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As filed with the Securities and Exchange Commission on March 11, 2004
Registration No. 333-112261

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 1
TO
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

CYTOKINETICS, INCORPORATED
(Exact name of Registrant as specified in its charter)
 	 	 	 	 	
Delaware	 	2834	 	94-3291317	
(State or other jurisdiction of
incorporation or organization)	 	(Primary Standard Industrial
Classification Code Number)	 	(I.R.S. Employer
Identification Number)	
280 East Grand Avenue
South San Francisco, California 94080
(650) 624-3000
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

James H. Sabry, M.D., Ph.D.
President and Chief Executive Officer
Cytokinetics, Incorporated
280 East Grand Avenue
South San Francisco, California 94080
(650) 624-3000
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:
 	 	 	 	 	
Michael J. O’Donnell, Esq.
Martin J. Waters, Esq.
David B. Crawford, Esq.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300	 	 	 	Alan C. Mendelson, Esq.
Patrick A. Pohlen, Esq.
Latham & Watkins LLP
135 Commonwealth Drive
Menlo Park, CA 94025
(650) 328-4600	

    Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

    If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), check the following box.     o

    If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

    If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

    If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

    If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.    o

CALCULATION OF REGISTRATION FEE

	

	
 	 	Proposed Maximum	 	Amount of	
Title of Each Class of	 	Aggregate	 	Registration	
Securities to be Registered	 	Offering Price(1)	 	Fee	

	
Common Stock $0.001 par value	 	$86,250,000	 	$6,977.63	

	

	

(1) 	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457 under the Securities Act of 1933.	

    The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine.

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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated March 11, 2004.

5,800,000 Shares

Common Stock

       This is an initial public offering of shares of common stock of Cytokinetics, Incorporated. All of the 5,800,000 shares of common stock are being sold by the company.

       Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $11.00 and $13.00. Application has been made for the quotation of the common stock on the Nasdaq National Market under the symbol “CYTK”.

      See “Risk Factors” on page 8 to read about factors you should consider before buying shares of the common stock.

      Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 	 	 	 	 	 	 	 	 	
 	 	Per Share	 	Total	

	 	

	
Initial public offering price	 	$	 	 	 	$	 	 	
Underwriting discount	 	$	 	 	 	$	 	 	
Proceeds, before expenses, to Cytokinetics	 	$	 	 	 	$	 	 	

       To the extent that the underwriters sell more than 5,800,000 shares of common stock, the underwriters have the option to purchase up to an additional 870,000 shares from Cytokinetics at the initial public offering price less the underwriting discount.

       The underwriters expect to deliver the shares against payment in New York, New York on                     , 2004.

Goldman, Sachs & Co.
                                                Credit Suisse First Boston
Pacific Growth Equities, LLC                        
Lazard

Prospectus dated                     , 2004.

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CANCER PROGRAM Cargo Mitotic Kinesin Kinesin Inhibitors Microtubule Taxanes Cancer is a disease characterized by unregulated cell proliferation. Mitotic kinesins [e.g., Kinesin Spindle Protein (KSP)] are cytoskeletal motor proteins that perform highly specific and essential roles in cell proliferation. These newly understood proteins transport cellular components, including genetic material, along microtubules. Microtubules are a central component of the cytoskeleton of both proliferating and non-proliferating cells, and are comprised of tubulin, the protein target of chemotherapeutic drugs known as taxanes. In our cancer program, we are focused on the discovery and development of novel classes of compounds that inhibit mitotic kinesins. Mitotic kinesin inhibitors specifically disrupt cell division, leaving other cytoskeletal processes unaffected, and therefore represent a potentially safer and more effective approach to the treatment of cancer.  Normal mitotic spindle in Monopolar mitotic spindle in dividing cancer cell cancer cell treated with KSP inhibitor  (blue = genetic material, green = microtubules) (blue = genetic material, green = microtubules) The mitotic spindle is a cytoskeletal structure in proliferating cells that is responsible for the segregation of identical copies of genetic material into each of the two cells resulting from the division of a single cell. Treatment of dividing cells with an inhibitor of KSP prevents formation of a functional bipolar mitotic spindle thereby producing a characteristic monopolar mitotic spindle. Interruption of proper cell division through this mechanism in cancer cells results in cell death.	

TABLE OF CONTENTS
 	 	 	 	 	 	 	 	 	
Summary Financial Data	
RISK FACTORS	
Risks Related To Our Common Stock and This Offering	
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	
USE OF PROCEEDS	
DIVIDEND POLICY	
CAPITALIZATION	
DILUTION	
SELECTED FINANCIAL DATA	
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	
BUSINESS	
MANAGEMENT	
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	
PRINCIPAL STOCKHOLDERS	
DESCRIPTION OF CAPITAL STOCK	
SHARES ELIGIBLE FOR FUTURE SALE	
MATERIAL UNITED STATES FEDERAL TAX CONSIDERATIONS FOR NON-UNITED STATES HOLDERS OF COMMON STOCK	
UNDERWRITING	
VALIDITY OF SECURITIES	
EXPERTS	
WHERE YOU CAN FIND ADDITIONAL INFORMATION	
PART II	
SIGNATURES	
EXHIBIT INDEX	
EXHIBIT 1.1	
EXHIBIT 4.3	
EXHIBIT 4.4	
EXHIBIT 4.5	
EXHIBIT 4.6	
EXHIBIT 4.7	
EXHIBIT 4.8	
EXHIBIT 4.9	
EXHIBIT 4.10	
EXHIBIT 4.11	
EXHIBIT 4.12	
EXHIBIT 4.13	
EXHIBIT 4.14	
EXHIBIT 5.1	
EXHIBIT 10.1	
EXHIBIT 10.45	
EXHIBIT 23.1	

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PROSPECTUS SUMMARY

      You should read the following summary together with the more detailed information regarding us, the sale of our common stock in this offering, our financial statements and notes to those financial statements that appear elsewhere in this prospectus.

Cytokinetics, Incorporated

       We are a leading biopharmaceutical company focused on the discovery, development and commercialization of novel small molecule drugs that specifically target the cytoskeleton. The cytoskeleton is a complex biological infrastructure that plays a fundamental role within every human cell. A number of commonly used drugs and a growing body of research validate the role that the cytoskeleton plays in a wide array of human diseases. Our focus on the cytoskeleton enables us to develop novel and potentially safer and more effective classes of drugs directed at treatments for cancer, cardiovascular disease, fungal diseases and other diseases. We have developed a cell biology driven approach and proprietary technologies to evaluate the function of many interacting proteins in the complex environment of the intact human cell. We believe that our approach enhances the speed, efficiency and yield of our drug discovery and development process by accurately and rapidly identifying drug candidates with attractive properties. Our approach has yielded two drug candidates for the treatment of cancer, a drug candidate for the treatment of acute congestive heart failure, and more than ten other research programs. Our most advanced drug candidate, SB-715992, is the subject of a broad Phase II clinical trials program designed to evaluate its effectiveness in many different types of cancer. An investigational new drug application, or IND, was filed with the U.S. Food and Drug Administration, or FDA, in 2003 for our second cancer drug candidate, SB-743921, which we expect will enter Phase I clinical development in early 2004. In addition, we expect to initiate Phase I clinical development for a drug candidate, CK-1213296, for the treatment of acute congestive heart failure in the second half of 2004. Our strategy is to develop our own commercialization capabilities for those of our drug candidates that are directed towards large concentrated markets, however, it is possible that we may never successfully commercialize any of our drug candidates. Our leading drug candidates are in clinical or earlier stages of development, and we have neither received regulatory approval for, nor derived commercial revenues from, any of them and we expect to incur increasing losses over the next several years.

Our Focus on the Cytoskeleton

       We believe that the cytoskeleton is one of a few biological areas with broad potential for drug discovery and development and has been scientifically and commercially validated in a wide variety of human diseases. For example, the cytoskeleton plays a fundamental role in the cell proliferation process, and cancer is a disease of unregulated cell proliferation. A number of commonly used cancer drugs inhibit cell proliferation by disrupting aspects of cytoskeletal function. However, these drugs also interrupt cytoskeletal functions unrelated to cell proliferation. This limits their clinical benefit and results in dose-limiting toxicities. As another example, the cytoskeleton plays a fundamental role in cardiac muscle contraction and has been linked to the origins of congestive heart failure, a disease of impaired cardiac function. Certain commonly used congestive heart failure drugs that work by indirectly modulating cytoskeletal function have limited therapeutic value due to their clinical side effects. We believe that our understanding of the cytoskeleton will allow us to develop potentially safer and more effective drugs for cancer and congestive heart failure. Our other research programs are also focused on diseases in which we believe the cytoskeleton plays a significant role.

Our Drug Candidates in Development
 	 	 	
 	• 	Cancer:SB-715992 has entered a Phase II clinical trial for the treatment of non-small cell lung cancer and is expected to enter multiple Phase II clinical trials in other solid	

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 	 	cancers throughout 2004. SB-715992 is a novel small molecule drug candidate that inhibits cell proliferation and promotes cancer cell death by specifically disrupting the function of a cytoskeletal protein known as kinesin spindle protein, or KSP. KSP is essential for cell proliferation, a process that when unregulated results in tumor growth. KSP plays no role outside of cell proliferation. Current drugs that inhibit cell proliferation, such as Taxol® (paclitaxel) and Taxotere® (docetaxel), are standard treatments for many types of cancers, but these drugs target tubulin, a cytoskeletal protein that is essential not only to cell proliferation but also to many other important cellular functions. Because SB-715992 inhibits only cell proliferation, we believe it may exhibit a lower incidence of toxicities than many existing cancer drugs. In addition, SB-715992’s novel mechanism of action may be effective against a broader range of tumor types.	

 	 	We are participating in the development of SB-715992 which is being conducted by GlaxoSmithKline, or GSK, under our strategic alliance. GSK commenced a Phase II clinical trial for SB-715992 in non- small cell lung cancer in late 2003. A number of parallel Phase II monotherapy clinical trials and Phase Ib combination therapy clinical trials are scheduled to begin throughout 2004. These clinical trials are expected to evaluate this novel drug candidate in multiple tumor types including colorectal, breast and ovarian cancers. Also in 2004, the National Cancer Institute, or NCI, plans to sponsor additional Phase I and Phase II clinical trials designed to evaluate SB-715992 in other tumor types and other dosing regimens.	

 	• 	Cancer: SB-743921 is expected to enter Phase I clinical trials in early 2004. This drug candidate also inhibits KSP but is structurally distinct from SB-715992. We believe that having two KSP inhibitors for the potential treatment of cancer in concurrent clinical development increases the likelihood that a commercial drug will be developed. SB-743921 is also being developed by GSK through our strategic alliance.	

 	• 	Cardiovascular Disease: We expect to file an IND and initiate a Phase I clinical trial for our drug candidate for the treatment of acute congestive heart failure, CK-1213296, in the second half of 2004.  Our drug candidate specifically targets a cytoskeletal protein, cardiac myosin, which is essential for cardiac muscle contraction. In animal models, CK-1213296 improves cardiac function without detrimental effects on heart rhythm, heart rate or blood pressure that limit the effectiveness of existing drugs.	
 	 	 	
Our Research Programs

       We have more than ten research programs that address multiple therapeutic areas, such as fungal diseases, inflammatory diseases, high blood pressure and asthma. We structure our research programs in these therapeutic areas around cytoskeletal protein targets to discover and develop novel small molecule drug candidates that may address unmet clinical needs as well as the shortcomings of existing drugs.

Our Cell Biology Driven Approach to Drug Discovery and Development

       All of our compounds in research and development have been discovered internally using our unique cell biology driven approach. We develop a detailed understanding of multiple proteins within a cytoskeletal pathway or multi-protein system to identify various intervention points to modulate the pathway or system to treat disease. We can then direct our discovery activities to specific cytoskeletal proteins that may be attractive targets for the development of potentially safer and more effective drugs.

       We have also developed proprietary automated technologies, including our PUMA system and Cytometrix technologies, to enable early identification and prioritization of compounds that are highly selective for their intended protein targets without other cellular effects, and are thereby less likely to give rise to clinical side effects. The integrated use of these technologies enables us to efficiently

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focus our research efforts and resources on those compounds directed at novel cytoskeletal protein targets that are more likely to yield attractive drug candidates. We have advanced our Cytometrix technologies through technical development activities conducted with each of Eisai Research Institute, Novartis Pharma AG, Tularik Inc. and Vertex Pharmaceuticals, Inc.

Our Strategic Alliances

       We selectively seek strategic alliances that enable us to maintain financial and operational flexibility while retaining significant economic and commercial rights to our drug candidates. In June 2001, we entered into a strategic alliance with GSK to discover, develop and commercialize small molecule drugs for the treatment of cancer as well as other diseases by targeting KSP and certain other related cytoskeletal proteins involved in cell proliferation. Under this strategic alliance, GSK has made a $14.0 million upfront cash payment and an initial $14.0 million investment in our equity. GSK has also committed to reimburse our full time equivalents, or FTEs, conducting research in connection with the strategic alliance and to make additional precommercialization milestone payments to us and pay royalties to us based on product sales. As of December 31, 2003, we have received $17.2 million in FTE reimbursement and $3.2 million in precommercialization milestone payments from GSK. We will receive future FTE reimbursement and could receive significant precommercialization milestone payments and royalties based on product sales. In addition, we retain both a product-by-product option to co-fund certain later-stage development activities in exchange for a higher royalty rate, and an option to secure additional co-promotion rights. In December 2003, we entered into a strategic alliance with AstraZeneca AB to fund and participate in the development of a new application of our Cytometrix technologies for use by both parties.

Our Corporate Strategy

       Our goal is to become a fully-integrated biopharmaceutical company focused on discovering, developing and commercializing novel drugs to treat cancer, cardiovascular disease and other diseases. We intend to achieve this goal by:
 	 	 	
 	• 	focusing on the cytoskeleton;	
 	 	 	
 	• 	leveraging our cell biology driven approach and proprietary technologies to increase the speed, efficiency and yield of our drug discovery and development process;	
 	 	 	
 	• 	pursuing multiple drug candidates for each cytoskeletal protein target and broad clinical trials for each drug candidate;	
 	 	 	
 	• 	establishing select strategic alliances to accelerate our drug development programs while preserving significant development and commercial rights; and	
 	 	 	
 	• 	building development and commercialization capabilities directed towards large concentrated markets.	
Risks

       Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in “Risk Factors”. All of our drug candidates, including SB-715992, SB-743921 and CK-1213296, are in clinical or earlier stages of development. Accordingly, we have not received regulatory approval for, nor commercial revenues from, any of our drug candidates. It is possible that neither we nor our partners may ever successfully commercialize any of our drug candidates. As of December 31, 2003, we had incurred $94.1 million in net losses since inception. Because our initial drug candidates are in the early stages of clinical testing, we expect to continue to incur increasing losses over the next several years, and we may never become profitable.

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Private Sale of Shares to GSK

       We have entered into an agreement pursuant to which we will sell an affiliate of GSK approximately $7.0 million of our common stock immediately prior to the completion of this offering at a per share price equal to our per share initial public offering price. Assuming an initial public offering price of $12.00 per share, an affiliate of GSK will purchase 583,333 restricted shares of our common stock at a price of $12.00 per share.

Company Information

       We were incorporated in Delaware in August 1997 as Cytokinetics, Incorporated. Our principal executive offices are located at 280 East Grand Avenue, South San Francisco, California 94080, and our telephone number is (650) 624-3000. Our website address is http://www.cytokinetics.com. Information contained in our website is not a part of this prospectus. References in this prospectus to “we,” “us” and “our” refer to Cytokinetics, Incorporated.

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The Offering

 	 	 	
Common stock offered	 	5,800,000 shares	

 	 	 	
Common stock to be outstanding after this offering	 	25,794,573 shares	

 	 	 	
Use of proceeds	 	For general corporate purposes, including the potential co-funding of certain later-stage development activities with respect to SB-715992 or SB-743921; preclinical activities and clinical development of our drug candidate, CK-1213296, for the treatment of acute congestive heart failure; research programs; development, sales, marketing and manufacturing operations and the potential license or acquisition of complementary technologies. See “Use of Proceeds.”	

 	 	 	
Proposed Nasdaq National Market symbol	 	CYTK	

       The number of shares of common stock to be outstanding after this offering is based on 2,307,258 shares of common stock outstanding as of December 31, 2003 and also reflects the automatic conversion of preferred stock into 17,103,982 shares of common stock. This number does not include, as of December 31, 2003:

 	• 	2,244,400 shares of common stock issuable upon exercise of options outstanding, at a weighted average exercise price of $1.06 per share;	

 	 	 	
 	• 	100,000 shares of common stock issuable upon the exercise of warrants to purchase common stock and 181,983 shares of preferred stock issuable upon the exercise of warrants to purchase preferred stock (which will become exercisable for 90,991 shares of common stock upon consummation of this offering);	

 	 	 	
 	• 	390,655 shares of common stock reserved for issuance under our 1997 Stock Option/ Stock Issuance Plan; and	

 	 	 	
 	• 	4,200,000 shares of common stock to be reserved for future issuance under our 2004 Equity Incentive Plan and our 2004 Employee Stock Purchase Plan.	

       Except as otherwise indicated, all information in this prospectus:
 	 	 	
 	• 	gives effect to our certificate of incorporation which we will file immediately prior to the closing of this offering;	

 	• 	gives effect to the automatic conversion of all outstanding shares of preferred stock into shares of common stock upon the closing of this offering;	

 	 	 	
 	• 	gives effect to a 1-for-2 reverse stock split to be completed prior to the closing of this offering;	

 	 	 	
 	• 	gives effect to the sale of 583,333 shares of common stock to an affiliate of GSK in a concurrent private placement based on an initial offering price of $12.00 per share; and	

 	 	 	
 	• 	assumes no exercise by the underwriters of their option to purchase 870,000 additional shares from Cytokinetics in this offering.	
 	 	 	
       CYTOKINETICS, our logo used alone and with the mark CYTOKINETICS, and CYTOMETRIX are our registered service marks and trademarks. Other service marks, trademarks and trade names referred to in this prospectus are the property of their respective owners.

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Summary Financial Data

      The following table summarizes our financial data. The summary financial data for the years ended December 31, 2001, 2002 and 2003 are derived from our audited financial statements included in this prospectus. You should read these data together with our financial statements and related notes and the information under “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” See Note 10 to our financial statements for information regarding pro forma common shares outstanding and pro forma net loss per share.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	Cumulative Period	
 	 	 	 	from August 5, 1997	
 	 	Years Ended December 31,	 	(date of Inception)	

	 	to December 31,	
 	 	2001	 	2002	 	2003	 	2003	

	 	

	 	

	 	

	
 	 	 	
 	 	(in thousands, except for per share data)	
Statement of Operations Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development revenues from related party	 	$	6,764	 	 	$	8,470	 	 	$	7,703	 	 	$	22,937	 	
 	Research and development and grant revenues	 	 	302	 	 	 	126	 	 	 	74	 	 	 	502	 	
 	License revenues from related party	 	 	1,400	 	 	 	2,800	 	 	 	2,800	 	 	 	7,000	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	 	8,466	 	 	 	11,396	 	 	 	10,577	 	 	 	30,439	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development (1)	 	 	20,961	 	 	 	28,424	 	 	 	34,004	 	 	 	100,817	 	
 	General and administrative (1)	 	 	5,897	 	 	 	6,953	 	 	 	9,163	 	 	 	28,136	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	Total operating expenses	 	 	26,858	 	 	 	35,377	 	 	 	43,167	 	 	 	128,953	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Loss from operations	 	 	(18,392	)	 	 	(23,981	)	 	 	(32,590	)	 	 	(98,514	)	
Interest and other income (expense), net	 	 	2,518	 	 	 	901	 	 	 	(95	)	 	 	4,440	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net loss	 	$	(15,874	)	 	$	(23,080	)	 	$	(32,685	)	 	$	(94,074	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net loss per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted	 	$	(11.18	)	 	$	(13.25	)	 	$	(17.10	)	 	 	 	 	
Pro forma net loss per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted (unaudited) (2)	 	 	 	 	 	 	 	 	 	$	(1.81	)	 	 	 	 	
Weighted-average number of shares used in pro forma per share calculation:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted (unaudited) (2)	 	 	 	 	 	 	 	 	 	 	18,029	 	 	 	 	 	

 	 	
(1) 	Includes non-cash stock-based compensation.	

(2) 	Gives effect to the conversion of all outstanding shares of preferred stock into 17,103,982 shares of our common stock effective upon the closing of this offering. See Note 10 to our financial statements.	

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	
 	 	As of December 31, 2003	

	
 	 	 	 	Pro Forma,	
 	 	Actual	 	Pro Forma	 	As Adjusted	

	 	

	 	

	
 	 	 	
 	 	(in thousands)	
Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	 	
Cash, cash equivalents, short-term and long-term investments	 	$	43,045	 	 	$	43,045	 	 	$	113,248	 	
Restricted cash	 	 	7,199	 	 	 	7,199	 	 	 	7,199	 	
Working capital(1)	 	 	27,619	 	 	 	27,619	 	 	 	97,822	 	
Total assets	 	 	62,873	 	 	 	62,873	 	 	 	133,076	 	
Long-term portion of equipment financing lines	 	 	8,075	 	 	 	8,075	 	 	 	8,075	 	
Convertible preferred stock	 	 	133,172	 	 	 	—	 	 	 	—	 	
Deficit accumulated during the development stage	 	 	(94,074	)	 	 	(94,074	)	 	 	(94,074	)	
Total stockholders’ (deficit) equity	 	 	(92,031	)	 	 	41,141	 	 	 	111,344	 	

The table above presents summary balance sheet data on an actual basis, on a pro forma basis and on a pro forma as adjusted basis. The pro forma numbers reflect the conversion of all of our preferred stock into an aggregate of 17,103,982 shares of our common stock immediately upon the

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closing of this offering and the pro forma as adjusted numbers reflect the sale of 583,333 shares of our common stock to an affiliate of GSK based on an initial offering price of $12.00 per share and the sale of 5,800,000 shares of our common stock at an assumed initial public offering price of $12.00 per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 	 	
(1) 	Represents current assets less current liabilities.	
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RISK FACTORS

      Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below with all of the other information included in this prospectus before making an investment decision. If any of the possible adverse events described below actually occurs, our business, results of operations or financial condition would likely suffer. In such an event, the market price of our common stock could decline and you could lose all or part of your investment in our common stock.

Risks Related to Our Business

Our initial drug candidates are in the early stages of clinical testing and we have a history of significant losses and may not achieve or sustain profitability and, as a result, you may lose all or part of your investment.

       Our initial drug candidates are in the early stages of clinical testing and we must conduct significant additional clinical trials before we can seek the regulatory approvals necessary to begin commercial sales of our drugs. We have incurred operating losses in each year since our inception in 1997 due to costs incurred in connection with our research and development activities and general and administrative costs associated with our operations. Our net loss for the fiscal years ended December 31, 2003, 2002 and 2001 was $32.7 million, $23.1 million and $15.9 million, respectively. As of December 31, 2003, we had an accumulated deficit of $94.1 million. We expect to incur increasing losses for several years, as we continue our research activities and conduct development of, and seek regulatory approvals for, our initial drug candidates, and commercialize any approved drugs. If our initial drug candidates fail in clinical trials or do not gain regulatory approval, or if our drugs do not achieve market acceptance, we will not be profitable. If we fail to become and remain profitable, or if we are unable to fund our continuing losses, you could lose all or part of your investment.

We have never generated, and may never generate, revenues from commercial sales of our drugs and we may not have drugs to market for several years, if ever.

       We currently have no drugs for sale and we cannot guarantee that we will ever have marketable drugs. We must demonstrate that our drug candidates satisfy rigorous standards of safety and efficacy before the FDA and other regulatory authorities in the United States and abroad. We and our partners will need to conduct significant additional research, preclinical testing and clinical testing, before we or our partners can file applications with the FDA for approval of our drug candidates. In addition, to compete effectively, our drugs must be easy to use, cost-effective and economical to manufacture on a commercial scale. We may not achieve any of these objectives. SB-715992, our most advanced drug candidate for the treatment of cancer, is currently our only drug candidate in clinical trials and we cannot be certain that the clinical development of this or any other drug candidate in preclinical testing or clinical development will be successful, that it will receive the regulatory approvals required to commercialize it, or that any of our other research programs will yield a drug candidate suitable for entry into clinical trials. Our commercial revenues, if any, will be derived from sales of drugs that we do not expect to be commercially available for several years, if at all. We expect that SB-743921, our other cancer drug candidate, will enter Phase I clinical trials in early 2004. Because SB-743921 has a similar mechanism of action as SB-715992, the development of one or both of these drug candidates may be discontinued at any stage of our clinical trials programs and we may not generate revenue from either of these drug candidates.

       We have funded all of our operations and capital expenditures with proceeds from private placements of our securities and strategic alliances with GSK and others. We expect that the net proceeds of this offering, together with our existing cash resources, future payments from GSK and AstraZeneca, proceeds from equipment financings, and interest earned on investments will be

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sufficient to meet our projected operating requirements for at least the next 24 months. For the year ended December 31, 2003, our cash outflow to fund operations was approximately $30.5 million. To meet our future cash requirements, we may raise funds through public or private equity offerings, debt financings or strategic alliances. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional dilution. To the extent that we raise additional funds through debt financing, if available, this may involve covenants that restrict our business activities. To the extent that we raise additional funds through strategic alliance and licensing arrangements, we will likely have to relinquish valuable rights to our technologies, research programs or drug candidates, or grant licenses on terms that may not be favorable to us.

Clinical trials may fail to demonstrate the safety and efficacy of our drug candidates, which could prevent or significantly delay completion of clinical development and regulatory approval.

       Prior to receiving approval to commercialize any of our drug candidates, we must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA and other regulatory authorities in the United States and abroad, that such drug candidate is both safe and effective. We will need to demonstrate efficacy for the treatment of specific indications and monitor safety throughout the clinical development process. To date, long-term safety and efficacy have not yet been demonstrated in clinical trials for any of our drug candidates. Through our strategic alliance, GSK is currently conducting a Phase II clinical trial to test the safety and efficacy of SB-715992 in non-small cell lung cancer. Additional Phase II and Phase Ib clinical trials for SB-715992 and Phase I clinical trials for SB-743921 are scheduled to begin throughout 2004. If these trials or future clinical trials are unsuccessful, our business and reputation would be harmed and our stock price would be negatively affected.

       All of our drug candidates are prone to the risks of failure inherent in drug development. The results of preclinical studies and early-stage clinical trials of our drug candidates do not necessarily predict the results of later-stage clinical trials. Drug candidates in later-stage clinical trials may fail to show desired safety and efficacy traits despite having progressed through initial clinical trials. Even if we believe the data collected from clinical trials of our drug candidates are promising, such data may not be sufficient to support approval by the FDA or any other United States or foreign regulatory approval. Preclinical and clinical data can be interpreted in different ways. Accordingly, FDA officials could interpret the data in different ways than we or our partners do, which could delay, limit or prevent regulatory approval. Administering any of our drug candidates to humans may produce undesirable side effects. These side effects could interrupt, delay or halt clinical trials of our drug candidates and could result in the FDA or other regulatory authorities denying approval of our drug candidates for any or all targeted indications. The FDA, other regulatory authorities, our partners or we may suspend or terminate clinical trials at any time. Any failure or significant delay in completing clinical trials for our drug candidates, or in receiving regulatory approval for the sale of any drugs resulting from our drug candidates, may severely harm our business and reputation.

Clinical trials are expensive, time consuming and subject to delay.

       Clinical trials are very expensive and difficult to design and implement, especially in the cancer and congestive heart failure indications that we are pursuing, in part because they are subject to rigorous requirements. The clinical trial process is also time consuming. According to industry sources, it takes on average 12 to 15 years to discover and develop a new drug. Most of that time is spent testing the drug to make sure it is safe. According to industry studies, the fully capitalized resource cost of new drug development is approximately $800 million. We estimate that clinical trials of our most advanced drug candidates will continue for several years, but may take significantly longer to complete. The commencement and completion of our clinical trials could be delayed or prevented by several factors, including:
 	 	 	
 	• 	delays in obtaining regulatory approvals to commence a study;	
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 	• 	delays in identifying and reaching agreement on acceptable terms with prospective clinical trial sites;	
 	 	 	
 	• 	slower than expected rates of patient recruitment and enrollment;	
 	 	 	
 	• 	lack of effectiveness during clinical trials;	
 	 	 	
 	• 	unforeseen safety issues;	
 	 	 	
 	• 	uncertain dosing issues;	
 	 	 	
 	• 	inability to monitor patients adequately during or after treatment; and	
 	 	 	
 	• 	inability or unwillingness of medical investigators to follow our clinical protocols.	
       We do not know whether planned clinical trials will begin on time, will need to be restructured or will be completed on schedule, if at all. Significant delays in clinical trials will impede our ability to commercialize our drug candidates and generate revenue and could significantly increase our development costs.

We depend on GSK for the conduct, completion and funding of the clinical development and commercialization of our current drug candidates for the treatment of cancer.

       Under our strategic alliance with GSK, GSK is currently responsible for the clinical development and regulatory approval of SB-715992 and SB-743921. GSK is responsible for filing applications with the FDA or other regulatory authorities for approval of these drug candidates, and will be the owner of any marketing approvals issued by the FDA or other regulatory authorities. If the FDA or other regulatory authorities approve these drug candidates, GSK will also be responsible for the marketing and sale of these drugs. Because GSK is responsible for these functions, we cannot control whether GSK will devote sufficient attention and resources to the clinical trials program or will proceed in an expeditious manner. Under certain circumstances, GSK has discretion to elect whether to pursue the development of our drug candidates or to abandon the clinical trials program, and, after June 20, 2006, GSK may terminate our strategic alliance for any reason upon six months prior notice. Disputes may arise between us and GSK, which may delay or cause termination of the clinical trials program, result in significant litigation or arbitration, or cause GSK to act in a manner that is not in our best interest. If development of our drug candidates does not progress for these or any other reasons, we would not receive further milestone payments from GSK. Even if the FDA or other regulatory agencies approve one or more of our drug candidates, GSK may elect not to proceed with the commercialization of such drugs, or may elect to pursue commercialization of one drug but not others. In such event, we would have to undertake and fund the clinical development of our drug candidates or commercialization of our drugs, seek a new partner for clinical development or commercialization, or curtail or abandon the clinical development or commercialization programs. If we were unable to do so on acceptable terms, or at all, our business would be harmed, and the price of our common stock would be negatively affected.

If we fail to enter into and maintain successful strategic alliances for our drug candidates, we may have to reduce or delay our drug candidate development or increase our expenditures.

       Our strategy for developing, manufacturing and commercializing in certain therapeutic areas currently requires us to enter into and successfully maintain strategic alliances with pharmaceutical companies or other industry participants to advance our programs and reduce our expenditures on each program. We have formed a strategic alliance with GSK with respect to SB-715992, SB-743921 and certain other research activities. However, we may not be able to negotiate additional strategic alliances on acceptable terms, if at all. If we are not able to maintain our existing strategic alliances or establish and maintain additional strategic alliances, we may have to limit the size or scope of, or delay, one or more of our drug development programs or research programs or undertake and fund these programs ourselves. If we elect to increase our expenditures to fund drug development programs or research programs on our own, we will need to obtain additional capital, which may not be available on acceptable terms, or at all.

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The success of our strategic alliances depends in part on the performance of our partners, over which we have little or no control.

       Our ability to commercialize drugs that we develop with our partners and generate royalties from product sales depends on our partners’ abilities to assist us in establishing the safety and efficacy of our drug candidates, obtaining and maintaining regulatory approvals and achieving market acceptance of the drugs once commercialized. Our partners may elect to delay or terminate development of one or more drug candidates, independently develop drugs that could compete with ours, or fail to commit sufficient resources to the marketing and distribution of drugs developed through their strategic alliances with us. If our partners fail to perform as we expect, our potential for revenue from drugs developed through our strategic alliances with them could be dramatically reduced.

Our focus on the discovery of drug candidates directed against specific proteins and pathways within the cytoskeleton is unproven, and we do not know whether we will be able to develop any drug candidates of commercial value.

       Our focus on drug discovery and development directed at the cytoskeleton is novel and unique to us. While a number of commonly used drugs and a growing body of research validate the importance of the cytoskeleton in the origin and progression of a number of diseases, no existing drugs specifically and directly interact with the cytoskeletal proteins and pathways that our drug candidates seek to modulate. As a result, we cannot be certain that our drug candidates will appropriately modulate targeted cytoskeletal proteins and pathways or produce commercially viable drugs that safely and effectively treat cancer, congestive heart failure and potentially other diseases. In addition, if we are successful in developing and receiving regulatory approval for a commercially viable drug for the treatment of one disease focused to the cytoskeleton, we cannot be certain that we will also be able to develop and receive regulatory approval for drug candidates for the treatment of other forms of that disease or other diseases. If we or our partners fail to develop and commercialize viable drugs, we will not achieve commercial success.

Our proprietary rights may not adequately protect our technologies and drug candidates.

       Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of our technologies and drug candidates as well as successfully defending these patents against third-party challenges. We will only be able to protect our technologies and drug candidates from unauthorized use by third parties to the extent that valid and enforceable patents or trade secrets cover them. Furthermore, the degree of future protection of our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage.

       The patent positions of life sciences companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in such companies’ patents has emerged to date in the United States. The patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent laws in the United States or other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents. For example:
 	 	 	
 	• 	we or our licensors might not have been the first to make the inventions covered by each of our pending patent applications and issued patents;	
 	 	 	
 	• 	we or our licensors might not have been the first to file patent applications for these inventions;	
 	 	 	
 	• 	others may independently develop similar or alternative technologies or duplicate any of our technologies;	
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 	• 	it is possible that none of our pending patent applications or the pending patent applications of our licensors will result in issued patents;	
 	 	 	
 	• 	our issued patents and issued patents of our licensors may not provide a basis for commercially viable drugs, or may not provide us with any competitive advantages, or may be challenged and invalidated by third parties;	
 	 	 	
 	• 	we may not develop additional proprietary technologies or drug candidates that are patentable; or	
 	 	 	
 	• 	the patents of others may have an adverse effect on our business.	
       We also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. While we use reasonable efforts to protect our trade secrets, our or our strategic partners’ employees, consultants, contractors, or scientific and other advisors may unintentionally or willfully disclose our information to competitors. If we were to enforce a claim that a third party had illegally obtained and was using our trade secrets, it would be expensive and time consuming, and the outcome would be unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, if our competitors may independently develop equivalent knowledge, methods and know-how, it will be more difficult for us to enforce our patent rights and our business could be harmed.

       If we are not able to defend the patent or trade secret protection position of our technologies and drug candidates, then we will not be able to exclude competitors from developing or marketing competing drugs, and we may not generate enough revenue from product sales to justify the cost of development of our drugs and to achieve or maintain profitability.

If we are sued for infringing intellectual property rights of third parties, such litigation will be costly and time consuming, and an unfavorable outcome would have a significant adverse effect on our business.

       Our ability to commercialize drugs depends on our ability to sell such drugs without infringing the patents or other proprietary rights of third parties. Numerous United States and foreign issued patents and pending applications, which are owned by third parties, exist in the areas that we are exploring. In addition, because patent applications can take several years to issue, there may be currently pending applications, unknown to us, which may later result in issued patents that our drug candidates may infringe. There could also be existing patents of which we are not aware that our drug candidates may inadvertently infringe.

       In particular, we are aware of an issued United States patent and at least one pending United States patent application assigned to Curis, Inc. relating to certain compounds in the quinazolinone class. SB-715992 falls into this class of compounds. The Curis patent claims a method of use for inhibiting signaling by what is called the hedgehog pathway using certain such compounds. We are also aware that Curis has pending applications in Europe, Japan, Australia and Canada with claims covering compositions of certain quinazolinone compounds. Curis or a third party may assert that the sale of SB-715992 may infringe one or more of these or other patents. We believe that we have valid defenses against an assertion that SB-715992 infringes the Curis patent. However, we cannot guarantee that a court would find such defenses valid. We have not attempted to obtain a license to this patent. If we decide to obtain a license to this patent, we cannot guarantee that we would be able to obtain such a license on commercially reasonable terms, or at all.

       In addition, we are aware of various issued United States patents and pending United States and foreign patent applications assigned to Cellomics, Inc. relating to an automated method for analyzing cells. One of these applications is proceeding to grant in Europe. Cellomics or a third party may assert that our Cytometrix technologies fall within the scope of and thus, infringe, one or more of these patents. We have received a letter from Cellomics notifying us that Cellomics believes we

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may be practising one or more of their patents and that Cellomics offers a use license for such patents through its licensing program. We believe that we have valid defenses to such an assertion. Moreover, the grant of the European patent may be opposed by one or more parties. However, we cannot guarantee that a court would find such defenses valid or that such opposition would be successful. If we decide to obtain a license to these patents, we cannot guarantee that we would be able to obtain such a license on commercially reasonable terms, or at all.

       If a third party claims that we infringe on their patents or other proprietary rights, we could face a number of issues that could seriously harm our competitive position, including:
 	 	 	
 	• 	infringement and other intellectual property claims which, with or without merit, can be costly and time consuming to litigate and can delay the regulatory approval process and divert management’s attention from our core business strategy;	
 	 	 	
 	• 	substantial damages for past infringement which we may have to pay if a court determines that our drugs or technologies infringe upon a competitor’s patent or other proprietary rights;	
 	 	 	
 	• 	a court prohibiting us from selling or licensing our drugs or technologies unless the holder licenses the patent or other proprietary rights to us, which it is not required to do; and	
 	 	 	
 	• 	if a license is available from a holder, we may have to pay substantial royalties or grant cross licenses to our patents or other proprietary rights.	
To the extent we elect to fund the development of a drug candidate or the commercialization of a drug at our expense, we will need substantial additional funding.

       The discovery, development and commercialization of novel small molecule drugs focused on the cytoskeleton for the treatment of a wide array of diseases is costly. As a result, to the extent we elect to fund the development of a drug candidate or the commercialization of a drug at our expense, we will need to raise additional capital to:
 	 	 	
 	• 	expand our research and development and technologies;	
 	 	 	
 	• 	fund clinical trials and seek regulatory approvals;	
 	 	 	
 	• 	build or access manufacturing and commercialization capabilities;	
 	 	 	
 	• 	implement additional internal systems and infrastructure;	
 	 	 	
 	• 	maintain, defend and expand the scope of our intellectual property; and	
 	 	 	
 	• 	hire additional management and scientific personnel.	
       Our future funding requirements will depend on many factors, including:
 	 	 	
 	• 	the rate of progress and cost of our clinical trials and other research and development activities;	

 	• 	the costs associated with establishing manufacturing and commercialization capabilities;	

 	• 	the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;	
 	 	 	
 	• 	the costs and timing of seeking and obtaining regulatory approvals;	
 	 	 	
 	• 	the costs of acquiring or investing in businesses, products and technologies;	
 	 	 	
 	• 	the effect of competing technological and market developments; and	
 	 	 	
 	• 	the payment and other terms and timing of any strategic alliance, licensing or other arrangements that we may establish.	
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       Until we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance future cash needs primarily through public or private equity offerings, debt financings or strategic alliances. We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more of our clinical trials or research and development programs or future commercialization initiatives.

We currently have no marketing or sales staff, and if we are unable to enter into or maintain strategic alliances with marketing partners or if we are unable to develop our own sales and marketing capabilities, we may not be successful in commercializing our potential drugs.

       We currently have no sales, marketing or distribution capabilities. To commercialize our drugs that we determine not to market on our own, we will depend on strategic alliances with third parties, such as GSK, which have established distribution systems and direct sales forces. If we are unable to enter into such arrangements on acceptable terms, we may not be able to successfully commercialize such drugs.

       We plan to commercialize drugs on our own, with or without a partner, that can be effectively marketed and sold in concentrated markets that do not require a large sales force to be competitive. To achieve this goal, we will need to establish our own specialized sales force and marketing organization with technical expertise and with supporting distribution capabilities. Developing such an organization is expensive and time consuming and could delay a product launch. In addition, we may not be able to develop this capacity efficiently, or at all, which could make us unable to commercialize our drugs.

       To the extent that we are not successful in commercializing any drugs ourselves or through a strategic alliance, our product revenues will suffer, we will incur significant additional losses and the price of our common stock will be negatively affected.

We have no manufacturing capacity, depend on a single manufacturer to produce our clinical trial drug supplies, and anticipate continued reliance on third-party manufacturers for the development and commercialization of our potential drugs.

       We do not currently operate manufacturing facilities for clinical or commercial production of our drug candidates under development. We have no experience in drug formulation or manufacturing, and we lack the resources and the capabilities to manufacture any of our drug candidates on a clinical or commercial scale. As a result, we currently rely on a single contract manufacturer to supply, store and distribute drug supplies for our clinical trials and anticipate future reliance on a limited number of third-party manufacturers until we are able to expand our operations to include manufacturing capacities. Any performance failure on the part of our existing or future manufacturers could delay clinical development or regulatory approval of our drug candidates or commercialization of our drugs, producing additional losses and depriving us of potential product revenues.

       Our drug candidates require precise, high quality manufacturing. Our failure or our contract manufacturer’s failure to achieve and maintain high manufacturing standards, including the incidence of manufacturing errors, could result in patient injury or death, product recalls or withdrawals, delays or failures in product testing or delivery, cost overruns or other problems that could seriously hurt our business. Contract manufacturers often encounter difficulties involving production yields, quality control and quality assurance, as well as shortages of qualified personnel. These manufacturers are subject to ongoing periodic unannounced inspection by the FDA, the United States Drug Enforcement Agency, or DEA, and corresponding state agencies to ensure strict compliance with current Good Manufacturing Practice, or GMP, and other applicable government regulations and corresponding foreign standards; however, we do not have control over third-party manufacturers’ compliance with these regulations and standards. If one of our manufacturers fails to maintain compliance, the production of our drug candidates could be interrupted, resulting in delays,

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additional costs and potentially lost revenues. Additionally, our third-party manufacturer must pass a preapproval inspection before we can obtain marketing approval for any of our drug candidates in development.

       If the FDA or other regulatory agencies approve any of our drug candidates for commercial sale, we will need to manufacture them in larger quantities. To date, our drug candidates have been manufactured in small quantities for preclinical testing and clinical trials and we may not be able to successfully increase the manufacturing capacity, whether in collaboration with third-party manufacturers or on our own, for any of our drug candidates in a timely or economic manner, or at all. Significant scale-up of manufacturing may require additional validation studies, which the FDA must review and approve. If we are unable to successfully increase the manufacturing capacity for a drug candidate, the regulatory approval or commercial launch of any related drugs may be delayed or there may be a shortage in supply. Even if any third-party manufacturer makes improvements in the manufacturing process for our drug candidates, we may not own, or may have to share, the intellectual property rights to such innovation.

       In addition, our existing and future contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to successfully produce, store and distribute our drug candidates. We currently rely on a single third-party manufacturer as the sole supply source for our drug candidates. In the event of a natural disaster, business failure, strike or other difficulty, we may be unable to replace such third-party manufacturer in a timely manner and the production of our drug candidates would be interrupted, resulting in delays and additional costs.

       Switching manufacturers may be difficult because the number of potential manufacturers is limited and the FDA must approve any replacement manufacturer prior to manufacturing our drug candidates. Such 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 drug candidates after receipt of FDA approval. It may be difficult or impossible for us to find a replacement manufacturer on acceptable terms quickly, or at all.

We expect to expand our development, clinical research and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

       We expect to have significant growth in expenditures, the number of our employees and the scope of our operations, in particular with respect to those drug candidates that we elect to commercialize independently or together with a partner. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited resources, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The physical expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

The failure to attract and retain skilled personnel could impair our drug development and commercialization efforts.

       Our performance is substantially dependent on the performance of our senior management and key scientific and technical personnel, particularly James H. Sabry, M.D., Ph.D., our President and Chief Executive Officer and Robert I. Blum, our Executive Vice President, Corporate Development and Finance and Chief Financial Officer. Our employment agreements with these individuals and our other personnel are terminable at will with short or no notice. We carry key person life insurance on James H. Sabry, M.D., Ph.D., our President and Chief Executive Officer. The loss of the services of any member of our senior management, scientific or technical staff may significantly delay or prevent

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the achievement of drug development and other business objectives by diverting management’s attention to transition matters and identification of suitable replacements, and could have a material adverse effect on our business, operating results and financial condition. We also rely on consultants and advisors to assist us in formulating our research and development strategy. All of our consultants and advisors are either self-employed or employed by other organizations, and they may have conflicts of interest or other commitments, such as consulting or advisory contracts with other organizations, that may affect their ability to contribute to us.

       In addition, we believe that we will need to recruit additional executive management and scientific and technical personnel. There is currently intense competition for skilled executives and employees with relevant scientific and technical expertise, and this competition is likely to continue. The inability to attract and retain sufficient scientific, technical and managerial personnel could limit or delay our product development efforts, which would adversely affect the development of our drug candidates and commercialization of our potential drugs and growth of our business.

Risks Related to Our Industry

Our competitors may develop drugs that are less expensive, safer, or more effective, which may diminish or eliminate the commercial success of any drugs that we may commercialize.

       We compete with companies that are developing drug candidates that focus on the cytoskeleton, as well as companies that have developed drugs or are developing alternative drug candidates for cancer and cardiovascular and infectious diseases. For example, with respect to cancer, Bristol-Myers Squibb’s Taxol, Aventis Pharmaceuticals Inc.’s Taxotere, and generic equivalents of Taxol are currently available on the market and commonly used in cancer treatment. Furthermore, we are aware that Merck & Co., Inc. and Bristol-Myers Squibb are conducting KSP-directed research. In addition, Bristol-Myers Squibb, Novartis and other pharmaceutical and biopharmaceutical companies are developing other approaches to inhibiting mitosis. With respect to congestive heart failure, we are aware of a potentially competitive approach being developed by Orion in collaboration with Abbott Laboratories.

       Our competitors may:
 	 	 	
 	• 	develop drug candidates and market drugs that are less expensive or more effective than our future drugs;	
 	 	 	
 	• 	commercialize competing drugs before we or our partners can launch any drugs developed from our drug candidates;	
 	 	 	
 	• 	initiate or withstand substantial price competition more successfully than we can;	
 	 	 	
 	• 	have greater success in recruiting skilled scientific workers from the limited pool of available talent;	
 	 	 	
 	• 	more effectively negotiate third-party licenses and strategic alliances; and	
 	 	 	
 	• 	take advantage of acquisition or other opportunities more readily than we can.	
       We will compete for market share against large pharmaceutical and biotechnology companies and smaller companies that are collaborating with larger pharmaceutical companies, new companies, academic institutions, government agencies and other public and private research organizations. Many of these competitors, either alone or together with their partners, may develop new drug candidates that will compete with ours, as these competitors may, and in certain cases do, operate larger research and development programs or have substantially greater financial resources than we do. Our competitors may also have significantly greater experience in:
 	 	 	
 	• 	developing drug candidates;	
 	 	 	
 	• 	undertaking preclinical testing and clinical trials;	
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 	• 	building relationships with key customers and opinion-leading physicians;	
 	 	 	
 	• 	obtaining and maintaining FDA and other regulatory approvals of drug candidates;	
 	 	 	
 	• 	formulating and manufacturing drugs; and	
 	 	 	
 	• 	launching, marketing and selling drugs.	
       If our competitors market drugs that are less expensive, safer or more effective than our potential drugs, or that reach the market sooner than our potential drugs, we may not achieve commercial success. In addition, the life sciences industry is characterized by rapid technological change. Because our research approach integrates many technologies, it may be difficult for us to stay abreast of the rapid changes in each technology. If we fail to stay at the forefront of technological change we may be unable to compete effectively. Our competitors may render our technologies obsolete by advances in existing technological approaches or the development of new or different approaches, potentially eliminating the advantages in our drug discovery process that we believe we derive from our research approach and proprietary technologies.

The regulatory approval process is expensive, time consuming and uncertain and may prevent our partners or us from obtaining approvals for the commercialization of some or all of our drug candidates.

       The research, testing, manufacturing, selling and marketing of drug candidates are subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries, which regulations differ from country to country. Neither we nor our partners are permitted to market our potential drugs in the United States until we receive approval of a NDA from the FDA. Neither we nor our partners have received marketing approval for any of our drug candidates. Obtaining a NDA can be a lengthy, expensive and uncertain process. In addition, failure to comply with the FDA and other applicable foreign and United States regulatory requirements may subject us to administrative or judicially imposed sanctions. These include warning letters, civil and criminal penalties, injunctions, product seizure or detention, product recalls, total or partial suspension of production, and refusal to approve pending NDAs, or supplements to approved NDAs.

       Regulatory approval of a NDA or NDA supplement is never guaranteed, and the approval process typically takes several years and is extremely expensive. The FDA also has substantial discretion in the drug approval process. Despite the time and expense exerted, failure can occur at any stage, and we could encounter problems that cause us to abandon clinical trials or to repeat or perform additional preclinical testing and clinical trials. The number of preclinical studies and clinical trials that will be required for FDA approval varies depending on the drug candidate, the disease or condition that the drug candidate is designed to address, and the regulations applicable to any particular drug candidate. The FDA can delay, limit or deny approval of a drug candidate for many reasons, including:
 	 	 	
 	• 	a drug candidate may not be safe or effective;	
 	 	 	
 	• 	FDA officials may not find the data from preclinical testing and clinical trials sufficient;	
 	 	 	
 	• 	the FDA might not approve our or our third-party manufacturer’s processes or facilities; or	
 	 	 	
 	• 	the FDA may change its approval policies or adopt new regulations.	
If we or our partners receive regulatory approval for our drug candidates, we will also be subject to ongoing FDA obligations and continued regulatory review, such as continued safety reporting requirements, and we may also be subject to additional FDA post-marketing obligations, all of which may result in significant expense and limit our ability to commercialize our potential drugs.

       Any regulatory approvals that we or our partners receive for our drug candidates may also be subject to limitations on the indicated uses for which the drug may be marketed or contain

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requirements for potentially costly post-marketing follow-up studies. In addition, if the FDA approves any of our drug candidates, the labeling, packaging, adverse event reporting, storage, advertising, promotion and record-keeping for the drug will be subject to extensive regulatory requirements. The subsequent discovery of previously unknown problems with the drug, including adverse events of unanticipated severity or frequency, may result in restrictions on the marketing of the drug, and could include withdrawal of the drug from the market.

       The FDA’s policies may change and additional government regulations may be enacted that could prevent or delay regulatory approval of our drug candidates. We cannot predict the likelihood, nature or extent of adverse government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are not able to maintain regulatory compliance, we might not be permitted to market our drugs and our business could suffer.

If physicians and patients do not accept our drugs, we may be unable to generate significant revenue, if any.

       Even if our drug candidates obtain regulatory approval, resulting drugs, if any, may not gain market acceptance among physicians, healthcare payors, patients and the medical community. Even if the clinical safety and efficacy of drugs developed from our drug candidates are established, physicians may elect not to recommend these drugs for a variety of reasons including:
 	 	 	
 	• 	timing of market introduction of competitive drugs;	
 	 	 	
 	• 	demonstration of clinical safety and efficacy;	
 	 	 	
 	• 	cost-effectiveness;	
 	 	 	
 	• 	availability of reimbursement from health maintenance organizations and other third-party payors;	
 	 	 	
 	• 	convenience and ease of administration;	
 	 	 	
 	• 	prevalence and severity of adverse side effects;	
 	 	 	
 	• 	other potential advantages over alternative treatment methods; and	
 	 	 	
 	• 	marketing and distribution support.	
If our drugs fail to achieve market acceptance, we may not be able to generate significant revenue and our business would suffer.

The coverage and reimbursement status of newly approved drugs is uncertain and failure to obtain adequate coverage and reimbursement could limit our ability to market any drugs we may develop and decrease our ability to generate revenue.

       There is significant uncertainty related to the coverage and reimbursement of newly approved drugs. The commercial success of our potential drugs in both domestic and international markets is substantially dependent on whether third-party coverage and reimbursement is available for the ordering of our potential drugs by the medical profession for use by their patients. Medicare, Medicaid, health maintenance organizations and other third-party payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement of new drugs, and, as a result, they may not cover or provide adequate payment for our potential drugs. They may not view our potential drugs as cost-effective and reimbursement may not be available to consumers or may not be sufficient to allow our potential drugs to be marketed on a competitive basis. Likewise, legislative or regulatory efforts to control or reduce healthcare costs or reform government healthcare programs could result in lower prices or rejection of our potential drugs. Changes in coverage and reimbursement policies or healthcare cost containment initiatives that limit or restrict reimbursement for our drugs may cause our revenue to decline.

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We may be subject to costly product liability claims and may not be able to obtain adequate insurance.

       Because we conduct clinical trials in humans, we face the risk that the use of our drug candidates will result in adverse effects. We currently maintain product liability insurance in the amount of $10.0 million with a $5,000 deductible per occurrence, however, such liability insurance excludes coverage of liability resulting from clinical trials. We cannot predict the possible harms or side effects that may result from our clinical trials. We may not have sufficient resources to pay for any liabilities resulting from a claim excluded from, or beyond the limit of, our insurance coverage.

       In addition, once we have commercially launched drugs based on our drug candidates, we will face exposure to product liability claims. This risk exists even with respect to those drugs that are approved for commercial sale by the FDA and manufactured in facilities licensed and regulated by the FDA. We intend to secure limited product liability insurance coverage, but may not be able to obtain such insurance on acceptable terms with adequate coverage, or at reasonable costs. There is also a risk that third parties that we have agreed to indemnify could incur liability. Even if we were ultimately successful in product liability litigation, the litigation would consume substantial amounts of our financial and managerial resources and may create adverse publicity, all of which would impair our ability to generate sales of the litigated product as well as our other potential drugs. Moreover, product recalls may be issued at our discretion or at the direction of the FDA, other governmental agencies or other companies having regulatory control for drug sales. If product recalls occur, such recalls are generally expensive and often have an adverse effect on the image of the drugs being recalled as well as the reputation of the drug’s developer or manufacturer.

We may be subject to damages resulting from claims that our employees or we have wrongfully used or disclosed alleged trade secrets of their former employers.

       Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could hamper or prevent our ability to commercialize certain potential drugs, which could severely harm our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

We use hazardous chemicals and radioactive and biological materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly.

       Our research and development processes involve the controlled use of hazardous materials, including chemicals, radioactive and biological materials. Our operations produce hazardous waste products. We cannot eliminate the risk of accidental contamination or discharge and any resultant injury from those materials. Federal, state and local laws and regulations govern the use, manufacture, storage, handling and disposal of hazardous materials. We may be sued for any injury or contamination that results from our use or the use by third parties of these materials. Compliance with environmental laws and regulations may be expensive, and current or future environmental regulations may impair our research, development and production efforts.

       In addition, our partners may use hazardous materials in connection with our strategic alliances. To our knowledge, their work is performed in accordance with applicable biosafety regulations. In the event of a lawsuit or investigation, however, we could be held responsible for any injury caused to persons or property by exposure to, or release of, these hazardous materials used

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by these parties. Further, we may be required to indemnify our partners against all damages and other liabilities arising out of our development activities or drugs produced in connection with these strategic alliances.

Our facilities in California are located near an earthquake fault, and an earthquake or other types of natural disasters or resource shortages could disrupt our operations and adversely affect results.

       Important documents and records, such as hard copies of our laboratory books and records for our drug candidates and compounds, are located in our corporate headquarters at a single location in South San Francisco, California near active earthquake zones. In the event of a natural disaster, such as an earthquake, drought or flood, or localized extended outages of critical utilities or transportation systems, we do not have a formal business continuity or disaster recovery plan, and could therefore experience a significant business interruption. In addition, California from time to time has experienced shortages of water, electric power and natural gas. Future shortages and conservation measures could disrupt our operations and cause expense, thus adversely affecting our business and financial results.

Risks Related To Our Common Stock and This Offering

We expect that our stock price will fluctuate significantly, and you may not be able to resell your shares at or above the initial public offering price.

       Prior to this offering, you could not buy or sell our common stock publicly. An active public market for our common stock may not develop or be sustained after this offering. We will negotiate and determine the initial public offering price with the representatives of the underwriters based on several factors. This price may vary from the market price of our common stock after this offering. You may be unable to sell your shares of common stock at or above the initial offering price due to fluctuation in the market price of the common stock arising from changes in our operating performance or prospects. In addition, the stock market, particularly in recent years, has experienced significant volatility particularly with respect to pharmaceutical, biotechnology and other life sciences company stocks. The volatility of pharmaceutical, biotechnology and other life sciences company stocks often does not relate to the operating performance of the companies represented by the stock. Factors that could cause this volatility in the market price of our common stock include:
 	 	 	
 	• 	results from and any delays in the clinical trials programs, including the clinical trials for SB-715992 and SB-743921, our drug candidates for the treatment of cancer;	

 	• 	failure or delays in entering additional drug candidates into clinical trials, including our drug candidate for the treatment of acute congestive heart failure, CK-1213296;	

 	• 	failure or discontinuation of any of our research programs;	
 	 	 	
 	• 	delays in establishing new strategic alliances;	
 	 	 	
 	• 	announcements concerning our strategic alliances with GSK or AstraZeneca or future strategic alliances;	
 	 	 	
 	• 	delays in the development of our drug candidates and commercialization of our potential drugs by GSK or any future partners or otherwise;	
 	 	 	
 	• 	market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts’ reports or recommendations;	
 	 	 	
 	• 	actual and anticipated fluctuations in our quarterly financial and operating results;	
 	 	 	
 	• 	developments or disputes concerning our intellectual property or other proprietary rights;	
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 	• 	introduction of technological innovations or new commercial products by us or our competitors;	
 	 	 	
 	• 	issues in manufacturing our drug candidates or drugs;	
 	 	 	
 	• 	market acceptance of our drugs;	
 	 	 	
 	• 	third-party healthcare reimbursement policies;	
 	 	 	
 	• 	FDA or other United States or foreign regulatory actions affecting us or our industry;	
 	 	 	
 	• 	litigation or public concern about the safety of our drug candidates or drugs; and	
 	 	 	
 	• 	additions or departures of key personnel.	
       These and other external factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management.

If the ownership of our common stock continues to be highly concentrated, it may prevent you and other stockholders from influencing significant corporate decisions and may result in conflicts of interest that could cause our stock price to decline.

       Our executive officers, directors and their affiliates will beneficially own or control approximately                     percent of the outstanding shares of our common stock (after giving effect to the conversion of all outstanding convertible preferred stock and the exercise of all outstanding vested and unvested options and warrants), following the completion of this offering and the private placement. Accordingly, these executive officers, directors and their affiliates, acting as a group, will have substantial influence over the outcome of corporate actions requiring stockholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets or any other significant corporate transactions. These stockholders may also delay or prevent a change of control of us, even if such a change of control would benefit our other stockholders. The significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise.

Future sales of common stock by our existing stockholders may cause our stock price to fall.

       The market price of our common stock could decline as a result of sales by our existing stockholders of shares of common stock in the market after this offering, or the perception that these sales could occur. These sales might also make it more difficult for us to sell equity securities at a time and price that we deem appropriate. The lock-up agreements delivered by our executive officers and directors and substantially all of our stockholders and optionholders provide that Goldman, Sachs & Co., in its sole discretion, may release those parties, at any time or from time to time and without notice, from their obligation not to dispose of shares of common stock for a period of 180 days after the date of this prospectus. Goldman, Sachs & Co. has no pre-established conditions to waiving the terms of the lock-up agreements, and any decision by it to waive those conditions would depend on a number of factors, which may include market conditions, the performance of the common stock in the market and our financial condition at that time. Please see “Shares Eligible for Future Sale.”

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We will have broad discretion in how we use the proceeds of this offering and the private placement, and we may not use these proceeds effectively, which could affect our results of operations and cause our stock price to decline.

       We will have considerable discretion in the application of the net proceeds of this offering and the private placement. We currently intend to use the net proceeds to:
 	 	 	
 	• 	co-fund certain later-stage development activities, if we exercise our option under our strategic alliance with GSK, for either or both of SB-715992 or SB-743921;	

 	• 	continue preclinical activities and conduct clinical development of our drug candidate for the treatment of acute congestive heart failure, CK-1213296;	

 	• 	advance our other research programs;	
 	 	 	
 	• 	scale up our development, sales, marketing and manufacturing operations; and	
 	 	 	
 	• 	in-license technology and acquire or invest in businesses, products or technologies that we believe are complementary to our own.	
       We have not yet finalized the amount of net proceeds that we will use specifically for each of these purposes. We may use the net proceeds for corporate purposes that do not yield a significant return or any return at all for our stockholders.

Evolving regulation of corporate governance and public disclosure may result in additional expenses and continuing uncertainty.

       Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and Nasdaq National Market rules are creating uncertainty for public companies. We are presently evaluating and monitoring developments with respect to new and proposed rules and cannot predict or estimate the amount of the additional costs we may incur or the timing of such costs. These new or changed laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and we may be harmed.

We have never paid dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future.

       We have paid no cash dividends on any of our classes of capital stock to date and we currently intend to retain our future earnings, if any, to fund the development and growth of our businesses. In addition, the terms of existing or any future debts may preclude us from paying these dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

Investors in this offering will pay a much higher price than the book value of our common stock.

       If you purchase common stock in this offering, you will pay more for your shares than the amounts paid by existing stockholders for their shares. You will incur immediate and substantial

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dilution of $7.68 per share, representing the difference between our pro forma net tangible book value per share after giving effect to this offering and an assumed initial public offering price of $12.00. In the past, we issued options and warrants to acquire common stock at prices significantly below the initial public offering price. To the extent these outstanding options or warrants are ultimately exercised, you will sustain further dilution.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

       This prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” contains forward-looking statements.

       Forward-looking statements include, but are not limited to, statements about:
 	 	 	
 	• 	the initiation, progress, timing and completion of preclinical research, development, and clinical trials for our drug candidates and potential drug candidates;	
 	 	 	
 	• 	the time and costs involved in obtaining regulatory approvals;	
 	 	 	
 	• 	delays that may be caused by evolving requirements of regulatory agencies;	
 	 	 	
 	• 	the number of drug candidates we pursue;	
 	 	 	
 	• 	our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others, including the costs involved in filing and prosecuting patent applications and enforcing or defending patent claims;	
 	 	 	
 	• 	our options to co-fund the development of one or both of SB-715992 and SB-743921;	

 	• 	the level of funding we may provide for future drug candidates, including our drug candidate for the treatment of acute congestive heart failure, CK-1213296;	

 	• 	our plans or ability to establish sales, marketing or manufacturing capabilities and to achieve market acceptance for drug candidates;	
 	 	 	
 	• 	our ability to establish, enforce and maintain selected strategic alliances and activities required for commercialization of our drug candidates;	
 	 	 	
 	• 	the acquisition of technologies, products and other business opportunities that require financial commitments;	
 	 	 	
 	• 	our estimates of future performance; and	
 	 	 	
 	• 	our estimates regarding anticipated operating losses, future revenues, if any, from successful development of our drug candidates and commercialization of our potential drugs, capital requirements and our needs for additional financing.	
       These statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks and other factors include those listed under “Risk Factors” and elsewhere in this prospectus. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We do not intend to update any of the forward-looking statements after the date of this prospectus or to conform these statements to actual results. Neither the Private Securities Litigation Reform Act of 1995 nor Section 27A of the Securities Act of 1933 provides any protection for statements made in this prospectus.

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USE OF PROCEEDS

       Our net proceeds from the sale of 5,800,000 shares of common stock in this offering are estimated to be approximately $63.2 million, based on an assumed offering price of $12.00 per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses, which are payable by us. In addition, we will receive approximately $7.0 million of additional proceeds as a result of the private placement to an affiliate of GSK.

       We intend to use the proceeds of this offering and the private placement for general corporate purposes, including to:
 	 	 	
 	• 	co-fund certain later-stage development activities, if we exercise our option under our strategic alliance with GSK, for either or both of SB-715992 or SB-743921;	

 	• 	continue preclinical activities and conduct clinical development of our drug candidate for the treatment of acute congestive heart failure, CK-1213296;	

 	• 	advance our other research programs;	
 	 	 	
 	• 	scale up our development, sales, marketing and manufacturing operations; and	
 	 	 	
 	• 	potentially in-license technology and acquire or invest in businesses, products or technologies that we believe are complementary to our own.	
       Although we periodically engage in preliminary discussions with respect to acquisitions, we are not currently a party to any agreements or commitments and we have no understandings with respect to any acquisitions.

       The amounts and timing of our actual expenditures depend on several factors, including the progress of our research and development efforts and the amount of cash used by our operations. We have not determined the amount or timing of the expenditures in the areas listed above. Pending their use, we intend to invest the net proceeds in short-term, investment-grade, interest-bearing instruments.

DIVIDEND POLICY

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

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CAPITALIZATION

       The following table sets forth our capitalization as of December 31, 2003:
 	 	 	
 	• 	on an actual basis;	

 	• 	on a pro forma basis, reflecting the conversion of all of our preferred stock into an aggregate of 17,103,982 shares of common stock immediately upon the closing of this offering; and	

 	 	 	
 	• 	on a pro forma as adjusted basis, to give effect to:	

 	 	 	
 	 	 	
 	• 	our sale of 5,800,000 shares of common stock in this offering at an assumed initial public offering price of $12.00 per share, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, and;	

 	 	 	
 	• 	our sale of 583,333 shares of common stock to GSK for cash proceeds of $7 million, at a purchase price equal to the assumed initial public offering price of $12.00 per share.	
 	 	 	
       You should read this table in conjunction with the sections of this prospectus entitled “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with our financial statements and related notes.

 	 	As of	 	Pro	
 	 	December 31, 2003	 	Forma	

	 	As	
 	 	Actual	 	Pro Forma	 	Adjusted	

	 	

	 	

	
 	 	 	
 	 	(in thousands)	
Long-term portion of equipment financing lines	 	$	8,075	 	 	$	8,075	 	 	$	8,075	 	

	 	 	 	

	 	 	 	

	 	
Convertible preferred stock, $0.001 par value, 37,300,000 shares authorized, 34,124,308 shares issued and outstanding, actual, no shares issued and outstanding pro forma and pro forma as adjusted	 	 	133,172	 	 	 	—	 	 	 	 	 	
Stockholders’ equity (deficit):	 	 	 	 	 	 	 	 	 	 	 	 	
 	Common stock, $0.001 par value, 61,500,000 shares authorized, 2,307,258 shares issued and outstanding, actual; 19,411,240 shares outstanding pro forma and 25,794,573 shares outstanding pro forma as adjusted	 	 	2	 	 	 	19	 	 	 	26	 	
Additional paid-in capital	 	 	5,646	 	 	 	138,801	 	 	 	208,997	 	
Deferred stock-based compensation	 	 	(3,651	)	 	 	(3,651	)	 	 	(3,651	)	
Accumulated other comprehensive income	 	 	46	 	 	 	46	 	 	 	46	 	
Deficit accumulated during the development stage	 	 	(94,074	)	 	 	(94,074	)	 	 	(94,074	)	

	 	 	 	

	 	 	 	

	 	
 	Total stockholders’ equity (deficit)	 	 	(92,031	)	 	 	41,141	 	 	 	111,344	 	

	 	 	 	

	 	 	 	

	 	
Total capitalization	 	$	49,216	 	 	$	49,216	 	 	$	119,419	 	

	 	 	 	

	 	 	 	

	 	

       The actual number of shares of common stock shown as issued and outstanding in the table above excludes:

 	• 	2,244,400 shares subject to stock options outstanding as of December 31, 2003;	

 	 	 	
 	• 	390,655 shares reserved for issuance under our 1997 Stock Option/ Stock Issuance Plan as of December 31, 2003; and	

 	 	 	
 	• 	100,000 shares of common stock issuable upon the exercise of warrants to purchase common stock and 181,983 shares of preferred stock issuable upon the exercise of warrants to purchase preferred stock (which will become exercisable for 90,991 shares of common stock upon consummation of this offering) outstanding at December 31, 2003,	

 	 	 	
 	• 	4,200,000 shares of common stock to be reserved for future issuance under our 2004 Equity Incentive Plan and our 2004 Employee Stock Purchase Plan.	
 	 	 	
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DILUTION

       If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share of common stock upon the completion of this offering and the private placement. Our historical net tangible book value as of December 31, 2003 was approximately $(92.0) million or $(39.89) per share. Pro forma net tangible book value per share represents our total tangible assets less total liabilities divided by the pro forma total number of shares of common stock outstanding after giving effect to the automatic conversion of all shares of our outstanding convertible preferred stock. Dilution in pro forma as adjusted net tangible book value per share represents the difference between the amount per share paid by purchasers of common stock in this offering and the pro forma as adjusted net tangible book value per share of common stock immediately after the closing of this offering.

       After giving effect to the sale of the shares of common stock at an assumed initial public offering price of $12.00 per share and after deducting underwriting discounts and commissions and estimated offering expenses payable by us and our sale of 583,333 shares of common stock to an affiliate of GSK for cash proceeds of $7 million at a purchase price equal to the assumed initial public offering price of $12.00 per share, our pro forma as adjusted net tangible book value as of December 31, 2003 would have been approximately $111.3 million, or $4.32 per share of common stock. This represents an immediate increase in pro forma net tangible book value of $2.20 per share to existing stockholders and an immediate dilution of $7.68 per share to new investors purchasing shares of common stock in this offering at the initial offering price.

       The following table illustrates this dilution on a per share basis:
 	 	 	 	 	 	 	 	 	
Assumed initial public offering price per share	 	 	 	 	 	$	12.00	 	
Historical net tangible book value per share as of December 31, 2003	 	$	(39.89	)	 	 	 	 	
Increase per share due to assumed conversion of all shares of convertible preferred stock	 	 	42.01	 	 	 	 	 	

	 	 	 	 	 	
Pro forma net tangible book value per share as of December 31, 2003	 	 	2.12	 	 	 	 	 	
Increase per share attributable to new investors	 	 	2.20	 	 	 	 	 	

	 	 	 	 	 	
Pro forma as adjusted net tangible book value per share after this offering and the private placement	 	 	 	 	 	 	4.32	 	

	 	
Dilution per share to new investors in this offering	 	 	 	 	 	$	7.68	 	

	 	

       The following table summarizes as of December 31, 2003 the number of shares of our common stock purchased from us, the total consideration paid to us, and the average price per share paid to us by existing stockholders and new investors purchasing shares of our common stock in this offering. The table assumes an initial public offering and private placement price of $12.00 per share, before deducting underwriting discounts and commissions and estimated offering expenses payable by us:

 	 	Shares Purchased	 	Total Consideration	 	Average	

	 	

	 	Price Per	
 	 	Number	 	Percent	 	Amount	 	Percent	 	Share	

	 	

	 	

	 	

	 	

	
Existing stockholders	 	 	19,411,240	 	 	 	75	%	 	$	135,064,385	 	 	 	64	%	 	$	6.96	 	
New investors	 	 	6,383,333	 	 	 	25	 	 	 	76,600,600	 	 	 	36	 	 	 	12.00	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Total	 	 	25,794,573	 	 	 	100	%	 	$	211,664,385	 	 	 	100	%	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	

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       The above discussion and tables are based on 2,307,258 shares of common stock issued and outstanding as of December 31, 2003 and excludes:

 	• 	2,244,400 shares subject to stock options outstanding as of December 31, 2003;	

 	 	 	
 	• 	390,655 shares reserved for issuance under our 1997 Stock Option/ Stock Issuance Plan as of December 31, 2003; and	

 	 	 	
 	• 	100,000 shares of common stock issuable upon the exercise of warrants to purchase common stock and 181,983 shares of preferred stock issuable upon the exercise of warrants to purchase preferred stock (which will become exercisable for 90,991 shares of common stock upon consummation of this offering) outstanding at December 31, 2003.	

 	 	 	
 	• 	4,200,000 shares of common stock to be reserved for future issuance under our 2004 Equity Incentive Plan and our 2004 Employee Stock Purchase Plan.	

       Assuming the exercise in full of all options and warrants outstanding as of December 31, 2003, the number of shares purchased by existing stockholders would be increased by 2,435,391 shares to 21,846,631 shares, total consideration paid by them would be increased by approximately $2,828,000 to $137,892,000 and the average price per share paid by them would be decreased by $0.65 per share to $6.31 per share.

       The exercise of options and warrants, all of which have an exercise price less than the assumed initial public offering price would increase the dilution to new investors an additional $0.28 per share, to $7.96 per share.

       If the underwriters exercise their over-allotment option in full, the percentage of shares of common stock held by existing stockholders will be approximately 75% of the total number of shares of our common stock outstanding after this offering, and the number of shares held by new investors will be increased to 7,253,333, or approximately 25% of the total number of shares of our common stock outstanding after this offering.

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SELECTED FINANCIAL DATA

      The following selected financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” following this section and our financial statements and related notes included in the back of this prospectus. See also Note 10 to our financial statements for information regarding pro forma common shares outstanding and pro forma net loss per share. The selected financial data for the years ended December 31, 1999 and 2000 and as of December 31, 1999, 2000 and 2001 are derived from our audited financial statements not included in this prospectus. The selected financial data for the years ended December 31, 2001, 2002 and 2003 and as of December 31, 2002 and 2003 are derived from our audited financial statements included in this prospectus. The historical results are not necessarily indicative of results to be expected in any future period.

 	 	Year Ended December 31,	

	
 	 	1999	 	2000	 	2001	 	2002	 	2003	

	 	

	 	

	 	

	 	

	
Statement of Operations Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development revenues from related party	 	$	—	 	 	$	—	 	 	$	6,764	 	 	$	8,470	 	 	$	7,703	 	
 	Research and development and grant revenues	 	 	—	 	 	 	—	 	 	 	302	 	 	 	126	 	 	 	74	 	
 	License revenues from related party	 	 	—	 	 	 	—	 	 	 	1,400	 	 	 	2,800	 	 	 	2,800	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	Total revenues	 	 	—	 	 	 	—	 	 	 	8,466	 	 	 	11,396	 	 	 	10,577	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development	 	 	6,103	 	 	 	10,403	 	 	 	20,961	 	 	 	28,424	 	 	 	34,004	 	
 	General and administrative	 	 	1,515	 	 	 	3,390	 	 	 	5,897	 	 	 	6,953	 	 	 	9,163	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	Total operating expenses	 	 	7,618	 	 	 	13,793	 	 	 	26,858	 	 	 	35,377	 	 	 	43,167	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Operating loss	 	 	(7,618	)	 	 	(13,793	)	 	 	(18,392	)	 	 	(23,981	)	 	 	(32,590	)	
Interest and other income	 	 	378	 	 	 	902	 	 	 	3,232	 	 	 	2,232	 	 	 	2,395	 	
Interest and other expense	 	 	(101	)	 	 	(188	)	 	 	(714	)	 	 	(1,331	)	 	 	(2,490	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net loss	 	$	(7,341	)	 	$	(13,079	)	 	$	(15,874	)	 	$	(23,080	)	 	$	(32,685	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net loss per common share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted	 	$	(9.44	)	 	$	(13.55	)	 	$	(11.18	)	 	$	(13.25	)	 	$	(17.10	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Weighted average shares used in computing net loss per common share, basic and diluted	 	 	778	 	 	 	965	 	 	 	1,420	 	 	 	1,742	 	 	 	1,911	 	
Pro forma net loss per common share, basic and diluted (unaudited)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	(1.81	)	
Weighted average shares used in computing pro forma net loss per common share, basic and diluted (unaudited)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	18,029	 	

 	 	 	
 	 	As of December 31,	

	
 	 	1999	 	2000	 	2001	 	2002	 	2003	

	 	

	 	

	 	

	 	

	
Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash, cash equivalents, short-term and long-term investments	 	$	14,823	 	 	$	56,787	 	 	$	62,314	 	 	$	30,461	 	 	$	43,045	 	
Restricted cash	 	 	225	 	 	 	225	 	 	 	6,236	 	 	 	13,106	 	 	 	7,199	 	
Working capital	 	 	12,888	 	 	 	42,781	 	 	 	43,887	 	 	 	18,571	 	 	 	27,619	 	
Total assets	 	 	17,644	 	 	 	61,038	 	 	 	79,019	 	 	 	56,168	 	 	 	62,873	 	
Long-term portion of equipment financing lines	 	 	892	 	 	 	1,079	 	 	 	3,525	 	 	 	7,077	 	 	 	8,075	 	
Deficit accumulated during the development stage	 	 	(9,356	)	 	 	(22,435	)	 	 	(38,309	)	 	 	(61,389	)	 	 	(94,074	)	
Total convertible preferred stock	 	 	24,604	 	 	 	79,462	 	 	 	93,304	 	 	 	93,304	 	 	 	133,172	 	
Total stockholders’ deficit	 	$	(9,121	)	 	$	(21,818	)	 	$	(37,352	)	 	$	(60,588	)	 	$	(92,031	)	

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

      You should read the following discussion of our financial condition and results of operations in conjunction with the financial statements and the notes to those statements included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under the section entitled “Risk Factors” and elsewhere in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

       We are a leading biopharmaceutical company focused on the discovery, development and commercialization of novel small molecule drugs specifically targeting the cytoskeleton. Employing our cell biology driven approach and proprietary technologies we have enhanced the speed, efficiency and yield of our drug discovery and development process. We have two drug candidates for the treatment of cancer, one which is in Phase II clinical trials and the other which is expected to enter Phase I clinical trials in early 2004. We are also pursuing CK-1213296 as a drug candidate for the treatment of acute congestive heart failure and we expect to file an IND and initiate clinical trials for that compound in the second half of 2004. In addition, we are pursuing more than ten research programs addressing a number of therapeutic areas.

       Since our inception in August 1997, we have incurred significant net losses. As of December 31, 2003, we had an accumulated deficit of $94.1 million. We expect to incur substantial and increasing losses for the next several years as:
 	 	 	
 	• 	one or both of SB-715992 and SB-743921 enter later-stage development and commercialization, if we exercise our options to co-fund the development of, and co-promote, these drug candidates under our strategic alliance with GSK;	

 	• 	we advance CK-1213296 for the treatment of acute congestive heart failure and other drug candidates through clinical trials;	

 	• 	we expand our research programs and further develop our proprietary drug discovery technologies; and	
 	 	 	
 	• 	if we elect to fund development or commercialization of any drug candidate.	
We intend to pursue selective strategic alliances to enable us to maintain financial and operational flexibility.

       A Phase II clinical trial program for SB-715992 for the treatment of cancer commenced in the fourth quarter of 2003. We anticipate that this Phase II program will be completed in 2005. A Phase III clinical trial program will then be initiated. We expect that it will take several years before we can commercialize SB-715992. Accordingly, we cannot reasonably estimate when and to what extent SB-715992 will generate revenues or material net cash flows, which may vary widely depending on numerous factors, including the effectiveness and safety profile of the drug, market acceptance, and then prevailing reimbursement policies, competition and other market conditions. GSK funds all research and development costs associated with SB-715992 pursuant to our strategic alliance. If we exercise our option to co-fund certain later stage development activities associated with SB-715992, our expenditures relating to research and development of this drug candidate will increase significantly.

       We expect that a Phase I clinical trial for SB-743921 will commence in early 2004. The clinical trial program for SB-743921 will proceed for several years, and we will not be in a position to generate any revenues or material net cash flows from the drug candidate until the program is successfully completed, regulatory approval is achieved and a drug is commercialized. SB-743921 is at too early a stage of development for us to predict when this may occur. GSK funds all research

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and development costs associated with SB-743921. If we exercise our option to co-fund certain later-stage development activities associated with SB-743921, our expenditures relating to research and development of this drug candidate will increase significantly.

       We plan to file an IND and initiate Phase I clinical trials for CK-1213296 in the second half of 2004. As with our other drug candidates, CK-1213296 is at too early a stage of development for us to predict when we will be in a position to generate any revenues or material net cash flows from the drug candidate. We currently fund all research and development costs associated with CK-1213296. For the years ended December 31, 2001, 2002, and 2003 we incurred costs of approximately $6.4 million, $8.8 million, and $11.4 million, respectively, for research and development activities relating to our congestive heart failure program that gave rise to CK-1213296. We anticipate that our expenditures relating to research and development of CK-1213296 will increase significantly as we advance this drug candidate into clinical development.

       The successful development of our drug candidates is highly uncertain. We cannot estimate with certainty or know the exact nature, timing and estimated costs of the efforts necessary to complete the development of our drug candidates or the date of completion of these development efforts. We cannot estimate with certainty any of the foregoing due to the numerous risks and uncertainties associated with developing our drug candidates, including:

 	• 	the uncertainty of the timing of completion of patient registration in our pivotal Phase III clinical trials;	

 	 	 	
 	• 	the possibility of delays in the collection of clinical trial data and the uncertainty of the timing of the interim analyses of our pivotal Phase III clinical trials;	

 	 	 	
 	• 	the uncertainty of clinical trial results;	

 	 	 	
 	• 	extensive governmental regulation, both foreign and domestic, for approval of new therapies; and	

 	 	 	
 	• 	the uncertainty related to the completion of construction and qualification of a commercial scale manufacturing facility.	

       If we fail to complete the development of our drug candidates in a timely manner, it could have a material adverse effect on our operations, financial position and liquidity. In addition, any failure by us to obtain, or any delay in obtaining, regulatory approvals could have a material adverse effect on our results of operations. A further discussion of the risks and uncertainties associated with completing our projects on schedule, or at all, and certain consequences of failing to do so are set forth in the risk factors entitled  “We have never generated, and may never generate, revenues from commercial sales of our drugs and we may not have drugs to market for several years, if ever,” “Clinical trials may fail to demonstrate the safety and efficiency of our drug candidates, which could prevent or significantly delay completion of clinical development and regulatory approval”  and  “Clinical trials are expensive, time consuming and subject to delay,”  as well as other risk factors.

       To date, we have funded our operations primarily through the sale of equity securities, non-equity payments from GSK, capital lease financings, interest on investments and government grants. We received net proceeds from the sale of equity securities of $39.9 million in 2003, $13.8 million in 2001, $54.9 million in 2000, $19.3 million in 1999 and $5.3 million in 1998. Under our strategic alliance with GSK, GSK has made a $14.0 million upfront cash payment and an initial $14.0 million investment in our equity. GSK has also committed to reimburse FTEs performing research in connection with the strategic alliance and to make additional milestone payments and pay royalties based on product sales. As of December 31, 2003, we have received $17.2 million in FTE reimbursement and $3.2 million in milestone payments from GSK. We received $2.0 million, $6.4 million, $3.5 million, $0.6 million and $1.3 million under equipment financing arrangements in the years ending December 31, 2003, 2002, 2001, 2000, and 1999, respectively. Interest earned on investments in the years ending December 31, 2003, 2002, 2001, 2000 and 1999 was $2.4 million,

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$2.2 million, $3.1 million, $0.8 million and $0.3 million, respectively. Grant revenues were $0.3 million and $0.1 million in 2001 and 2002, respectively.

       GSK has also committed to reimburse FTEs through the end of the five-year research term of the strategic alliance, and to make additional payments upon the achievement of certain precommercialization milestones. GSK has agreed to fund worldwide development and commercialization of drug candidates arising from our strategic alliance. We will earn royalties from sales of any resulting drugs. We retain a product-by-product option to co-fund certain later-stage development activities, thereby potentially increasing our royalties and affording co-promotion rights in North America. In the event we exercise our co-promotion option, we are entitled to receive reimbursement from GSK for certain sales force costs we incur in support of our commercial activities.

Revenues

       Our current revenue sources are limited, and we do not expect to generate any direct revenue from product sales for several years. We currently recognize revenues from our strategic alliance with GSK for contract research activities, which we record as related expenses are incurred. Charges to GSK are based on negotiated rates which are intended to approximate costs for our FTEs performing research under the strategic alliance and our out-of-pocket expenses. GSK has paid us an upfront licensing fee, which we recognize ratably over the five-year research term of the strategic alliance. We may receive additional payments from GSK upon achieving certain precommercialization milestones. Milestone payments are non-refundable and recognized as revenue when earned, as evidenced by achievement of the specified milestones and the absence of ongoing performance obligations. We record amounts received in advance of performance as deferred revenue. None of the revenues recognized to date are refundable if the relevant research effort is not successful. Because a substantial portion of our revenues for the foreseeable future will depend on achieving research, development and other precommercialization milestones, our results of operations may vary substantially from year to year. In the event, we exercise our co-promotion option, we are entitled to receive reimbursement from GSK for certain sales force costs we incur in support of our commercial activities.

       We expect that ultimately our future revenues will be derived from royalties on sales from drugs licensed to GSK under our strategic alliance and from those licensed to future partners, as well as from direct sales of our drugs. We retain a product-by-product option under our strategic alliance with GSK to co-fund certain later-stage development activities with GSK under our strategic alliance, thereby potentially increasing our royalties and affording co-promotion rights in North America.

Research and Development

       We incur research and development expenses associated with both partnered and unpartnered research activities, as well as the development and expansion of our drug discovery technologies. Research and development expenses relating to our strategic alliance with GSK consist primarily of costs related to research and screening, lead optimization and other activities relating to the identification of compounds for development as mitotic kinesin inhibitors for the treatment of cancer. These costs are reimbursed by GSK on a FTE basis. GSK funds all costs related to preclinical and clinical development of the compounds that are selected for development. Accordingly, we do not currently incur research and development expenses related to the ongoing development of SB-715992 and SB-743921. Under our strategic alliance, we have an option on a product-by-product basis to co-fund certain later-stage development costs for each of these drug candidates. If we exercise an option, our research and development expenses will increase significantly. Research and development expenses related to any development and commercialization activities we elect to fund would consist primarily of employee compensation, supplies and materials, costs for consultants and contract research, facilities costs, and depreciation of equipment. We expect to incur research and development expenses to conduct clinical trials for our drug candidate for the treatment of acute congestive heart failure, CK-1213296, and in connection with our more than ten research programs

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in other diseases, as well as the continued advancement of our PUMA system, Cytometrix technologies and our other existing and future drug discovery technologies.

General and Administrative Expenses

       General and administrative expenses consist primarily of compensation for employees in executive and operational functions, including finance, business development and corporate development. Other significant costs include facilities costs and professional fees for accounting and legal services, including legal services associated with obtaining and maintaining patents. After completion of the offering made by this prospectus, we anticipate incurring increases in general and administrative expenses, such as increased costs for insurance and investor relations associated with operating as a publicly traded company. These increases will also likely include the hiring of additional personnel.

Stock Compensation

       In connection with the grant of stock options to employees and non-employees, we recorded deferred stock-based compensation as a component of stockholders’ deficit. Deferred stock compensation for options granted to employees is the difference between the fair value of our common stock on the date such options were granted and their exercise price. Through 2002, for stock options granted to non-employees, we initially recorded on the date of grant the fair value of the options, estimated using the Black-Scholes valuation model. As the non-employee options become exercisable, we revalue the remaining unvested options, with the change in fair value from period to period represented as a change in the deferred compensation charge. Beginning in 2003, we value and recognize the stock-based compensation expense related to options granted to non-employees as the stock options are earned. We amortize this stock-based compensation as charges to operations over the vesting periods of the options, generally four years.

       We recorded $4.0 million of deferred stock-based compensation and $536,000 of amortization of deferred stock-based compensation related to options granted to employees during the year ended December 31, 2003. We have recorded $736,000 of deferred stock-based compensation for the period from inception through December 31, 2003 related to options granted to non-employees through 2002. We recorded amortization of non-employee deferred compensation of $93,000, $6,000, $232,000 and $555,000 for the years ended December 31, 2001, 2002 and 2003, and for the period from August 5, 1997 (date of inception) through December 31, 2003 respectively. We recorded non-employee stock-based compensation for the year ended December 31, 2003 of $158,000. We expect the remaining $3.7 million to be amortized as follows: $1,122,000 in 2004, $942,000 in 2005, $924,000 in 2006, $413,000 in 2007 and $250,000 in 2008, respectively.

       The amount of non-cash stock-based compensation expense we expect in future periods may decrease if unvested options for which deferred compensation expense has been recorded are subsequently cancelled, or may increase if we make future option grants with exercise prices below the estimated fair market value of our common stock on the date of grant.

Interest and Other Income and Expense

       Interest and other income and expense consists primarily of interest income and interest expense. Interest income is generated primarily from investment of our cash reserves. Interest expense relates generally to the borrowings for capital asset financings.

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Results of Operations

Years ended December 31, 2001, 2002 and 2003

Revenues

       We recorded revenues of $8.5 million, $11.4 million and $10.6 million for the years ended December 31, 2001, 2002 and 2003, respectively. The increase in license revenues from our strategic alliance with GSK, which we formed in June 2001, from $1.4 million for the year ended December 31, 2001 to $2.8 million for each of the years ended December 31, 2002 and 2003 resulted from a full year of revenue recognition in 2002 and 2003 compared to a partial year of revenue recognition in 2001. Research and development and grant revenues of $7.1 million for the year ended December 31, 2001 comprised $3.5 million of reimbursement for FTEs, $2.0 million of milestone revenues, $1.3 million of research funding and $0.3 million of other revenues. Research and development and grant revenues of $8.6 million for the year ended December 31, 2002 comprised $6.7 million of reimbursement for FTEs, $1.0 million of milestone revenues, and $0.9 million of various research related revenues. The increase in FTE reimbursement resulted from a full year of FTE activity in 2002 compared to a partial year of FTE activity in 2001. Research and development and grant revenues of $7.8 million for the year ended December 31, 2003 comprised $7.1 million of reimbursement for FTEs, $0.2 million of milestone revenues, and $0.5 million of various research related expenses. The $0.4 million increase in 2003 compared to 2002 FTE reimbursement resulted from an annual expense index adjustment to the GSK FTE reimbursement effective June 20, 2003 and the initial $0.1 million FTE reimbursement from a newly negotiated collaboration with Astra Zeneca. GSK milestone revenues decreased $0.8 million in 2003 compared to 2002 and various research related expenses also decreased by $0.4 million.

Research and development expenses

       Research and development expenses were $21.0 million for the year ended December 31, 2001 compared with $28.4 million for the year ended December 31, 2002. The increase in research and development expense was primarily due to increased salary and benefit costs of $3.8 million resulting from the hiring of additional research and development personnel and $1.1 million of outsourced contracted services and laboratory consumables. Research and development expenses were $34.0 million for the year ended December 31, 2003, an increase of $5.6 million from the year before. The increase was primarily due to the hiring of additional research and development personnel of $3.2 million and increased spending for contracted services and laboratory consumables of $2.4 million.

       For the years ended December 31, 2001, 2002 and 2003 we incurred costs of approximately $7.9 million, $8.9 million and $6.7 million, respectively, for research and development activities relating to the discovery of mitotic kinesin inhibitors, of which GSK reimbursed $4.8 million, $7.5 million and $7.5 million, respectively. During the same periods, we incurred costs of approximately $6.4 million, $8.8 million and $11.4 million, respectively, for research and development activities relating to our congestive heart failure program, $1.8 million, $3.2 million and $7.2 million, respectively, for all other research programs and $4.9 million, $7.5 million and $8.7 million, respectively, for our PUMA system and Cytometrix technologies.

       Clinical development timelines, likelihood of success and total completion costs vary significantly for each drug candidate and are difficult to estimate. We anticipate that we will make determinations as to which research programs to pursue and how much funding to direct to each program on an ongoing basis in response to the scientific and clinical success of each drug candidate. The lengthy process of seeking regulatory approvals, and the subsequent compliance with applicable regulations, require the expenditure of substantial resources. Any failure by us to obtain, or any delay in obtaining, regulatory approvals could cause our research and development expenditures to increase and, in turn, have a material adverse effect on our results of operations.

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       We expect that research and development expenditures will continue to increase substantially during 2004 and subsequent years if we exercise our options to co-fund certain later-stage research and development activities relating to SB-715992 and SB-743921, advance research and development of CK-1213296 and expand our cardiovascular clinical program, pursue additional clinical programs and build associated development of systems and infrastructure. We expect to expand the scope of our research and development programs in future periods which may result in substantial increases in research and development expenses.

General and administrative expenses

       General and administrative expenses were $5.9 million for the year ended December 31, 2001 compared with $7.0 million for the year ended December 31, 2002. The increase of $1.1 million was primarily due to increased salary and benefit costs resulting from the hiring of additional general and administrative personnel. General and administrative expenses were $9.2 million for the year ended December 31, 2003, an increase of $2.2 million from the year before. The increase was primarily due to $0.3 million increased salary and benefit costs resulting from the hiring of additional general and administrative personnel and $1.4 million increased spending for contracted services.

       We expect that general and administrative expenditures will continue to increase during 2004 and subsequent years due to increasing expenses associated with payroll, operating as a publicly traded company, support of our initial commercialization efforts, business development costs and expanded operational infrastructure. General and administrative expenses consist primarily of the costs of administrative personnel and related facility costs along with legal, accounting and other professional fees.

Interest and Other Income and Expense

       Interest and other income (expense), net was $2.5 million for the year ended December 31, 2001 compared with $0.9 million and $(0.1) million for the years ended December 31, 2002 and 2003, respectively. The decrease in interest and other income (expense), net from the year ended December 31, 2001 as compared with the year ended December 31, 2002, was primarily due to an increase in interest and other expense from $0.7 million in 2001 to $1.3 million in 2002. The increase was due to increased debt as a result of loans entered into for capital lease financings. Interest and other income also decreased from $3.2 million in 2001 to $2.2 million in 2002. The decrease in interest income was due to lower average balances of cash, cash equivalents and investments in 2002. The $1.0 million decrease in interest and other income (expense), net from the year ended December 31, 2002 as compared with the year ended December 31, 2003 was primarily due to an increase in interest and other expenses from $1.3 million in 2002 to $2.5 million in 2003. The increase was due to increased debt as a result of loans entered into for capital lease financings. Interest and other income increased from $2.2 million to $2.4 million in 2003. The increase in interest income was due to higher average balances of cash, cash equivalents and investments in 2003.

Liquidity and Capital Resources

       Our cash, cash equivalents and investments totaled $43.0 million, and our restricted cash totaled $7.2 million at December 31, 2003. From August 5, 1997, date of inception, through December 31, 2003, we funded our operations through the sale of equity securities, non-equity payments from GSK, equipment financings, government grants and interest earned on investments. We received net proceeds of $39.9 million, $13.8 million, $54.9 million, $19.3 million, and $5.3 million from the sale of equity securities in 2003, 2001, 2000, 1999, and 1998, respectively. As of December 31, 2003, we have received $36.9 million in non-equity payments from GSK. We have received $2.0 million, $6.4 million, $3.5 million, $0.6 million, and $1.3 million under equipment financing arrangements in 2003, 2002, 2001, 2000, and 1999, respectively. Grant revenues were $0.3 million and $0.1 million in 2001 and 2002, respectively. Interest earned on investments in the

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years ending December 31, 2003, 2002, 2001, 2000 and 1999 was $2.4 million, $2.2 million, $3.1 million, $0.8 million, and $0.3 million, respectively.

       Net cash used in operating activities was $1.8 million, $22.3 million and $30.5 million for the years ended December 31, 2001, 2002 and 2003, respectively, and resulted primarily from net losses of $15.9 million, $23.1 million and $32.7 million, respectively, adjusted for non-cash depreciation and amortization and stock-based compensation expenses and changes in accounts receivable, accounts payable and accrued liabilities balances. In 2001, cash used in operating activities was significantly decreased by the receipt of the $14.0 million license fee from GSK, which is being recognized as revenue ratably over the five-year research term of the strategic alliance.

       Related party accounts receivable decreased $1.0 million from 2001 to 2002. This decrease was primarily due to a GSK clinical expense reimbursement payment of $0.9 million received in 2002.

       Accrued liabilities increased $1.2 million from 2001 to 2002 due to a $1.0 million increase in general accruals and a $0.2 million increase in the PTO accrual. This 2002 increase was offset by the $1.2 million decrease in accounts payable from 2001 to 2002. Accrued liabilities increased $0.8 million from 2002 to 2003 due to additional consumable expense and outside professional services. Accounts payable increased $0.5 million from 2002 to 2003 due to increased legal and patent expense.

       Net cash used in investing activities of $23.5 million and $15.1 million for the years ended December 31, 2001 and 2003, respectively was primarily used to fund our purchases of investments and to a lesser extent, to fund purchases of property and equipment. Net cash provided by investing activities was $22.6 million for the year ended December 31, 2002 as a result of sales and maturities of investments to meet liquidity needs.

       Net cash provided by financing activities was $17.0 million, $4.9 million and $40.2 million for the years ended December 31, 2001, 2002 and 2003, respectively. The net cash provided by financing activities was primarily attributable to the sale of preferred stock which generated $13.8 million in 2001 and $39.9 million in 2003.

       As of December 31, 2003, future minimum payments under lease obligations and equipment financing lines are as follows (in thousands):
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Within	 	One to three	 	Four to five	 	After five	 	 	
 	 	one year	 	years	 	years	 	years	 	Total	

	 	

	 	

	 	

	 	

	
Operating leases	 	$	1,689	 	 	$	3,208	 	 	$	3,168	 	 	$	7,128	 	 	$	15,193	 	
Equipment financing line	 	 	2,008	 	 	 	3,950	 	 	 	4,125	 	 	 	—	 	 	 	10,083	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Total	 	$	3,697	 	 	$	7,158	 	 	$	7,293	 	 	$	7,128	 	 	$	25,276	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	

       Our long-term commitments under operating leases shown above consist of payments relating to our facility lease in South San Francisco, California, which expires in 2013. We have investigated additional office space expansion opportunities to support our administrative, research and development requirements beyond the year 2004 as we expect that by executing our strategy, we will require additional space. As of this date, we have made no formal commitments or plans to access any additional lease space.

       We expect to incur substantial costs as we continue to expand our research programs and related research and development activities. Under the terms of our strategic alliance with GSK, we have options to co-fund certain later-stage development activities for SB-715992 and SB-743921. If we exercise an option, our research and development expenses will increase significantly. Research and development expenses for our unpartnered drug discovery programs consist primarily of employee compensation, supplies and materials, costs for consultants and contract research, facilities costs and depreciation of equipment. We expect to incur significant research and

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development expenses to complete Phase I and subsequent clinical trials for our drug candidate for the treatment of acute congestive heart failure, CK-1213296, to advance our more than ten research programs in multiple therapeutic areas and to develop our PUMA system, Cytometrix technologies and other proprietary drug discovery technologies.

       Our future capital uses and requirements depend on numerous forward-looking factors. These factors include but are not limited to the following:
 	 	 	
 	• 	the initiation, progress, timing and completion of preclinical research, development, and clinical trials for our drug candidates and potential drug candidates;	
 	 	 	
 	• 	the time and costs involved in obtaining regulatory approvals;	
 	 	 	
 	• 	delays that may be caused by evolving requirements of regulatory agencies;	
 	 	 	
 	• 	the number of drug candidates we pursue;	
 	 	 	
 	• 	the costs involved in filing and prosecuting patent applications and enforcing or defending patent claims;	
 	 	 	
 	• 	our options to co-fund the development of one or both of SB-715992 and SB-743921;	

 	• 	the level of funding that we may provide for other current or future drug candidates, including our drug candidate for the treatment of acute congestive heart failure, CK-1213296;	

 	• 	our plans or ability to establish sales, marketing or manufacturing capabilities and to achieve market acceptance for potential drugs;	
 	 	 	
 	• 	our ability to establish, enforce and maintain selected strategic alliances and activities required for commercialization of our potential drugs;	
 	 	 	
 	• 	the acquisition of technologies, products and other business opportunities that require financial commitments; and	
 	 	 	
 	• 	our revenues, if any, from successful development of our drug candidates and commercialization of potential drugs.	

       We believe that the net proceeds of this offering and the private placement, our existing cash resources, future payments from GSK and AstraZeneca, proceeds from equipment financings and interest earned on investments will be sufficient to meet our projected operating requirements for at least the next 24 months. If, at any time, our prospects for internally financing our research programs decline, we may decide to reduce research and development expenses by delaying, discontinuing or reducing our funding of development of one or more drug candidates. Alternatively, we might raise funds through public or private financings, strategic relationships or other arrangements. We cannot assure you that the funding, if needed, will be available on attractive terms, or at all. Furthermore, any additional equity financing may be dilutive to stockholders and debt financing, if available, may involve restrictive covenants. Similarly, financing obtained through future co-development arrangements may require us to forego certain commercial rights to future drug candidates. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategy.

       As of December 31, 2001, 2002 and 2003, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. Therefore, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships. We do not have relationships or transactions with persons or entities that derive benefits from their non-independent relationship with us or our related parties.

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Disclosure about Market Risk

       Our exposure to market risk is limited to interest income sensitivity, which is affected by changes in the general level of United States interest rates, particularly because the majority of our investments are in short-term debt securities. The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive without significantly increasing risk. To minimize risk, we maintain our portfolio of cash, cash equivalents, short-term and long-term, and restricted investments in a variety of interest-bearing instruments, including United States government and agency securities, high-grade United States corporate bonds, commercial paper and money market funds. The investment portfolio is subject to interest rate risk and will fall in value in the event market interest rates increase. Due to the short duration of our investment portfolio, we believe an immediate 10% change in interest rates would not be material to our financial condition or results of operations. We do not have any foreign currency or derivative financial instruments.

Critical Accounting Policies

       Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. We review our estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in the notes to our financial statements included in this prospectus, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements.

Revenue Recognition

       We recognize revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin, or SAB, No. 101, Revenue Recognition in Financial Statements, as amended by SAB Nos. 101A and 101B. SAB No. 101 requires that four basic criteria must be met before revenue can be recognized: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the fee is fixed and determinable; and collectibility is reasonably assured. Determination of whether persuasive evidence of an arrangement exists and whether delivery has occurred or services have been rendered are based on management’s judgments regarding the fixed nature of the fee charged for research performed and milestones met, and the collectibility of those fees. Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.

       Research and development revenues, which are earned under agreements with third parties for contract research and development activities, are recorded as the related expenses are incurred. Charges to the third parties are based upon negotiated rates for our FTEs and actual out-of-pocket costs. Rates for FTEs are intended to approximate our anticipated costs. Milestone payments are non-refundable and recognized as revenue when earned, as evidenced by achievement of the specified milestones and the absence of ongoing performance obligations. Any amounts received in advance of performance are recorded as deferred revenue. None of the revenues recognized to date are refundable if the relevant research effort is not successful.

       Grant revenues are recorded as research is performed. Grant revenues are not refundable.

       License revenues received in connection with strategic alliance agreements are deferred and recognized on a straight-line basis over the term of the agreement.

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Stock-Based Compensation

       We account for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees,” Statement of Financial Accounting Standards No. 123 (“SFAS No. 123”), “Accounting for Stock-Based Compensation” and complies with the disclosure requirements of Statement of Financial Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation and Disclosure an Amendment of FASB Statement No. 123.” Under APB 25, compensation expense is based on the difference, if any, on the date of grant, between the estimated fair value of our common stock and the exercise price. SFAS No. 123 defines a “fair value” based method of accounting for an employee stock option or similar equity investment.

       We account for equity instruments issued to non-employees in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force (“EITF”) Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods, or Services.”

Recent Accounting Pronouncements

       In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.” FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. In December 2003, the FASB issued FIN 46R, a revision to FIN 46. FIN 46R provides a broad deferral of the latest date by which all public entities must apply FIN 46 to certain variable interest entities to the first reporting period ending after March 15, 2004. We do not expect the adoption of FIN 46 to have a material impact upon our financial position, cash flows or results of operations.

       In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability or an asset in some circumstances. Many of those instruments were previously classified as equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of SFAS No. 150 and still existing at the beginning of the interim period of adoption. While the effective date of certain elements of SFAS No. 150 has been deferred, we do not expect the adoption of SFAS No. 150 to have a material impact upon our financial position, cash flows or results of operations.

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BUSINESS

Overview

       We are a leading biopharmaceutical company focused on the discovery, development and commercialization of novel small molecule drugs that specifically target the cytoskeleton. A number of commonly used drugs and a growing body of research validate the role the cytoskeleton plays in a wide array of human diseases. Our focus on the cytoskeleton enables us to develop novel and potentially safer and more effective drugs for the treatment of these diseases. We believe that our cell biology driven approach and proprietary technologies enhance the speed, efficiency and yield of our drug discovery and development process. Our unique approach has produced two cancer drug candidates, an acute congestive heart failure drug candidate, and more than ten other research programs addressing a variety of other disease areas including fungal diseases, inflammatory diseases, high blood pressure and asthma. Our most advanced cancer drug candidate, SB-715992, is the subject of a broad Phase II clinical trials program, being conducted by our partner GSK, designed to evaluate effectiveness in multiple tumor types. An IND was filed with the FDA in 2003 for SB-743921, our second cancer drug candidate being developed by GSK, which we expect will enter Phase I clinical trials in early 2004. In addition, we expect to file an IND and initiate Phase I clinical trials for our drug candidate, CK-1213296, to treat acute congestive heart failure in the second half of 2004.

       Because the cytoskeleton plays a fundamental role in the cell proliferation process, we focused our initial research and development activities on cancer, a disease of unregulated cell proliferation. Our most advanced cancer drug candidate, SB-715992, is a small molecule compound that interferes with cell proliferation and promotes cancer cell death by specifically inhibiting the function of KSP. KSP is a cytoskeletal protein that is essential for cell proliferation, a process which when unregulated, results in tumor growth. Unlike many commonly used cancer drugs, such as Taxol and Taxotere which also impact cytoskeletal proteins, SB-715992 inhibits only cell proliferation and does not interfere with other cell functions. As a result, we believe SB-715992 may exhibit a lower incidence of toxicities. In addition, our preclinical studies indicate that SB-715992 may be effective in treating a wider variety of tumors than existing cancer drugs. SB-715992 is being developed by GSK under our strategic alliance. A Phase II clinical trial for SB-715992 in non-small cell lung cancer began in late 2003. A series of parallel Phase II monotherapy clinical trials and Phase Ib combination therapy clinical trials are scheduled to begin throughout 2004. These additional trials are expected to evaluate SB-715992 in multiple tumor types, including colorectal, breast and ovarian cancers. In addition, the NCI plans to sponsor additional Phase I and Phase II clinical trials in 2004 to evaluate SB-715992 in other tumor types and other dosing regimens.

       Our other cancer drug candidate, SB-743921, is a structurally distinct small molecule compound that also modulates cell proliferation by specifically inhibiting KSP. Like SB-715992, SB-743921 is being developed by GSK under our strategic alliance. We expect that Phase I clinical trials evaluating the safety and pharmacokinetics of SB-743921 will begin in early 2004. The concurrent development of both drug candidates is key to our strategy of maximizing the potential for the development of a commercially viable cancer drug. We expect other drug candidates targeting other related cytoskeletal proteins essential for cell proliferation will emerge from our strategic alliance with GSK. In addition, we are independently pursuing compounds directed at other cytoskeletal protein pathways, unrelated to cell proliferation, in our other research programs that may also have application for the treatment of cancer.

       Our focus on the cytoskeleton enables us to leverage research and development investments made in our cancer program for our programs in other diseases. For example, we have extended our understanding of the biology of the cytoskeleton to cardiovascular disease. The cytoskeleton plays a pivotal role in cardiac muscle contraction and has been linked to the origins of congestive heart failure, a disease of impaired cardiac function. We believe that by targeting cytoskeletal proteins and multi-protein systems that are responsible for cardiac muscle contraction, we will be able to develop

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effective and safe drugs for the treatment of acute and chronic congestive heart failure. We expect to file an IND and initiate a Phase I clinical trial for our drug candidate for the treatment of acute congestive heart failure, CK-1213296, in the second half of 2004. Our drug candidate specifically targets and activates cardiac myosin, a cytoskeletal protein essential for cardiac muscle contraction. In animal models, compounds arising from this program improve cardiac contractility without the potentially life-threatening effects on heart rhythm, heart rate and blood pressure often exhibited by existing congestive heart failure drugs.

       We have more than ten other research programs similarly focused on diseases in which we believe the cytoskeleton plays a significant role. For example, in infectious diseases, we are conducting chemical lead optimization activities for compounds that disrupt a specific cytoskeletal protein essential to fungal cell proliferation. These compounds have demonstrated improved survival in an animal model of fungal infection and, because they are directed against a novel cytoskeletal protein target, we believe they may overcome the increasing clinical resistance seen with existing antifungal drugs. In addition, we are evaluating specific inhibitors of other cytoskeletal proteins implicated in fungal cell proliferation and virulence that may also result in potential drugs for fungal infections. We also have a research program designed to find anti-inflammatory drug candidates by targeting specific cytoskeletal proteins involved in cell movement. We have identified compounds that inhibit the function of a key cytoskeletal protein involved in the migration of inflammatory cells into diseased tissues. Furthermore, we have identified, characterized and are now seeking to chemically optimize other compounds that target another cytoskeletal multi-protein system and that inhibit smooth muscle contractility. Our objective for this research program is to discover potential drug candidates for high blood pressure, asthma and other disease conditions.

       All of our compounds in research and development have been discovered internally using our cell biology driven approach and proprietary automated technologies. This approach, which we have applied specifically to the cytoskeleton, enables increased speed, efficiency and yield not only in our drug discovery process, but also potentially in clinical development. We focus on developing a detailed understanding of validated protein pathways and multi-protein systems to allow our assay systems to more correctly represent the natural environment of a human cell. This approach differs from the conventional practice of concentrating on individual protein targets assayed in a system that may not adequately represent the natural functional environment that is relevant to disease. As a result, we can identify multiple points of biological intervention to modulate a specific protein pathway or multi-protein system. Our discovery activities are thus directed at particular proteins that may be better targets for the development of potentially safer and more effective drugs.

       Our PUMA system and Cytometrix technologies enable early identification and automated prioritization of compounds that are highly selective for their intended protein targets without other cellular effects, and are thereby less likely to give rise to clinical side effects. Our PUMA system identifies compounds within our small molecule library that are likely to target specific cytoskeletal proteins. Our Cytometrix technologies enable us to simultaneously analyze and quantify hundreds of effects of each compound on a cell-by-cell basis. The integrated use of these technologies enables us to efficiently focus our efforts towards those compounds directed at novel cytoskeletal protein targets that are more likely to yield attractive drug candidates. We have advanced our Cytometrix technologies through technical development activities conducted with each of Eisai Research Institute, Novartis Pharma AG, Tularik Inc. and Vertex Pharmaceuticals, Inc.

       We selectively seek partners and strategic alliances that enable us to maintain financial and operational flexibility while retaining significant economic and commercial rights to our drug candidates. For example, under our strategic alliance, GSK has made a $14.0 million upfront cash payment, an initial $14.0 million equity investment and has committed to reimburse our FTEs performing research in connection with the strategic alliance. As of December 31, 2003, we have received FTE reimbursement of $17.2 million, and in the future we expect to receive additional FTE reimbursement. In addition, we have received, through December 31, 2003, $3.2 million in precommercialization milestone payments from GSK, and in the future we could receive significant

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precommercialization milestone payments and royalties on product sales. GSK is responsible for worldwide development of drug candidates and commercialization of drugs arising from the strategic alliance but we retain a product-by-product option to co-fund certain later-stage development activities in exchange for a higher royalty rate and a further option to secure co-promotion rights in North America. In the event we exercise a co-promotion option, we are entitled to receive reimbursement from GSK for certain sales force costs that we may incur in support of our commercial activities. In addition to our strategic alliance with GSK, our joint technology development activities with each of Eisai Research Institute, Novartis Pharma AG, Tularik Inc. and Vertex Pharmaceuticals, Inc. have supported the continued development and further validated the proprietary technologies that we use in our research programs. In December 2003, we entered into a strategic alliance with AstraZeneca to fund and participate in the development of a new application of our Cytometrix technologies for use by both parties.

       We plan to build commercial capabilities to address markets characterized by severe illnesses, large patient populations and concentrated customer groups. For example, for SB-715992 and SB-743921, we intend to establish sales and marketing capabilities in collaboration with GSK to support the future commercialization of one or both of those potential drugs in North America. In markets for which customer groups are not concentrated, we intend to seek strategic alliances for the development and commercialization of drug candidates while retaining significant financial interests.

The Cytoskeleton

       The cytoskeleton is a diverse, multi-protein framework that carries out fundamental mechanical activities of cells including mitosis, or the division of genetic material during cell division, intracellular transport, cell movement and contraction and overall cell organization. It provides an ordered but dynamic organizational scaffolding for the cell, and mediates movement, whether of proteins within the cell or of the entire cell itself. The cytoskeleton is comprised of a unique set of filaments and molecular motor proteins. Filaments are long linear structures of proteins that serve as the major scaffolding in cells and conduits for movement of molecular motor proteins transporting other proteins or intracellular material. Microtubule filaments are composed of tubulin, and actin filaments are composed of actin. Molecular motor proteins, such as kinesins and myosins, are proteins that transport materials within cells and are also responsible for cellular movement. Kinesins move along microtubule filaments and myosins move along actin filaments.

       These cytoskeletal proteins organize into ordered protein pathways or multi-protein systems that perform important cellular functions. For example, one such structure called the mitotic spindle organizes and divides genetic material during cell proliferation. The mitotic spindle encompasses many cytoskeletal proteins including tubulin, which forms microtubule filaments, and a sub-group of kinesins known as mitotic kinesins. The highly orchestrated action of the proteins within this structure transports and segregates genetic material during cell proliferation. Our most advanced cancer program, partnered with GSK, is focused on discovering potential drugs that inhibit human mitotic kinesins. One of our founders and scientific advisory board members, Dr. Ron Vale, first discovered kinesins. Another of our founders and scientific advisory board members, Dr. Larry Goldstein, was the first scientist to identify and characterize kinesin genes.

       Another multi-protein cytoskeletal structure, called the cardiac sarcomere, contains a highly ordered array of cardiac myosin interacting with actin filaments. The movement of myosin along actin filaments generates the cell contraction responsible for cardiac muscle function. Our program in congestive heart failure is focused on discovering potential drugs that activate cardiac myosin. Another of our founders and scientific advisory board members, Dr. James Spudich, was one of the first scientists to characterize the functional interrelationships of the cytoskeletal proteins in the sarcomere.

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       Beyond the role these specific cytoskeletal proteins play in cell proliferation and cardiac muscle contraction, other cytoskeletal proteins have been implicated in a variety of other important biological processes and related human diseases. Our drug discovery activities are focused on several of these mechanical cellular processes, including cell proliferation, cardiac and other muscle contraction, cellular organization and cell motility, and are specifically directed at the cytoskeletal proteins that play essential roles in carrying out these functions. For instance, a unique set of cytoskeletal proteins forms the cellular machinery that maintains blood vessel tone. One of our research programs is focused on discovering inhibitors of these proteins as a potential treatment for high blood pressure. In addition, another unique set of cytoskeletal proteins is essential for the movement and function of inflammatory cells. We have a research program focused on the discovery of novel anti-inflammatory drug candidates that inhibit these proteins.

Our Product Development Opportunities

       All of our research programs are focused on diseases in which we believe the cytoskeleton plays a significant role. The following table summarizes our clinical and preclinical programs in 2004 with their current status shown in black and planned activities shown in gray, and excludes those programs that are still in the research stage:

Clinical and Preclinical Programs in 2004

 	 	
(1) 	The Phase I clinical trials of SB-715992 will be used to support Phase II clinical trials for each of the cancer indications set forth below.	
(2) 	To be conducted by GSK.	
 	 	
(3) 	To be conducted by NCI. Phase I and Phase II clinical trials may include colorectal, kidney, head and neck, prostate, melanoma and hematological cancers, as well as the potential evaluation of other potential dosing schedules for SB-715992.	
 	 	
(4) 	To be conducted by Cytokinetics.	
       In addition to the above preclinical and clinical programs, we also have more than ten other research programs. For example, we are conducting chemical lead optimization activities in our

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antifungal program with the objective of selecting a drug candidate to enter IND-enabling studies in 2005. Currently, we are also conducting research on several earlier stage research programs that we believe will contribute to our development pipeline over time.

Our Cancer Program

       One of our major development programs is focused on cancer, a disease of unregulated cell proliferation. Each of our cancer drug candidates, SB-715992 and SB-743921, is a structurally distinct small molecule compound that modulates cell proliferation and promotes cancer cell death by specifically inhibiting KSP. KSP is a mitotic kinesin that acts early in the process of mitosis during cell proliferation and is responsible for the formation of a functional mitotic spindle. We initially discovered, characterized and optimized both drug candidates in our research laboratories. These drug candidates are now being developed by GSK through our strategic alliance. SB-715992 is currently the subject of a broad Phase II clinical trials program designed to evaluate efficacy against multiple tumor types. We expect SB-743921 to enter Phase I clinical trials in early 2004. We are also pursuing other potential drug candidates for the treatment of cancer, both within our strategic alliance with GSK and on our own.

      Market Opportunity. Each year over 1.3 million new patients are diagnosed with primary malignant solid tumors or hematological cancers in the United States. The incidence of three of the more common cancer types, colorectal, breast and non-small cell lung cancers, in the United States represents between 35% and 50% of the total incidence of these cancers in the United States, Japan and the major commercial markets in Europe.

       The current market for cancer drugs worldwide is greater than $10.0 billion. Within this market, we estimate that sales of drugs that inhibit mitosis, or anti-mitotic drugs, such as taxanes, most notably Taxol from Bristol-Myers Squibb and Taxotere from Aventis, comprise a large portion of the commercial market for cancer drugs. Worldwide sales from these taxanes alone represented over $2.0 billion in 2002.

       Since their introduction over 30 years ago, anti-mitotic drugs have advanced the treatment of cancer and are commonly used for the treatment of several tumor types. However, these drugs have demonstrated no treatment benefit against certain tumor types, such as colorectal and other tumors. In addition, these drugs target tubulin, a cytoskeletal protein involved not only in mitosis and cell proliferation, but also in other important cellular functions. The inhibition of these other cellular functions produces dose-limiting toxicities such as peripheral neuropathy, an impairment of the peripheral nervous system. Neuropathies result when these drugs interfere with the dynamics of microtubule filaments that are responsible for the long-distance transport of important cellular components within nerve cells.

      Our Solution. Mitotic kinesins form a diverse family of newly characterized cytoskeletal proteins that, like tubulin, facilitate the mechanical processes required for mitosis and cell proliferation. There are 14 human mitotic kinesins required to carry out cell division. We have identified and characterized all of them. Each of these mitotic kinesins functions in a pathway to enable cell division. In our cancer program directed towards inhibitors of mitotic kinesins, we have screened each mitotic kinesin and identified small molecule inhibitors of most of them using our PUMA system, and have begun characterizing these inhibitors using our Cytometrix technologies. We believe that this comprehensive approach to the complete mitotic kinesin pathway will allow us to identify a number of drug candidates that may have diverse clinical utilities. The first mitotic kinesin in this pathway and the one upon which we have focused a majority of our research and development efforts is KSP.

       We believe that drugs inhibiting KSP and other mitotic kinesins represent the next generation of anti-mitotic cancer drugs. Mitotic kinesins are essential to mitosis, and, unlike tubulin, appear to have no role in unrelated cellular functions. In addition, they are expressed only in proliferating cells and in higher concentrations in many tumor cells than in non-cancerous proliferating cells. We believe drugs

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that inhibit KSP and other mitotic kinesins can arrest mitosis and cell proliferation without impacting unrelated, normal cellular functions, avoiding many of the toxicities commonly experienced by patients treated with existing anti-mitotic cancer drugs.

       Our small molecule inhibitors of KSP are highly potent and specific. We have performed detailed biochemical studies to understand the precise molecular mechanism by which our drug candidates inhibit KSP activity. By inhibiting KSP, a cell cannot undertake the first step of mitosis, the separation of the two poles of the mitotic spindle and a monopolar mitotic spindle is created. Interruption of proper cell division through this mechanism in cancer cells results in cell death. In preclinical research, our drug candidates cause shrinkage of tumor size or reduction in tumor growth rates in more than ten different animal models, including cancers of the colon, lung, breast, ovary, pancreas and prostate, sarcomas and leukemias. These models reveal favorable results for our drug candidates in comparison to existing drugs such as irinotecan, topotecan, gemcitabine, paclitaxel, vinblastine and cyclophosphamide. Based on our preclinical data, we believe that our KSP inhibitor drug candidates may have the potential to expand the range of tumor types susceptible to this novel form of targeted anti-mitotic treatment.

       We have identified, characterized and optimized several distinct structural classes of KSP inhibitors as well as specific inhibitors of other mitotic kinesins. Our KSP inhibitor drug candidates, SB-715992 and SB-743921, are being developed by GSK through our strategic alliance. We and GSK are also characterizing several other mitotic kinesin inhibitors that may have therapeutic potential. We believe that our cancer drug candidates may be safer, more effective and treat a wider variety of tumor types than current anti-mitotic drugs. In addition, preclinical data on SB-715992 indicate that this compound may have an additive effect in certain combination regimens with existing cancer drugs. Potential advantages of our drug candidates include:
 	 	 	
 	• 	Broad therapeutic potential. Our preclinical testing indicates that SB-715992 and SB-743921 cause tumor regression in the form of partial response, complete response or tumor growth inhibition in a variety of tumor types. This is consistent with the important role that KSP plays in cell proliferation in all tumor types, and with the observation that KSP expression levels are higher in some tumor cells than in non-cancerous cells. The graphic below illustrates preclinical effects observed with SB-715992 in a mouse model of colon cancer, a type of cancer that is difficult to treat with existing anti-mitotic drugs.	
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Reduction in Tumor Volume

SB-715992 Compared to Irinotecan in a Mouse Model of Colon Cancer

 	SB-715992 causes colon tumor reduction in a mouse model. This graph shows the size of human colon tumors implanted in a mouse as treated with SB-715992 (shown on the lower curve with stars), irinotecan, a drug that is commonly used in treating colon cancer (middle curve with circles) or no treatment (upper curve with squares). Mice given SB-715992 experienced greater tumor shrinkage over the course of the study than those given irinotecan. Both drugs were administered at the maximum dose tolerated by the animals on days 12, 16 and 20 of the study.	

 	• 	Favorable safety profile.Preclinical testing of SB-715992 and SB-743921 demonstrates that these compounds have fewer toxicities than many existing cancer drugs. These studies indicate that the primary toxicities are temporary, limited to gastrointestinal side effects and a reduction in bone marrow function. We observed no evidence of drug-related toxicities to the nervous system, heart, lung, kidney or liver. We believe that this safety profile could enable higher dosing of SB-715992 and SB-743921 and increase their therapeutic value.	
       Because neuropathy is a common dose-limiting side effect of anti-mitotic cancer drugs, such as Taxol, we analyzed the effects of SB-715992 on the peripheral nervous system in a mouse model.

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Incidence of Neurotoxicity Side Effects

SB-715992 Compared to Taxol in a Mouse Model

 	This graph shows the percentage of mice developing peripheral nervous system dysfunction after being given Taxol (shown on the left with hatched bar), SB-715992 (shown in the middle with black bar) or no treatment (shown on the right with white bar). No evidence of nervous system dysfunction is seen in mice given SB-715992, whereas Taxol causes nerve dysfunction in over 60% of mice tested. Both drugs were given at doses used to treat cancer in mouse models.	

      Current Program Status. SB-715992 is the subject of an ongoing broad Phase II clinical trials program designed to evaluate its efficacy in treating multiple tumor types. The first Phase II clinical trial began in late 2003 to evaluate SB-715992 as a monotherapy in non-small cell lung cancer. Throughout 2004, other monotherapy Phase II clinical trials are planned to evaluate SB-715992 in other prevalent tumor types addressing large commercial markets, including colorectal, breast and ovarian cancers. Also, throughout 2004, the NCI plans to sponsor several additional Phase I and Phase II clinical trials to evaluate other potential dosing regimens and the effectiveness of SB-715992 in other tumor types, which may include colorectal, kidney, head and neck, prostate, melanoma and hematological cancers, respectively. In aggregate, we anticipate that Phase II clinical trials for SB-715992 will enroll more than 500 patients at over 50 clinical trial sites worldwide and evaluate our drug candidate in patients with a wide array of tumor types who have failed multiple prior therapies in both later and earlier-line treatments. Furthermore, we anticipate that SB-715992 may eventually be used in combination therapy regimens with existing cancer drugs. Phase Ib clinical trials are planned throughout 2004 to evaluate SB-715992 in combination with standard cancer drugs such as capecitabine, docetaxel and carboplatin.

       The design of the Phase II clinical trials program draws upon information learned from Phase I clinical trials of SB-715992. GSK commenced the first Phase I clinical trial of SB-715992 in August 2002. This clinical trial, which is nearing completion, is an open-label, non-randomized, dose-finding trial investigating safety, tolerability, pharmacokinetics and pharmacodynamics of SB-715992. This Phase I clinical trial is evaluating various doses of SB-715992 given as a one-hour intravenous infusion repeated once every three weeks. A second similarly designed dose-finding Phase I clinical trial commenced in January 2003. This second study, which is also nearing completion, is evaluating dosing of SB-715992 given once per week for each of three weeks and repeated over a 28-day

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cycle. In both clinical trials, the participants are patients with different types of cancer, all of whom have previously failed multiple regimens of drugs.

       As of March 1, 2004, 45 patients were enrolled in the first clinical trial and 30 patients were enrolled in the second clinical trial. The only dose-limiting toxicity observed in both clinical trials is temporary neutropenia, a decrease in the number of a certain type of white blood cell. This was anticipated given that we believe SB-715992 inhibits KSP in these white blood cells and prevents their proliferation. At the planned Phase II clinical dosing levels, Phase I clinical trial investigators have observed no clinically meaningful evidence of drug-related toxicity to the nervous system, heart, lung, kidney or liver. Both studies demonstrate that the pharmacokinetics of SB-715992 are dose-proportional, indicating that an increased dose is correlated with increased drug exposure. This allows us to more accurately correlate drug dose with drug effectiveness. Although these Phase I clinical trials were not designed to measure efficacy, anti-cancer activity was observed as indicated by stabilization of disease in thirteen patients with colorectal, liver, head and neck, prostate, pancreatic and kidney cancers over three to thirteen courses of treatment. In addition, trial investigators reported tumor shrinkage in five patients with colorectal, kidney, prostate and pancreatic cancers.

       In December 2003, under our strategic alliance, GSK filed an IND for SB-743921, a structurally distinct KSP inhibitor. We expect GSK to commence Phase I clinical trials for this drug candidate in early 2004. The Phase I clinical trials program for SB-743921 is designed as an open-label, non-randomized, dose-finding trial investigating safety, tolerability, pharmacokinetics and pharmacodynamics of this drug candidate. Though we are aware of no clinical shortcomings of SB-715992 that are addressed by SB-743921, we believe that having two KSP inhibitors in concurrent clinical development increases the likelihood that a commercial product will result from this program.

      Commercialization. GSK is responsible for the worldwide development and commercialization of SB-715992 and SB-743921 and other drug candidates arising from the strategic alliance. We will receive royalties from the sale of any drugs developed under the strategic alliance. In addition, we retain an option for each of SB-715992 and SB-743921 to co-fund certain later-stage development activities, and thereby increase our potential royalty rate. Furthermore, for those drug candidates that we co-fund certain later-stage development activities, we have a further option to secure co-promotion rights in North America. We expect that the royalties to be paid on future sales of SB-715992 and SB-743921 could potentially increase to an upper-teen percentage rate based on increasing product sales and our anticipated level of co-funding. In the event we exercise our co-promotion option, we are entitled to receive reimbursement from GSK for certain sales force costs we incur in support of our commercial activities. We expect to develop sales and marketing capabilities to support the North American commercialization of one or both of SB-715992 and SB-743921 and other drug candidates that may be developed under our strategic alliance with GSK. Because cancer patients are largely treated in institutional and other settings that can be addressed by a specialized sales force, developing our commercial capabilities to address such treatment centers is consistent with our corporate strategy of focusing our commercial efforts on large, concentrated markets.

Our Cardiovascular Disease Program

       We have focused our cardiovascular disease research and development activities on congestive heart failure, a disease characterized by compromised contractile function of the heart that impacts its ability to effectively pump blood throughout the body. We have discovered and optimized small molecule compounds that improve cardiac contractility by specifically targeting and activating cardiac myosin, a cytoskeletal protein essential for cardiac muscle contraction. In animal models, our drug candidate in this program, CK-1213296, improves cardiac contractility without the adverse effects on heart rate, blood pressure and oxygen consumption often exhibited by existing congestive heart failure drugs. We are pursuing CK-1213296 for intravenous administration in an acute care setting. We expect to file an IND with the FDA and initiate a Phase I clinical trial for CK-1213296 in the

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second half of 2004. We are conducting additional chemical optimization activities for other compounds that are intended for the treatment of chronic congestive heart failure through oral administration.

      Market Opportunity. Congestive heart failure is a widespread and rapidly growing disease affecting approximately five million people in the United States alone. The high prevalence of congestive heart failure translates into significant hospitalization rates and associated societal costs. The number of hospital discharges in the United States identified with a primary diagnosis of congestive heart failure rose from 550,000 in 1989 to 900,000 in 1999. Congestive heart failure is the most common primary diagnosis identified in hospital discharges for patients over 65. The annual costs of congestive heart failure in the United States are estimated to be $28.8 billion, including $17.1 billion for inpatient care.

       The market for congestive heart failure drugs was approximately $2.7 billion in 2001 and is expected to grow to approximately $4.0 billion by 2011. Current congestive heart failure drugs may have reached a plateau in terms of efficacy because they typically treat only the symptoms and effects of the disease. We believe that drugs that directly target the underlying cellular mechanisms responsible for congestive heart failure will be more effective.

       Existing drugs that improve cardiac contractility, including milrinone, dobutamine and digoxin, treat congestive heart failure in part by improving the contraction of cardiac cells, thus leading to an improvement in overall cardiac contractility. These drugs work through a complex cascade of cellular proteins, eventually resulting in an increase in intracellular calcium and a subsequent increase in cardiac cell contractility. However, activation of this cascade and the elevation of calcium levels may also impact other cardiac cell functions, producing unintended and potentially life threatening side effects, such as cardiac ischemia from increased oxygen demand and cardiac arrhythmias. Cardiac ischemia is a condition in which oxygen delivery to the heart is limited and is frequently observed in heart failure patients due to constriction or obstruction of blood vessels. Cardiac arrhythmias are irregularities in the force, quality and sequence of the heart beat. In addition, these existing drugs impact tissues apart from cardiac muscle leading to increases in heart rate and decreases in blood pressure, which can complicate their use in this patient population. Therefore, although existing drugs may be effective in treating the symptoms of heart failure, they often increase congestive heart failure patient morbidity and mortality.

      Our Solution. We believe that the direct activation of cardiac myosin is a more specific mechanism by which to improve cardiac cell contractility. Cardiac myosin is the cytoskeletal protein in the cardiac cell that is directly responsible for converting chemical energy into the mechanical force that results in contraction. Cardiac muscle cell contractility is driven by the cardiac sarcomere, the fundamental unit of muscle contraction in the heart that is a highly ordered cytoskeletal structure composed of cardiac myosin, actin and a set of regulatory proteins. The sarcomere represents one of the most thoroughly characterized protein machines in human biology. Existing drugs that seek to improve cardiac cell contractility increase the concentration of intracellular calcium, which indirectly activates cardiac myosin, but this effect on calcium levels also produces potentially life threatening side effects. Alternatively, our drug candidate for the treatment of acute congestive heart failure, CK-1213296, increases cardiac contractility by specifically targeting and directly activating cardiac myosin so that it attaches to actin to generate contractile force in the cardiac sarcomere.

       We believe we are the first to develop potential drug candidates that specifically activate cardiac myosin. We accomplished this by leveraging our expertise in the biochemistry, biophysics, chemistry and pharmacology of the cardiac sarcomere. We developed a series of proprietary assays that measure the integrated function of the cardiac sarcomere. We believe that we are the first to reconstitute for use in a high-throughput screen the essential components of the cardiac sarcomere from purified proteins as a fully calcium-regulated system simulating the activity of the multi-protein system  in vivo . The resulting high-throughput assay, incorporated within our PUMA system, is capable of detecting modulators of key aspects of sarcomere function ranging from cardiac myosin

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interaction with the actin filament to the sensitivity of the regulatory proteins to calcium. We have also developed a suite of complementary assays for the characterization of cardiac myosin activators in a manner that predicts their physiological activity. As a result, we can rapidly advance and evaluate highly potent and selective compounds in predictive assays replicating physiologic systems, and determine the precise mechanism of action of promising chemical compounds.

       We have identified multiple chemical series of cardiac myosin activators with attractive properties through repeated characterization in cell and animal models. In rats, guinea pigs and dogs, compounds arising from this program demonstrate increased cardiac contractility and improved cardiac efficiency without accompanying adverse effects.

       Our preclinical testing indicates that CK-1213296 works through a novel mechanism of action that enables the modulation of cardiac cell contraction without increasing intracellular calcium levels or interfering with other unrelated cardiac muscle functions. As a result, we believe that CK-1213296 may effectively improve cardiac contractility and cardiac output for the treatment of acute congestive heart failure patients without adversely impacting heart rate or blood pressure and minimally affecting cardiac energy consumption.

       We believe that CK-1213296 could be safer and more effective than existing congestive heart failure drugs. Potential advantages of compounds arising from this program may include:

 	• 	Cardiac efficiency.Our preclinical testing indicates that compounds arising from this program both enhance cardiac output and improve cardiac efficiency. Cardiac output measures the volume of blood pumped into circulation by the heart per minute. Cardiac work is the product of cardiac output and blood pressure. One measure of cardiac efficiency is the ratio of cardiac work divided by oxygen consumption.	

 	 	 	
 	• 	Favorable safety profile.Our preclinical testing indicates that compounds arising from this program may enhance cardiac output without significantly increasing heart rate, decreasing blood pressure or causing cardiac arrhythmias.	

       We expect that the properties of CK-1213296 could result in its improved safety over existing congestive heart failure drugs and allow for the potential use of our cardiac myosin activators for the treatment of patients for whom current drugs cannot be safely administered.

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       As shown below, in studies in a rat model, a precursor compound to CK-1213296 improves cardiac efficiency at a dose producing an equal increase in cardiac output, as compared to milrinone, a drug commonly used to treat acute congestive heart failure.

Increase in Cardiac Efficiency

Our Cardiac Myosin Activator Compared to Milrinone in a Rat Model

 	A cardiac myosin activator efficiently increases cardiac output. This graph shows the percentage change of cardiac output, heart rate, oxygen consumption and cardiac efficiency in rat hearts as measured against a baseline. The baseline was established by measuring these cardiac functions in the rat model prior to treatment. While both the cardiac myosin activator (gray bars) and milrinone (white bars) both increase cardiac output in isolated hearts, only the cardiac myosin activator achieves the increase in cardiac output with no associated increase in heart rate or significant increase in oxygen consumption.	

       Currently our objective in this program is to complete preclinical testing for CK-1213296. In addition, some of our other compounds have properties that may allow for the development of an orally administered compound suitable for the treatment of chronic congestive heart failure. We believe that cardiac myosin activators arising from our cardiovascular disease drug discovery activities may represent improvements relative to drugs commonly used in the treatment of both acute and chronic congestive heart failure.

      Current Program Status. We are currently performing advanced characterization activities on CK-1213296. We expect to file an IND and initiate a Phase I clinical trial with CK-1213296 for the treatment of acute congestive heart failure in the second half of 2004. We plan to design this Phase I clinical trial to assess in healthy volunteers the drug candidate’s safety, including dosing pharmacokinetics and effects on blood pressure and heart rate. We expect that follow-on studies will evaluate the effects of our drug candidate on cardiac output.

       Compounds, such as CK-1213296, identified through our research program have been shown to be effective in animal models of normal cardiac function and of heart failure. These compounds specifically activate cardiac myosin and increase cardiac contractile force  in vitro  and  in vivo,  and have no unintended effects on related targets in skeletal or smooth muscle. Furthermore, these compounds have no unintended effects on cardiac cellular calcium concentration. In animal models, these compounds increase cardiac contractility and have no significant adverse effects on heart rate or blood pressure. We are pursuing CK-1213296 for intravenous administration for use in treating

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acute congestive heart failure. We are also undertaking chemical optimization activities for compounds that are intended for oral administration for use in treating chronic congestive heart failure.

      Commercialization. While we may seek a strategic alliance to assist in the further funding and expansion of our cardiovascular disease drug discovery and development program, we expect to build capabilities to develop, market and sell our acute congestive heart failure drugs in North America. Because acute congestive heart failure patients are largely treated in teaching and community-based hospitals that can be addressed by a specialized sales force, developing our commercial capabilities to address such treatment centers is consistent with our corporate strategy of focusing our commercial efforts on large, concentrated markets. We expect to rely on one or more strategic alliances to further the discovery, development and commercialization of our potential acute congestive heart failure drugs outside North America and our potential chronic congestive heart failure drugs worldwide.

Other Research Programs

       The cytoskeleton plays a role in a broad array of disease areas beyond cancer and cardiovascular disease. Our drug discovery and development activities focused on other therapeutic areas will build on our investments in and experience gained from our more mature cancer and cardiovascular disease programs. Currently, we are conducting drug discovery activities on several earlier stage research programs that we believe will continue to contribute novel drug candidates to our pipeline over time. In each case, our decision to pursue these programs is based on a therapeutic rationale regarding the role of specific cytoskeletal proteins implicated in the relevant disease and desired treatment.

       We currently have several chemical series of antifungal drug candidates in lead optimization stage. Many critically ill patients, who have received bone marrow transplantations, solid organ transplantations, chemotherapy or treatment in an intensive care unit, suffer from systemic fungal infections as a result of suppressed or weakened immune systems. Depending on the patient, their condition and the underlying disease, these infections can be fatal. It is estimated that more than 120,000 patients will be treated with antifungal drugs in 2008. The largest drug in this market is Diflucan® (fluconazole), which had sales of approximately $1.1 billion in 2002 .  The effectiveness of existing antifungals is limited due to their spectrum of activity, their side effects and the resistance to these drugs that develops over time. The evolving resistance of fungal infections requires drugs that are directed against novel microbial targets with novel mechanisms of action.

       Currently, we are characterizing several series of antifungal compounds. Each of these compounds targets one of several fungal mitotic kinesins. As with human mitotic kinesins, fungal mitotic kinesins play a role in the formation and function of the mitotic spindle in fungal cell proliferation. In a preclinical model, compounds arising from this program increased survival in mice with systemic fungal infections. We are currently conducting chemical lead optimization activities and expect to continue these activities through 2004, with the goal of selecting a drug candidate for development and initiating IND-enabling studies in 2005. In addition, we are evaluating specific inhibitors of other compounds against other cytoskeletal proteins implicated in fungal cell proliferation and virulence that may also result in drug candidates for fungal infections.

       In addition to the programs mentioned above, we have more than ten other research programs in cancer, cardiovascular disease, inflammatory diseases, asthma, high blood pressure and other therapeutic areas. In each of these areas, there is a scientific and therapeutic rationale for modulating a specific cytoskeletal protein pathway or multi-protein system for the treatment of disease that guides our activities. For example, we have a research program designed to find anti-inflammatory drug candidates by targeting specific cytoskeletal proteins involved in cell movement. We have identified compounds that inhibit the function of a key cytoskeletal protein involved in the migration of inflammatory cells into diseased tissues. Furthermore, we have identified, characterized

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and are now seeking to chemically optimize compounds that inhibit smooth muscle contractility. Our objective for this research program is to discover potential drug candidates for high blood pressure, asthma and other diseases.

Our Cell Biology Driven Approach to Drug Discovery and Development

       All of our compounds in discovery and development have been discovered internally using our cell biology driven approach and proprietary automated technologies.

      Cell Biology Driven Approach. We believe that the human cell represents a comprehensive environment in which the full complement of proteins and biological pathways and systems operate, and is therefore the most appropriate context for drug discovery. Unlike the conventional drug discovery approach that typically focuses on a singular molecular target or protein in isolation, we focus on each protein along an entire biological pathway or in multi-protein systems that better represent the natural environment of the cell in which the target proteins function. We then seek to identify the most appropriate protein target or targets, as well as multiple effective ways to chemically modulate each target to elicit the appropriate cellular response without other effects and thereby more likely achieve a desired therapeutic effect. We believe that this approach maximizes the chance of finding the preferred protein target implicated in a particular disease and provides multiple opportunities for success within each target-based drug discovery and development program. Our approach to drug discovery and development may thereby increase the productivity and likelihood of success of our research and development activities compared to the more customary approach practiced by other companies.

      Proprietary Drug Discovery Technologies. Our proprietary automated technologies, most notably our PUMA system and Cytometrix technologies, enable early identification and prioritization of drug candidates.

       Our PUMA system is a high-throughput screening platform comprised of a series of automated proprietary multi-protein biochemical assays designed to comprehensively screen large compound libraries to yield chemical entities that specifically modulate each of several cytoskeletal molecular motor proteins. To date, we have applied the PUMA system to perform more than 20 million assays, against an in-house library of approximately 500,000 small molecule compounds and a diverse group of molecular motor protein targets. Unlike many screening platforms, these technologies allow us to analyze protein pathway activity and complexity in a high-throughput format that we believe is more predictive of the natural cellular environment. We complement this system with a customized suite of secondary and supplemental biochemical assays.

       The PUMA system leverages our focus and expertise in cytoskeletal biology and is a highly sensitive and specific screen for both inhibitors and activators of molecular motor proteins such as mitotic kinesin inhibitors in our cancer program and activators of cardiac myosin in our cardiovascular disease program. We screen small molecule members of our compound library against specific cytoskeletal targets, as well as against related proteins that mediate other cellular functions, to ensure that we identify compounds that modulate our protein targets of interest in a highly potent, specific and understandable manner.

       We have developed our Cytometrix technologies as an automated cell biology platform that is an integral part of our small molecule drug discovery process. Cytometrix technologies are our suite of automated and digital microscopy assays that enable us to screen for potency and specificity against multiple biological targets in cells, facilitating the early identification and rejection of those compounds that may have unintended effects and that may subsequently give rise to toxicities. By eliminating undesirable compounds earlier in the drug discovery process, we can focus our attention and resources on the most promising drug candidates. As a result, we believe we minimize investment on commercially unattractive compounds and we can devote more resources to understanding, qualifying and optimizing the compounds that are more likely to yield safe and effective drug candidates.

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       Cytometrix technologies systematically and comprehensively measure responses of individual human cells to potential drug candidates across multiple experimental conditions. For example, in our cancer program, Cytometrix technologies measure, on a cell-by-cell basis, the number of cells at each stage of cell division and cell death and characterize the type of cell death. This is accomplished by combining the same microscope-based approach that has characterized biological research in the past with modern robotic cell handling, digital imaging, image segmentation and analysis and information handling software technologies.

       Cytometrix technologies enable us to efficiently analyze the effects of individual compounds against all proteins simultaneously on a cell-by-cell basis in contrast to assessing more simple outputs of a compound against a single molecular target as is practiced in most other screening systems. Cytometrix technologies profile both existing drugs and small molecule compounds arising out of our drug discovery activities to create detailed cell-by-cell reports of an individual compound’s biological response. In 2003, Cytometrix technologies measured hundreds of variables across each of over 800 million human cells. The resulting information is quantitative and reproducible, allowing prioritization of potential drug candidates by identifying those compounds with certain unintended cellular effects. We believe Cytometrix technologies provide additional and potentially complementary information to gene and protein expression pattern analyses because they measure, cell-by-cell, the response of a network of integrated proteins within their natural environment, the human cell.

       Attractive small molecule compounds, first identified in primary screening against cytoskeletal protein targets using the PUMA system, are more thoroughly profiled using Cytometrix technologies for secondary screening. These technologies generate quantifiable and reproducible cell-based profiles that fingerprint the cellular responses of diverse molecular mechanisms of drug action. Through the integrated use of our PUMA system and Cytometrix technologies, we are able to efficiently focus our efforts towards those compounds that are directed towards novel cytoskeletal protein targets and that are more likely to yield attractive drug candidates.

      Advanced Small Molecule Chemistries. We have assembled a small molecule compound library containing approximately 500,000 compounds. We designed this library to maximize diversity and drug-like characteristics. We support this library with a fully automated infrastructure for compound handling and housing, thus allowing rapid and accurate robotic integration of this chemistry resource with our PUMA system and Cytometrix technologies. We utilize our chemistry technologies together with our expertise in cell biology, pharmacology, drug metabolism and pharmacokinetics for the rapid identification and advancement of attractive compounds and potential drug candidates.

      Discovery Informatics. We have organized our drug discovery operations based on the principle that aggregating informatics across biology and chemistry leads to predictive approaches to target identification, compound analoging and lead optimization, as well as enhances the speed, efficiency and yield of our drug discovery and development process. In support of this principle, we have also created a powerful discovery informatics infrastructure that efficiently manages large and complex data sets representing valuable cell biology driven and biochemical research insights across state-of-the-art chemoinformatics, bioinformatics and genomics resources.

Our Corporate Strategy

       Our goal is to become a fully-integrated biopharmaceutical company focused on discovering, developing and commercializing novel drugs to treat cancer, cardiovascular disease and other disease areas. We intend to achieve this goal by:

 	Focusing on the cytoskeleton.	

 	       We focus our drug discovery activities on the cytoskeleton because its role in disease has been scientifically and commercially validated. We believe that our unique understanding of the cytoskeleton will enable us to discover drug candidates with novel mechanisms of action and	
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 	which may avoid the limitations of current drugs. We believe that there are few, if any, other companies that have focused specifically on the cytoskeleton.	
 	 	
 	       Because the cytoskeleton has been validated in a wide array of human disease, we intend to pursue drug discovery programs across a number of therapeutic areas and we believe we can leverage research and development investments made for a program directed at one therapeutic area to programs directed at other therapeutic areas. This may facilitate our building a diverse pipeline of drug candidates in a cost-effective fashion.	

 	Leveraging our cell biology driven approach and proprietary technologies to increase the speed, efficiency and yield of our drug discovery and development process.	

 	       Our innovative cell biology driven research approach and proprietary technologies, including our PUMA system and Cytometrix technologies, enhance the speed, efficiency and yield of the discovery and, potentially, the development process. We believe we can identify and focus on the most promising compounds earlier in the drug discovery process. We do this by quickly and efficiently eliminating those compounds that exhibit potential toxicities. As a result, we may save time and discovery and development resources and reduce the occurrence of later-stage failures. This early intervention and screening may result in a higher yield of drug candidates with a greater chance of clinical success.	

 	Pursuing multiple drug candidates for each cytoskeletal protein target and broad clinical trials for select drug candidates.	

 	       For each of our programs, we characterize several drug candidates for each of a number of cytoskeletal protein targets that act together in a protein pathway or in a multi-protein system. By leveraging our drug discovery efficiencies, we intend to identify, for each cytoskeletal protein target, multiple potential drug candidates that we may progress into clinical development. We believe that this approach of pursuing a portfolio of potential drug candidates for each cytoskeletal protein target in parallel allows us to increase our potential for commercial success.	
 	 	
 	       Because the cytoskeleton plays a fundamental role in many related diseases, we have an opportunity in those diseases to conduct broad and comprehensive Phase II clinical development trials programs for our drug candidates across multiple related disease areas. We believe that by pursuing this approach we increase the probability of these drug candidates achieving success in clinical trials and maximize the commercial potential related to these programs.	

 	Establishing select strategic alliances to accelerate our drug development programs while preserving significant development and commercial rights.	

 	       We intend to selectively enter into strategic alliances to advance our drug discovery and development programs or technologies, to obtain financial support and to leverage the therapeutic area expertise and development and commercialization resources of our partners to accelerate the development of our drug candidates. Where appropriate, we plan to maintain certain rights in development of potential drug candidates and commercialization of potential drugs arising from our alliances so we can build our internal clinical development and sales and marketing capabilities while also maintaining a significant share of the potential revenues for any products arising from each alliance.	

 	Building development and commercialization capabilities directed at large concentrated markets.	

 	       We focus our drug discovery and development efforts on large commercial market opportunities in concentrated markets, such as cancer and acute congestive heart failure. By	
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 	focusing on concentrated markets, we believe that a company at our stage of development can compete effectively within these markets against larger, more established companies with more financial resources. For each opportunity focused on these markets, we intend to build clinical development and sales and marketing capabilities in order to become a fully-integrated biopharmaceutical company that can develop and commercialize drugs that arise from our research programs.	
Our Strategic Alliances

      GlaxoSmithKline. In June 2001, we formed a strategic alliance with GSK to discover, develop and commercialize novel small molecule drugs targeting KSP and certain other cytoskeletal proteins involved in cell proliferation for applications in the treatment of cancer and other diseases. This strategic alliance leverages our expertise in the biology and pharmacology of mitotic kinesins and GSK’s pharmaceutical research, development and commercialization capabilities. Under this strategic alliance, GSK has made a $14.0 million upfront cash payment and an initial $14.0 million investment in our equity. GSK has also committed to reimburse our FTEs conducting research in connection with the strategic alliance and to make additional milestone payments and pay royalties based on product sales. As of December 31, 2003, we have received $19.7 million in FTE and other reimbursement and $3.2 million in precommercialization milestone payments. GSK is responsible for worldwide development of drug candidates and commercialization of drugs arising from the strategic alliance, but we retain a product-by-product option to co-fund certain later-stage development activities in exchange for a higher royalty rate and a further option to secure co-promotion rights in North America. In the event we exercise a co-promotion option for a product, we are entitled to receive from GSK reimbursement of certain sales force costs that we may incur in support of our commercial activities. We are eligible to receive precommercialization milestone payments ranging from $30.0 to $50.0 million for each mitotic kinesin target for products directed towards each target. In addition, our royalty rate increases based on our level of participation in funding of certain later-stage development activities and as total worldwide sales escalate for each drug developed and commercialized under the strategic alliance. We expect that the royalties to be paid on future sales of SB-715992 and SB-743921 could potentially increase to an upper-teen percentage rate based on our anticipated level of co-funding of certain later-stage development activities of the drug candidates and increasing product sales.

       At predefined times during the research term of the collaboration, we are entitled to select certain mitotic kinesin targets and related compounds for independent research and development at our expense. If we elect to pursue a compound independently, then at a predetermined time during clinical development, GSK will have an option to return the compound to the joint activities of the collaboration subject to GSK’s payment to us of both an amount based on a premium over our research and development costs and also an enhanced royalty on product sales. In the event that GSK does not exercise its option with respect to a compound, we may independently develop and commercialize that compound, subject to a royalty on product sales payable to GSK.

       Under our strategic alliance, GSK has commenced a comprehensive Phase II clinical trials program designed to evaluate SB-715992 in parallel clinical trials across multiple tumor types in 2003. We expect GSK to commence Phase I clinical trials of SB-743921 to begin in early 2004. Additionally, through the strategic alliance, we are performing target validation, hit identification and lead characterization and optimization on other cytoskeletal targets, to select potential drug candidates that may similarly be advanced to clinical development.

      AstraZeneca. In December 2003, we formed an exclusive strategic alliance with AstraZeneca to develop automated imaging-based cellular phenotyping and analysis technologies for the  in vitro  prediction of hepatotoxicity, or toxicity of the liver, a common reason for failure of drug candidates in clinical development. AstraZeneca has agreed to fund a portion of our technology development activities over a two-year research term and pay annual licensing fees and make a milestone payment to us upon the successful achievement of certain agreed-upon performance criteria.

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      Other Strategic Alliances. We have advanced our Cytometrix technologies through our Cytometrix Technologies Development Partner Program with each of Eisai Research Institute, Novartis Pharma AG, Tularik Inc. and Vertex Pharmaceuticals, Inc. These partners provided us with research compounds that were profiled using our Cytometrix technologies. We have completed our obligations associated with these relationships.

       We formed a strategic alliance with Exelixis, Inc. in December 2001 to design and generate diverse, small molecule compound libraries. We and Exelixis may use these libraries for screening in our respective drug discovery programs. Exelixis may use its proprietary combinatorial chemistry platform to synthesize compounds designed in collaboration with us. The synthesized compounds will be jointly owned and each company will have the right to use the compounds in its own internal research programs, as well as in its respective collaborative research efforts.

Our Patents and Intellectual Property

       Our policy is to patent the technology, inventions and improvements that we consider important to the development of our business. As of December 31, 2003, we had 72 issued United States patents, notices of allowance on six additional United States patent applications and over 100 additional pending United States and foreign patent applications. In addition, we have an exclusive license to five United States patents and more than 20 pending United States and foreign patent applications from the University of California and Stanford University. We also rely on trade secrets, technical know-how and continuing innovation to develop and maintain our competitive position.

       We seek to protect our proprietary information by requiring our employees, consultants, contractors, outside partners and other advisers to execute nondisclosure and assignment of invention agreements upon commencement of their employment or engagement, through which we seek to protect our intellectual property. Agreements with our employees also prevent them from bringing the proprietary rights of third parties to us. We also require confidentiality or material transfer agreements from third parties that receive our confidential data or materials.

       Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of our technologies and drug candidates as well as successfully defending these patents against third-party challenges. We will only be able to protect our technologies from unauthorized use by third parties to the extent that valid and enforceable patents or trade secrets cover them.

       The patent positions of pharmaceutical, biotechnology and other life sciences companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in such patents has emerged to date in the United States. The patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents.

       The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example:
 	 	 	
 	• 	we or our licensors might not have been the first to make the inventions covered by each of our pending patent applications and issued patents;	
 	 	 	
 	• 	we or our licensors might not have been the first to file patent applications for these inventions;	
 	 	 	
 	• 	others may independently develop similar or alternative technologies or duplicate any of our technologies;	
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 	• 	it is possible that none of our pending patent applications or none of the pending patent applications of our licensors will result in issued patents;	
 	 	 	
 	• 	our issued patents and issued patents of our licensors may not provide a basis for commercially viable drugs or therapies, or may not provide us with any competitive advantages, or may be challenged and invalidated by third parties;	
 	 	 	
 	• 	our patent applications or patents may be subject to interference, opposition or similar administrative proceedings;	
 	 	 	
 	• 	we may not develop additional proprietary technologies that are patentable; or	
 	 	 	
 	• 	the patents of others may have an adverse effect on our business.	
       The defense and prosecution of intellectual property suits, interferences, oppositions and related legal and administrative proceedings in the United States are costly, time consuming to pursue, and result in diversion of resources. The outcome of these proceedings is uncertain and could significantly harm our business.

       We also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. While we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, partners and other advisors may unintentionally or willfully disclose our information to competitors. Enforcing a claim that a third party illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.

       The pharmaceutical, biotechnology and other life sciences industries are characterized by the existence of a large number of patents and frequent litigation based upon allegations of patent infringement. While our drug candidates are in clinical trials, and prior to commercialization, we believe our current activities fall within the scope of the exemptions provided by 35 U.S.C. Section 271(e) in the United States and Section 55.2(1) of the Canadian Patent Act, each of which covers activities related to developing information for submission to the FDA and its counterpart agency in Canada. As our drug candidates progress toward commercialization, the possibility of an infringement claim against us increases. While we attempt to ensure that our drug candidates and the methods we employ to manufacture them do not infringe other parties’ patents and other proprietary rights, competitors or other parties may assert that we infringe on their proprietary rights.

       In particular, we are aware of an issued United States patent and at least one pending United States patent application assigned to Curis, Inc. relating to certain compounds in the quinazolinone class. SB-715992 falls into this class of compounds. The Curis patent claims a method of use for inhibiting signaling the hedgehog pathway using certain quinazolinones. We are also aware that Curis has pending applications in Europe, Japan, Australia and Canada with claims covering compositions of certain quinazolinone compounds. Curis or a third party may assert that the sale of SB-715992 candidate may infringe one or more of these or other patents.

       We believe that we have valid defenses to an assertion that SB-715992 infringes the Curis patent. However, we cannot guarantee that a court would find such defenses valid. We have not attempted to obtain a license to this patent. If we decide to obtain a license to this patent, we cannot guarantee that we would be able to obtain such a license on commercially reasonable terms, or at all.

       In addition, we are aware of a European patent application assigned to Cellomics, Inc. relating to an automated method for analyzing cells. The Cellomics application is proceeding to grant in Europe. We are also aware that Cellomics has pending applications in the United States, Canada, Japan and Australia. Cellomics or a third party may assert that our Cytometrix technologies fall within the scope of the Cellomics European patent application and thus, may infringe one or more of

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these or other patents. We believe that we have valid defenses to such an assertion. Moreover, the grant of the European patent may be opposed by one or more parties. However, we cannot guarantee that a court would find such defenses valid or that such opposition would be successful. We have not attempted to obtain a license to this patent. If we decide to obtain a license to this patent, we cannot guarantee that we would be able to obtain such a license on commercially reasonable terms, or at all.

Government Regulation

       The FDA and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the clinical development, manufacture, marketing and distribution of drugs. These agencies and other federal, state and local entities regulate research and development activities and the testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion of our drug candidates and drugs.

       In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FFDCA, and implementing regulations. The process required by the FDA before our drug candidates may be marketed in the United States generally involves the following:
 	 	 	
 	• 	completion of extensive preclinical laboratory tests, preclinical animal studies and formulation studies all performed in accordance with the FDA’s good laboratory practice, or GLP, regulations;	
 	 	 	
 	• 	submission to the FDA of an IND application which must become effective before clinical trials may begin;	
 	 	 	
 	• 	performance of adequate and well-controlled clinical trials to establish the safety and efficacy of the product candidate for each proposed indication;	
 	 	 	
 	• 	submission of a NDA to the FDA;	
 	 	 	
 	• 	satisfactory completion of an FDA preapproval inspection of the manufacturing facilities at which the product is produced to assess compliance with current GMP, or cGMP, regulations; and	
 	 	 	
 	• 	FDA review and approval of the NDA prior to any commercial marketing, sale or shipment of the drug.	
       The testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our drug candidates will be granted on a timely basis, if at all.

       Preclinical tests include laboratory evaluation of product chemistry, formulation and stability, as well as studies to evaluate toxicity in animals. The results of preclinical tests, together with manufacturing information and analytical data, are submitted as part of an IND application to the FDA. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions about the conduct of the clinical trial, including concerns that human research subjects will be exposed to unreasonable health risks. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Our submission of an IND, or those of our collaborators, may not result in FDA authorization to commence a clinical trial. A separate submission to an existing IND must also be made for each successive clinical trial conducted during product development, and the FDA must grant permission before each clinical trial can begin. Further, an independent institutional review board, or IRB, for each medical center proposing to conduct the clinical trial must review and approve the plan for any clinical trial before it commences at that center and it must monitor the study until completed. The FDA, the IRB, or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects or patients are being exposed to an

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unacceptable health risk. Clinical testing also must satisfy extensive Good Clinical Practice, or GCP, regulations and regulations for informed consent.

      Clinical Trials. For purposes of NDA submission and approval, clinical trials are typically conducted in the following three sequential phases, which may overlap:
 	 	 	
 	• 	Phase I: Studies are initially conducted in a limited population to test the drug candidate for safety, dose tolerance, absorption, metabolism, distribution and excretion in healthy humans or, on occasion, in patients, such as cancer patients. In some cases, particularly in cancer trials, a sponsor may decide to run what is referred to as a “Phase Ib” evaluation, which is a second safety-focused Phase I clinical trial typically designed to evaluate the impact of the drug candidate in combination with currently approved drugs.	
 	 	 	
 	• 	Phase II: Studies are generally conducted in a limited patient population to identify possible adverse effects and safety risks, to determine the efficacy of the drug candidate for specific targeted indications and to determine dose tolerance and optimal dosage. Multiple Phase II clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more expensive Phase III clinical trials. In some cases, a sponsor may decide to run what is referred to as a “Phase IIb” evaluation, which is a second, confirmatory Phase II clinical trial that could, if positive and accepted by the FDA, serve as a pivotal clinical trial in the approval of a drug candidate.	
 	 	 	
 	• 	Phase III: These are commonly referred to as pivotal studies. When Phase II clinical trials demonstrate that a dose range of the drug candidate is effective and has an acceptable safety profile, Phase III clinical trials are undertaken in large patient populations to further evaluate dosage, to provide substantial evidence of clinical efficacy and to further test for safety in an expanded and diverse patient population at multiple, geographically dispersed clinical trial sites.	
       In some cases, the FDA may condition approval of an NDA for a drug candidate on the sponsor’s agreement to conduct additional clinical trials to further assess the drug’s safety and effectiveness after NDA approval. Such post-approval trials are typically referred to as Phase IV clinical trials.

      New Drug Application. The results of drug candidate development, preclinical testing and clinical trials are submitted to the FDA as part of an NDA. The NDA also must contain extensive manufacturing information. Once the submission has been accepted for filing, by law the FDA has 180 days to review the application and respond to the applicant. The review process is often significantly extended by FDA requests for additional information or clarification. The FDA may refer the NDA to an advisory committee for review, evaluation and recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. The FDA may deny approval of an NDA if the applicable regulatory criteria are not satisfied, or it may require additional clinical data or an additional pivotal Phase III clinical trial. Even if such data are submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval. Data from clinical trials are not always conclusive and FDA may interpret data differently than we or our collaborators interpret data. Once issued, the FDA may withdraw drug approval if ongoing regulatory requirements are not met or if safety problems occur after the drug reaches the market. In addition, the FDA may require testing, including Phase IV clinical trials, and surveillance programs to monitor the effect of approved products which have been commercialized, and the FDA has the power to prevent or limit further marketing of a drug based on the results of these post-marketing programs. Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved label. Further, if there are any modifications to the drug, including changes in indications, labeling, or manufacturing processes or facilities, we may be required to submit and obtain FDA approval of a new NDA or NDA supplement, which may require us to develop additional data or conduct additional preclinical studies and clinical trials.

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      Fast Track Designation.The FDA’s fast track program is intended to facilitate the development and to expedite the review of drugs that are intended for the treatment of a serious or life-threatening condition for which there is no effective treatment and which demonstrate the potential to address unmet medical needs for the condition. Under the fast track program, the sponsor of a new drug candidate may request the FDA to designate the drug candidate for a specific indication as a fast track drug concurrent with or after the filing of the IND for the drug candidate. The FDA must determine if the drug candidate qualifies for fast track designation within 60 days of receipt of the sponsor’s request.

       If fast track designation is obtained, the FDA may initiate review of sections of an NDA before the application is complete. This rolling review is available if the applicant provides and the FDA approves a schedule for the submission of the remaining information and the applicant pays applicable user fees. However, the time period specified in the Prescription Drug User Fees Act, which governs the time period goals the FDA has committed to reviewing an application, does not begin until the complete application is submitted. Additionally, the fast track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

       In some cases, a fast track designated drug candidate may also qualify for one or more of the following programs:
 	 	 	
 	• 	Priority Review. Under FDA policies, a drug candidate is eligible for priority review, or review within a six-month time frame from the time a complete NDA is accepted for filing, if the drug candidate provides a significant improvement compared to marketed drugs in the treatment, diagnosis or prevention of a disease. A fast track designated drug candidate would ordinarily meet the FDA’s criteria for priority review. We cannot guarantee any of our drug candidates will receive a priority review designation, or if a priority designation is received, that review or approval will be faster than conventional FDA procedures, or that FDA will ultimately grant drug approval.	
 	 	 	
 	• 	Accelerated Approval. Under the FDA’s accelerated approval regulations, the FDA is authorized to approve drug candidates that have been studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit to patients over existing treatments based upon either a surrogate endpoint that is reasonably likely to predict clinical benefit or on the basis of an effect on a clinical endpoint other than patient survival. In clinical trials, surrogate endpoints are alternative measurements of the symptoms of a disease or condition that are substituted for measurements of observable clinical symptoms. A drug candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase IV or post-approval clinical trials to validate the surrogate endpoint or confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or to validate a surrogate endpoint or confirm a clinical benefit during post-marketing studies, will allow the FDA to withdraw the drug from the market on an expedited basis. All promotional materials for drug candidates approved under accelerated regulations are subject to prior review by the FDA.	
       When appropriate, we and our collaborators intend to seek fast track designation or accelerated approval for our drug candidates. We cannot predict whether any of our drug candidates will obtain a fast track or accelerated approval designation, or the ultimate impact, if any, of the fast track or the accelerated approval process on the timing or likelihood of FDA approval of any of our drug candidates.

       Satisfaction of FDA regulations and requirements or similar requirements of state, local and foreign regulatory agencies typically takes several years and the actual time required may vary substantially based upon the type, complexity and novelty of the product or disease. Typically, if a drug candidate is intended to treat a chronic disease, as is the case with some of the drug

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candidates we are developing, safety and efficacy data must be gathered over an extended period of time. Government regulation may delay or prevent marketing of drug candidates for a considerable period of time and impose costly procedures upon our activities. The FDA or any other regulatory agency may not grant approvals for new indications for our drug candidates on a timely basis, if at all. Even if a drug candidate receives regulatory approval, the approval may be significantly limited to specific disease states, patient populations and dosages. Further, even after regulatory approval is obtained, later discovery of previously unknown problems with a drug may result in restrictions on the drug or even complete withdrawal of the drug from the market. Delays in obtaining, or failures to obtain, regulatory approvals for any of our drug candidates would harm our business. In addition, we cannot predict what adverse governmental regulations may arise from future United States or foreign governmental action.

      Other regulatory requirements.Any drugs manufactured or distributed by us or our collaborators pursuant to FDA approvals are subject to continuing regulation by the FDA, including recordkeeping requirements and reporting of adverse experiences associated with the drug. Drug manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with ongoing regulatory requirements, including cGMPs, which impose certain procedural and documentation requirements upon us and our third-party manufacturers. Failure to comply with the statutory and regulatory requirements can subject a manufacturer to possible legal or regulatory action, such as warning letters, suspension of manufacturing, seizure of product, injunctive action or possible civil penalties. We cannot be certain that we or our present or future third-party manufacturers or suppliers will be able to comply with the cGMP regulations and other ongoing FDA regulatory requirements. If our present or future third-party manufacturers or suppliers are not able to comply with these requirements, the FDA may halt our clinical trials, require us to recall a drug from distribution, or withdraw approval of the NDA for that drug.

       The FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the Internet. A company can make only those claims relating to safety and efficacy that are approved by the FDA. Failure to comply with these requirements can result in adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. Physicians may prescribe legally available drugs for uses that are not described in the drug’s labeling and that differ from those tested by us and approved by the FDA. Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, impose stringent restrictions on manufacturers’ communications regarding off-label use.

Competition

       We compete in the segments of the pharmaceutical, biotechnology and other related markets that address cancer, cardiovascular disease and antifungal applications, each of which is highly competitive. We face significant competition from most pharmaceutical companies as well as biotechnology companies that are also researching and selling products designed to address cancer, cardiovascular disease or antifungal applications. Many of our competitors have significantly greater financial, manufacturing, marketing and drug development resources than we do. Large pharmaceutical companies in particular have extensive experience in clinical testing and in obtaining regulatory approvals for drugs. These companies also have significantly greater research capabilities than we do. In addition, many universities and private and public research institutes are active in cancer, cardiovascular disease and antifungal research, some in direct competition with us.

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       We believe that our ability to successfully compete will depend on, among other things:
 	 	 	
 	• 	efficacy, safety and reliability of our drug candidates;	
 	 	 	
 	• 	the speed at which we develop drug candidates;	
 	 	 	
 	• 	completion of clinical development and laboratory testing and obtaining regulatory approvals for drug candidates;	
 	 	 	
 	• 	timing and scope of regulatory approvals;	
 	 	 	
 	• 	our ability to manufacture and sell commercial quantities of a product to the market;	
 	 	 	
 	• 	product acceptance by physicians and other health care providers;	
 	 	 	
 	• 	quality and breadth of our technology;	
 	 	 	
 	• 	skills of our employees and our ability to recruit and retain skilled employees;	
 	 	 	
 	• 	protection of our intellectual property;	
 	 	 	
 	• 	cash flows under existing and potential future arrangements with licensees, partners and other parties; and	
 	 	 	
 	• 	availability of substantial capital resources to fund development and commercialization activities.	
       It is possible that our competitors will develop drug candidates and market drugs that are less expensive and more effective than our future drugs or that will render our drugs obsolete. It is also possible that our competitors will commercialize competing drugs before we or our partners can launch any drugs developed from our drug candidates. Companies that currently sell drugs in our markets of interest include, for example, Bristol-Myers Squibb, Abbott, Aventis, Johnson & Johnson, Merck and Pfizer. Other companies that are early-stage are currently developing alternative treatments and products that could compete with our drugs. These organizations also compete with us to attract qualified personnel and potential parties for acquisitions, joint ventures or other strategic alliances.

Legal Proceedings

       We are not involved in any legal proceedings.

Facilities

       Our facilities consist of approximately 53,408 square feet of research and office space. We lease 50,195 square feet located at 280 East Grand Avenue in South San Francisco, California until 2013 with an option to renew that lease over that timeframe. We also lease 3,213 square feet at 250 East Grand Avenue in South San Francisco, California on a month-to-month basis.

Employees

       As of December 31, 2003, our workforce consisted of 163 full-time employees, 57 of whom hold Ph.D. or M.D. degrees, or both, and 30 of whom hold other advanced degrees. Of our total workforce, 131 are engaged in research and development and 32 are engaged in business development, finance, and administration. We have no collective bargaining agreements with our employees, and we have not experienced any work stoppages. We believe that our relations with our employees are good.

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MANAGEMENT

Executive Officers and Directors

       Our directors and executive officers as of January 15, 2004 are as follows:
 	 	 	 	 	 	 	
Name	 	Age	 	Position	

	 	

	 	

	
James H. Sabry, M.D., Ph.D.	 	 	45	 	 	President and Chief Executive Officer; Director	
Robert I. Blum	 	 	40	 	 	Executive Vice President, Corporate Development and Finance and Chief Financial Officer	
David J. Morgans, Jr., Ph.D.	 	 	51	 	 	Senior Vice President, Drug Discovery and Development	
Jay K. Trautman, Ph.D.	 	 	45	 	 	Vice President, Technology	
Gail A. Sheridan	 	 	55	 	 	Vice President, Human Resources	
Stephen Dow(1)(3)	 	 	48	 	 	Director	
A. Grant Heidrich, III(1)(2)	 	 	51	 	 	Director	
Charles Homcy, M.D.	 	 	55	 	 	Director	
William J. Rutter, Ph.D.(1)(2)(3)	 	 	76	 	 	Director	
Michael Schmertzler	 	 	51	 	 	Director	
James A. Spudich, Ph.D.(3)	 	 	62	 	 	Director	

 	 	
(1) 	Member of the Audit Committee.	
 	 	
(2) 	Member of the Compensation Committee.	
 	 	
(3) 	Member of the Nominating and Governance Committee.	

      James H. Sabry, M.D., Ph.D. co-founded our company and has served as our President and Chief Executive Officer and as a member of our board of directors since August 1997. Prior to that he held faculty positions at the University of California, San Francisco, from 1989 to 1998, and Harvard Medical School from 1984 to 1987. Dr. Sabry received a M.D. from Queens University and a Ph.D. in Cell Biology from the University of California, San Francisco.

      Robert I. Blum has served as our Executive Vice President, Corporate Development and Finance and Chief Financial Officer since January 2004. From October 2001 to December 2003, he served as our Senior Vice President, Corporate Development and Finance and Chief Financial Officer. From July 1998 to September 2001, Mr. Blum was our Vice President, Business Development. Prior to joining us in July 1998, he was Director, Marketing at COR Therapeutics, Inc., a biopharmaceutical company from 1996. From 1991 to 1996, he was Director, Business Development at COR Therapeutics. Prior to this, Mr. Blum performed roles of increasing responsibility in sales, marketing and other pharmaceutical business functions at Marion Laboratories, Inc. and Syntex Laboratories, Inc. Mr. Blum received B.A. degrees in Human Biology and Economics from Stanford University and a M.B.A. from Harvard Business School.

      David J. Morgans, Jr., Ph.D. has served as our Senior Vice President, Drug Discovery and Development since October 2003. From March 2002 to September 2003, he served as our Senior Vice President, Drug Discovery and, from January 2002 to February 2002, he served as our Vice President, Drug Discovery. From October 2000 to December 2001, he served as our Vice President Chemistry. From July 1998 to October 2000, Dr. Morgans served as Vice President of Research for Iconix Pharmaceuticals, Inc., a biopharmaceutical company. From March 1995 to July 1998, he was Vice President, Inflammatory Diseases at Roche Bioscience, a pharmaceutical company. From 1983 to 1995, he held various positions at Syntex Laboratories, Inc., most recently as Director, Medicinal Chemistry. From 1980 to 1983, Dr. Morgans was Assistant Professor of Chemistry at University of California, Santa Cruz. Dr. Morgans received a B.S. in Chemistry from Saint Joseph’s University in Philadelphia and a Ph.D. in Chemistry from Columbia University.

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      Jay K. Trautman, Ph.D. has served as our Vice President, Technology since May 2003. He served as our Vice President, Cell Technologies from June 2002 to May 2003. From March 2000 to June 2002, he served as the Chief Executive Officer of Praelux Incorporated, a research and development company and wholly owned subsidiary of Amersham Biosciences Corp. From March 1996 to March 2000, Dr. Trautman held a variety of positions at Praelux and its predecessor company, SEQ Ltd., and was responsible for directing research and development activities. Dr. Trautman received a B.S. in Chemistry from the University of Washington and a Ph.D. in Chemistry from Cornell University.

      Gail A. Sheridan has served as our Vice President, Human Resources since January 2004. She joined Cytokinetics as a consultant in March 2003 and became an employee in January 2004. She was sole proprietor of Human Resources Consulting from January 1995 to December 2003. From 1993 to 1995, she was Director, Human Resources at SyStemix Incorporated. From 1990 to 1993, she was Director, Human Resources at Software Publishing Corporation. From 1986 to 1990, Ms. Sheridan was a Principal at Telemarketing Solutions. From 1983 to 1986, she held Vice President positions at Bank of America. Ms. Sheridan holds a B.A. in Political Science from the University of California at Berkeley and an M.A. in American Studies from the University of Southern California.

      Stephen Dow has served as a member of our board of directors since April 1999. Mr. Dow has been a General Partner with Sevin Rosen Funds, a venture capital firm, since 1983. Since 1989, Mr. Dow has served on the board of directors of Citrix Systems, an enterprise software company, and has been Citrix’s Chairman of the Board since May 2002. Mr. Dow received a B.A. in Economics and a M.B.A. from Stanford University.

      A. Grant Heidrich, III has served as a member of our board of directors since April 1999. Mr. Heidrich has been a Managing Director of certain Mayfield funds, each a venture capital firm, since 1983. Mr. Heidrich currently serves as Chairman of the board of directors of Tularik, Inc., a biotechnology company, and as the Lead Outside Director of Millennium Pharmaceuticals, Inc., a biopharmaceutical company. Mr. Heidrich received a B.A. in Human Biology from Stanford University and a M.B.A. from Columbia University.

      Charles Homcy, M.D. has served as a member of our board of directors since February 2003. Since November 2003, Dr. Homcy has served as Chief Executive Officer of Portola Pharmaceuticals, Inc., a biopharmaceutical company. From January 2003 to November 2003, Dr. Homcy served as Senior Research and Development Advisor of Millennium Pharmaceuticals. From February 2002 to December 2002, Dr. Homcy served as the President of Research and Development at Millennium Pharmaceuticals. From 1995 to February 2002, he served as Executive Vice President, Research and Development of COR Therapeutics, Inc., where he served as a member of the board of directors from 1998 to February 2002. From 1994 to March 1995, Dr. Homcy was President of the Medical Research Division of American Cyanamid Company-Lederle Laboratories (now a division of Wyeth-Ayerst Laboratories). From 1990 to 1994, Dr. Homcy was Executive Director of the Cardiovascular and Central Nervous System Research Section at Lederle Laboratories. Dr. Homcy currently serves on the board of directors of Millennium Pharmaceuticals and Kosan Biosciences, Inc., a biopharmaceutical company. Dr. Homcy received a A.B. in Biology and a M.D. from Johns Hopkins University.

      William J. Rutter, Ph.D. has served as a member of our board of directors since May 1999. Since July 2002, Dr. Rutter has been the Chairman, Chief Executive Officer and a principal shareholder of Synergenics LLC, a biotechnology consulting company. From 1981 until May 1999, Dr. Rutter served as Chairman of the Board of Directors of Chiron Corporation, a biopharmaceutical, vaccine and blood testing company that he co-founded. He is currently Chairman Emeritus of Chiron. From August 1983 to April 1989, Dr. Rutter was the Director of the Hormone Research Institute at the University of California, San Francisco. Since January 2000, Dr. Rutter has served on the board of directors of Sangamo Biosciences, Inc., a biotechnology company. Dr. Rutter received a B.A. in

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Biochemistry from Harvard University, a M.S. in Biochemistry from the University of Utah and a Ph.D. in Biochemistry from the University of Illinois.

      Michael Schmertzler has served as a member of our board of directors since April 2003. Since 2001, Mr. Schmertzler has been a Managing Director of Aries Advisors, LLC, the sub-advisor to Credit Suisse First Boston Equity Partners, L.P., a private equity fund, and the Chair of the investment committee. From 1997 to 2001, Mr. Schmertzler was Co-Head of United States and Canadian Private Equity at Credit Suisse First Boston, an investment banking company. Prior to 1997, Mr. Schmertzler held various management positions with Morgan Stanley and its affiliates, including President of Morgan Stanley Leveraged Capital Funds and Managing Director, and was Managing Director and Chief Financial Officer of Lehman Brothers Kuhn Loeb, an investment banking firm. Mr. Schmertzler received a B.A. from Yale College in Molecular Biophysics and Biochemistry, History and City Planning and a M.B.A. from the Harvard Business School.

      James A. Spudich, Ph.D. co-founded our company and has served as a member of our board of directors since August 1997. From September 1998 to September 1999, he served as our Principal Scientist. Dr. Spudich is the Douglass M. Nola Leishman Professor in Cardiovascular Disease and Professor of Biochemistry and Developmental Biology at Stanford University where he has been a member of the faculty since 1977. From 1994 to 1998, Dr. Spudich served as Chairman of Stanford University’s Department of Biochemistry. From 1979 to 1984, he was Chairman of Stanford’s Department of Structural Biology. He was elected a member of the American Academy of Arts and Sciences in 1997 and a member of the National Academy of Sciences in 1991. Dr. Spudich is also a member of our scientific advisory board. Dr. Spudich received a B.S. in Chemistry from the University of Illinois and a Ph.D. in Biochemistry from Stanford University.

Scientific Advisory Board

       The following individuals are members of our scientific advisory board:

      John C. Chabala, Ph.D. is a founder and member of the Management Scientific Advisory Board of Pharmacopeia, Inc., a combinatorial chemistry and chemoinformatics company, where he served as President from 1993 to 1996 and Chief Scientific Officer from 1993 to 1997. Prior to joining Pharmacopeia, Dr. Chabala was Vice President of Discovery Chemistry at Bristol-Myers Squibb from 1991 to 1993. Prior to that, he was with Merck ultimately as Executive Director, Basic Chemistry, supervising a variety of medicinal and other chemistry programs. Dr. Chabala received a B.S. in Chemistry from Bucknell University, and a Ph.D. in Organic Chemistry from Massachusetts Institute of Technology.

      David G. Drubin, Ph.D. is Professor of Genetics in the Department of Molecular and Cell Biology at the University of California, Berkeley, where he has been a member of the faculty since 1988. Dr. Drubin is Associate Editor of Molecular Biology of the Cell, Editor of the Journal of Cell Biology and a member of the editorial board of Trends of Cell Biology. He was elected Co-Chair and Chair of the Gordon Research Conference on the Plant and Fungal Cytoskeleton in 1995 and 1998, respectively, and was Chair of the Program Committee for the 1999 meeting of the American Society of Cell Biology. Dr. Drubin received an A.B. in Biochemistry from the University of California at Berkeley, and a Ph.D. in Biochemistry from the University of California at San Francisco.

      Lawrence S. B. Goldstein, Ph.D. co-founded our company in August 1997. Dr. Goldstein has been a member of the University of California, San Diego faculty since 1995, where he is Professor of Cellular and Molecular Medicine and an Investigator in the Howard Hughes Medical Institute. From 1984 to 1993, he was Professor of Cellular and Developmental Biology at Harvard University. Dr. Goldstein is a member of the editorial boards of Molecular Biology of the Cell and the Journal of Cell Biology. He is also Associate Editor of the Annual Review of Cell and Developmental Biology. Dr. Goldstein received a B.A. in Biology from the University of California, San Diego, and a Ph.D. in Genetics from the University of Washington.

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      Eric M. Gordon, Ph.D. held the position of Senior Vice President of Research at Sunesis Pharmaceuticals, Inc. from October 1998 to July 2002. From 1996 to 1998, Dr. Gordon was President, Scientific Founder and Chief Scientific Officer of Versicor. Prior to this, Dr. Gordon served as Vice President of Research and Director of Chemistry at Affymax Research Institute from 1992 to 1996, and from 1990 to 1992, he was the Director of Medicinal Chemistry at The Squibb Institute in Princeton where he began as a Postdoctoral Fellow in 1974. His professional activities include serving as president of the Princeton American Chemical Society, Adjunct Professor of Medicinal Chemistry at the University of Wisconsin, and he was elected an American Association Advancement of Science (AAAS) Fellow. Dr. Gordon received a B.S. and a Ph.D. in Medicinal Chemistry from the University of Wisconsin.

      Marc W. Kirschner, Ph.D. is the founding chair of the Department of Cell Biology and the Carl W. Walter Professor of Cell Biology at Harvard Medical School, where he joined the faculty in 1993. Dr. Kirschner was a co-founder of Harvard’s Institute of Chemistry and Cell Biology. From 1978 to 1993, Dr. Kirschner was Professor at the University of California, San Francisco. From 1972 to 1978, he was on faculty at Princeton University. Dr. Kirschner is a member of the National Academy of Sciences and the American Academy of Arts and Sciences, and was elected a Foreign Member of the Royal Society of London in 1999. Dr. Kirschner received a B.A. in Chemistry from Northwestern University and received a Ph.D. in Cell Biology from the University of California, Berkeley.

      Larry E. Overman, Ph.D. has been a member of the faculty at the University of California, Irvine since 1971, where he is currently a Distinguished Professor of Chemistry. He is a member of the National Academy of Sciences and the American Academy of Arts and Sciences. Dr. Overman is Editor-in-Chief of Organic Reactions and a member of the Board of Consulting Editors of Tetrahedron Publications. He is a member of the board of directors of Organic Syntheses and Organic Reactions and a member of Pharmacopeia’s scientific advisory board. Dr. Overman received a B.A. in Chemistry in 1965 from Earlham College and a Ph.D. in Organic Chemistry in 1969 from the University of Wisconsin.

      Thomas D. Pollard, M.D. is the Higgins Professor of Molecular, Cellular and Developmental Biology at Yale University. From 1996 to 2000, Dr. Pollard served as Professor and President of the Salk Institute for Biological Studies in La Jolla, California. From 1977 to 1996, Dr. Pollard directed the Department of Cell Biology at the Johns Hopkins Medical School. From 1993 to 1998, he chaired the Commission on Life Sciences at the National Research Council. Dr. Pollard served as Council Member and President of both the American Society for Cell Biology and the Biophysical Society. Dr. Pollard received a B.A. in Chemistry and Zoology from Pomona College, and a M.D. from Harvard Medical School.

      Stephen J. Smith, Ph.D. is a Professor of Molecular and Cellular Physiology at the Stanford University School of Medicine. From 1977 to 1979, Dr. Smith was a Miller Fellow at the University of California, Berkeley. Dr. Smith received a B.S. in Psychology from Reed College, and a Ph.D. in Physiology and Biophysics from the University of Washington.

      James A. Spudich, Ph.D. Dr. Spudich’s biographical information is provided above.

      Ronald D. Vale, Ph.D. co-founded our company in August 1997. Since 1986, Dr. Vale has been a member of the University of California, San Francisco faculty. Dr. Vale was appointed to the Howard Hughes Medical Institute in 1995, and was elected to the National Academy of Sciences in 2001. He serves as the Chair of the Department of Cellular and Molecular Pharmacology at the University of California, San Francisco and is the W. K. Hamilton Distinguished Professor of Anesthesia. Dr. Vale received a B.S. in Biology and Chemistry from the University of California, Santa Barbara, and a Ph.D. in Neurosciences from Stanford University.

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Board Composition and Committees

       Our board of directors currently consists of seven members. Prior to the closing of this offering, our board of directors will be divided into three classes, with each director serving a three-year term and one class being elected at each year’s annual meeting of stockholders. Directors A. Grant Heidrich and William J. Rutter will be in the class of directors whose initial term expires at the 2004 annual meeting of stockholders. Directors James Spudich and Charles Homcy will be in the class of directors whose initial term expires at the 2005 annual meeting of the stockholders. Directors Stephen Dow, Michael Schmertzler and James Sabry will be in the class of directors whose initial term expires at the 2006 annual meeting of stockholders.

       Our board of directors currently has an audit committee, a compensation committee and a nominating and governance committee. Directors Stephen Dow, A. Grant Heidrich and William J. Rutter are currently members of the audit committee. The audit committee reviews our internal accounting procedures and consults with and reviews the services provided by our independent accountants. Directors A. Grant Heidrich and William J. Rutter are currently members of the compensation committee. The compensation committee reviews and recommends to the board of directors the compensation and benefits for all of our officers and establishes and reviews general policies relating to compensation and benefits for our other employees. Directors Stephen Dow, James Spudich and William J. Rutter are currently members of the nominating and governance committee. The nominating and governance committee assists our board of directors in the areas of membership selection, evaluation of overall effectiveness of the board of directors and the review of developments in corporate governance practices.

Director Compensation

       We reimburse our non-employee directors for their expenses incurred in connection with attending board and committee meetings but do not plan to compensate them for their services as board or committee members. We have in the past granted non-employee directors options to purchase our common stock pursuant to the terms of our 1997 Stock Option/ Stock Issuance Plan, and our board continues to have the discretion to grant options to new and continuing non-employee directors. In addition, one director has purchased shares of our common stock pursuant to restricted stock purchase agreements, subject to a repurchase right in our favor. For a discussion of such director’s restricted stock purchase agreement, see “Related Party Transactions.”

       In January 2004, our stockholders approved our 2004 Equity Incentive Plan, which provides for automatic grants of stock options to directors who are not our officers or employees. The 2004 Equity Incentive Plan provides that such directors will automatically receive:
 	 	 	
 	• 	one-time option grants of 20,000 shares vesting annually over three years from the date of joining the board which are to be granted on such date at the fair market value of one share of our common stock on the date of grant; and	
 	 	 	
 	• 	annual option grants of 15,000 shares vested in full on the date of grant which are to be granted on the date of each annual stockholder meeting following the closing of this offering at the fair market value of one share of our common stock on the date of grant, provided that such grant will only be made to non- employee directors that have been members of the board for at least six months at the time of such annual stockholder meeting.	
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Executive Compensation

       The following table sets forth the compensation earned for services rendered to us in all capacities by our Chief Executive Officer and our other executive officers whose total cash compensation exceeded $100,000 — collectively, the “Named Executive Officers” — for the year ended December 31, 2003.

Summary 2003 Compensation Table

 	 	 	 	 	 	 	 	 	 	Long-Term Compensation	

	
 	 	Annual Compensation ($)	 	Securities	 	 	

	 	Underlying	 	All Other	
Name and Principal Positions	 	Year	 	Salary	 	Bonus	 	Other	 	Options (#)	 	Compensation(7)	

	 	

	 	

	 	

	 	

	 	

	 	

	
James H. Sabry, M.D., Ph.D.,	 	 	2003	 	 	$	354,167	 	 	$	86,760	 	 	$	10,610	(2)	 	 	75,000	(8)	 	$	1,031	 	
 	President and Chief	 	 	2002	 	 	 	317,917	 	 	 	71,190	 	 	 	10,610	(2)	 	 	300,000	(9)	 	 	660	 	
 	Executive Officer	 	 	2001	 	 	 	277,083	 	 	 	52,500	 	 	 	1,152	(2)	 	 	—	 	 	 	618	 	
Robert I. Blum,	 	 	2003	 	 	 	268,404	 	 	 	210,290	 	 	 	6,248	(3)	 	 	179,425	(10)	 	 	604	 	
 	Executive Vice President,	 	 	2002	 	 	 	268,484	 	 	 	42,525	 	 	 	8,987	(3)	 	 	150,000	(11)	 	 	468	 	
 	Corporate Development and Finance	 	 	2001	 	 	 	234,375	 	 	 	31,500	 	 	 	9,256	(3)	 	 	—	 	 	 	456	 	
 	and Chief Financial Officer	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
David J. Morgans, Jr., Ph.D.,	 	 	2003	 	 	 	243,078	 	 	 	54,660	 	 	 	11,123	(4)	 	 	54,500	(12)	 	 	1,239	 	
 	Senior Vice President,	 	 	2002	 	 	 	226,208	 	 	 	34,965	 	 	 	8,935	(5)	 	 	50,000	(13)	 	 	1,146	 	
 	Drug Discovery and Development	 	 	2001	 	 	 	192,708	 	 	 	—	 	 	 	8,935	(5)	 	 	15,000	(14)	 	 	609	 	
Jay K. Trautman, Ph.D.,	 	 	2003	 	 	 	223,333	 	 	 	39,800	 	 	 	—	 	 	 	27,500	(15)	 	 	736	 	
 	Vice President, Technology(1)	 	 	2002	 	 	 	126,992	 	 	 	60,000	 	 	 	11,506	(6)	 	 	62,500	(16)	 	 	228	 	

 	 	 	
 	(1) 	Dr. Trautman’s employment with us began on June 3, 2002.	
 	 	 	
 	(2) 	Represents loan to be forgiven over eight years beginning November 12, 2001.	
 	 	 	
 	(3) 	Represents interest payments on a loan co-signed by us on behalf of Mr. Blum.	
 	 	 	
 	(4) 	Represents loans to be forgiven over eight years beginning on October 18, 2000 and May 20, 2002.	
 	 	 	
 	(5) 	Represents loan to be forgiven over eight years beginning October 18, 2000.	
 	 	 	
 	(6) 	Represents non-deductible moving expenses.	
 	 	 	
 	(7) 	Represents group term life Insurance	
 	 	 	
 	(8) 	Represents a stock option granted to Dr. Sabry in May, 2003. Such option vests monthly over a four-year period beginning March 1, 2003.	
 	 	 	
 	(9) 	Represents a stock option granted to Dr. Sabry in July, 2002. Such option vests monthly over a five-year period beginning March 15, 2002.	

(10) 	Represents a stock option granted to Mr. Blum in May, 2003, which vests monthly over a four-year period beginning March 1, 2003, and a stock option granted in December, 2003, which vests monthly over a five-year period beginning December 18, 2003.	
 	 	
(11) 	Represents a stock option granted to Mr. Blum in July, 2002. Such option vests monthly over a five-year period beginning March 15, 2002.	
 	 	
(12) 	Represents a stock option granted to Dr. Morgans in May, 2003. Such option vests monthly over a four-year period beginning March 1, 2003.	
 	 	
(13) 	Represents a stock option granted to Dr. Morgans in July, 2002. Such option vests monthly over a five-year period beginning March 15, 2002.	
 	 	
(14) 	Represents a stock option granted to Dr. Morgans in March, 2001. Such option vested as to 25% of the shares subject to the option on March 14, 2002, and as to 1/48th of the shares subject to such option each month thereafter.	
 	 	
(15) 	Represents a stock option granted to Dr. Trautman in May, 2003. Such option vests monthly over a four-year period from March 1, 2003.	
 	 	
(16) 	Represents a stock option granted to Dr. Trautman in July, 2002. Such option vested as to 25% of the shares subject to the option on June 3, 2003, and as to 1/48th of the shares subject to such option each month thereafter.	
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Option Grants in 2003

       The following table sets forth information concerning grants of stock options to each of the executive officers named in the table above during 2003. All options granted to these executive officers in 2003 were granted under the 1997 Stock Option/ Stock Issuance Plan, as amended. Except as otherwise noted, one forty-eighth of the shares subject to each option vests and becomes exercisable on the first month after the vesting commencement date, and an additional one-forty-eighth of the shares subject to each option vests each month thereafter. The percent of the total options set forth below is based on an aggregate of 613,769 options granted to employees during 2003. All options were granted at fair market value as determined by our board of directors on the date of grant.

       Potential realizable value represents hypothetical gains that could be achieved for the options if exercised at the end of the option term assuming that the initial public offering price of our common stock appreciates at 5% and 10% over the option term. The assumed 5% and 10% rates of stock price appreciation are provided in accordance with rules of the Securities and Exchange Commission and do not represent our estimate or projection of our future common stock price.

 	 	Individual Grants	 	 	 	 	

	 	 	 	 	
 	 	 	 	Percent of	 	 	 	 	
 	 	 	 	Total	 	 	 	Potential Realizable Value	
 	 	Number of	 	Options	 	 	 	at Assumed Annual Rates	
 	 	Securities	 	Granted to	 	 	 	of Stock Appreciation for	
 	 	Underlying	 	Employees	 	Exercise	 	 	 	Option Term ($)	
 	 	Options	 	During	 	Price Per	 	Expiration	 	

	
Name	 	Granted	 	Period (%)	 	Share ($)	 	Date	 	5%	 	10%	

	 	

	 	

	 	

	 	

	 	

	 	

	
James H. Sabry, M.D., Ph.D.	 	 	75,000	 	 	 	12.2	%	 	$	1.20	 	 	 	5/21/13	 	 	 	1,394,632	 	 	 	2,209,198	 	
Robert I. Blum	 	 	37,500	 	 	 	6.1	 	 	 	1.20	 	 	 	5/21/13	 	 	 	697,316	 	 	 	1,104,599	 	
 	 	 	141,925	 	 	 	23.1	 	 	 	2.00	 	 	 	12/18/13	 	 	 	2,504,912	 	 	 	3,888,397	 	
David J. Morgans, Jr., Ph.D.	 	 	54,500	 	 	 	8.9	 	 	 	1.20	 	 	 	5/21/13	 	 	 	1,013,433	 	 	 	1,605,350	 	
Jay K. Trautman, Ph.D.	 	 	27,500	 	 	 	4.5	 	 	 	1.20	 	 	 	5/21/13	 	 	 	511,365	 	 	 	810,039	 	

Aggregate Option Exercises in 2003 and Values at December 31, 2003

       The following table sets forth information concerning exercisable and unexercisable stock options held by the executive officers named in the summary compensation table at December 31, 2003. The value of unexercised in-the-money options is based on an assumed initial offering price of $12.00 per share minus the actual exercise prices. All options were granted under our 1997 Stock Option/ Stock Issuance Plan, as amended. Except as otherwise noted, these options vest over four years and otherwise generally conform to the terms of our 1997 Stock Option/ Stock Issuance Plan, as amended.

 	 	 	 	 	 	Number of Securities	 	 	
 	 	 	 	 	 	Underlying Unexercised	 	Value of Unexercised	
 	 	 	 	 	 	Options at	 	In-the-Money Options at	
 	 	Shares	 	 	 	December 31, 2003 (#)	 	December 31, 2003 ($)(2)	
 	 	Acquired	 	Value	 	

	 	

	
Name	 	On Exercise	 	Realized ($) (1)	 	Exercisable	 	Unexercisable	 	Exercisable	 	Unexercisable	

	 	

	 	

	 	

	 	

	 	

	 	

	
James H. Sabry, M.D., Ph.D.	 	 	—	 	 	 	—	 	 	 	687,500(3	)	 	 	—	 	 	 	7,691,250	 	 	 	—	 	
Robert I. Blum	 	 	—	 	 	 	—	 	 	 	441,925(4	)	 	 	—	 	 	 	4,729,000	 	 	 	—	 	
David J. Morgans, Jr., Ph.D.	 	 	17,500	 	 	 	199,850	 	 	 	182,000(5	)	 	 	—	 	 	 	2,007,350	 	 	 	—	 	
Jay K. Trautman, Ph.D.	 	 	30,000	 	 	 	324,000	 	 	 	60,000(6	)	 	 	—	 	 	 	648,000	 	 	 	—	 	

 	 	
 	 	
(1) 	Based upon the assumed initial public offering price of $12.00 per share less the exercise price per share.	

 	 	
(2) 	Value is determined by subtracting the exercise price of an option from an assumed $12.00 per share fair market value of our common stock.	

 	 	
(3) 	If Dr. Sabry’s employment with us terminated, 351,771 of the shares issuable upon the exercise of Dr. Sabry’s options would currently be subject to repurchase by us at the original purchase price.	
 	 	
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(4) 	If Mr. Blum’s employment with us terminated, 303,436 of the shares issuable upon the exercise of Mr. Blum’s options would currently be subject to repurchase by us at the original purchase price.	

 	 	
(5) 	If Dr. Morgan’s employment with us terminated, 98,136 of the shares issuable upon the exercise of Dr. Morgan’s options would currently be subject to repurchase by us at the original purchase price.	

 	 	
(6) 	If Dr. Trautman’s employment with us terminated, 61,406 of the shares issuable upon the exercise of Dr. Trautman’s options would currently be subject to repurchase by us at the original purchase price.	
 	 	
Stock Plans

1997 Stock Option/ Stock Issuance Plan

       Our board of directors adopted and our stockholders approved the 1997 Stock Option/ Stock Issuance Plan in December 1997 and January 1998, respectively. Our board of directors will not grant any additional options under the plan following the effective date of this offering. However, the plan will continue to govern the terms and conditions of the outstanding options previously granted under the plan.

       A total of 4,416,172 shares of our common stock are authorized for issuance under the 1997 Stock Option/ Stock Issuance Plan. As of December 31, 2003, options to acquire a total of 2,244,400 shares of our common stock were issued and outstanding, and a total of 1,781,132 shares of our common stock had been issued upon the exercise of options granted under the plan.

       The plan provides for the grant of nonstatutory stock options to our employees and consultants, and for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code to our employees. Our board of directors administers the 1997 Stock Option/ Stock Issuance Plan. The administrator has the authority to determine the terms and conditions of the options granted under the plan.

       Generally, in the event of a “change of control,” the successor corporation will assume each outstanding option or replace such options with a cash incentive program that preserves the spread between the strike price and fair market value associated with such option. If the outstanding options are not assumed, or if the successor corporation does not replace such options with a cash incentive program, the outstanding options will become fully exercisable immediately prior to such change of control and will terminate upon the consummation of the change of control. Generally, if options are assumed in connection with the change of control and an optionee’s employment is terminated as the result of an “involuntary termination” within 24 months of the change of control, the options held by such optionee will immediately vest in full.

2004 Equity Incentive Plan

       Our board of directors adopted our 2004 Equity Incentive Plan in January 2004 and our stockholders approved it in January 2004. Our 2004 Equity Incentive Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees and our parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, stock purchase rights, restricted stock, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and our parent and subsidiary corporations’ employees and consultants.

       We have reserved a total of 3,200,000 shares of our common stock for issuance pursuant to the 2004 Equity Incentive Plan, of which no options have been issued. The 2004 Equity Incentive Plan will become effective on the day prior to the completion of this offering. In addition, the shares reserved for issuance under our 2004 Equity Incentive Plan include (a) shares reserved but unissued under the 1997 Stock Option/ Stock Issuance Plan as of the effective date of this offering, (b) shares returned to the 1997 Stock Option/ Stock Issuance Plan as the result of termination of options or the repurchase of shares issued under such plan, and (c) annual increases in the number of shares

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available for issuance on the first day of each fiscal year beginning with our fiscal year beginning in 2005, equal to the lesser of:
 	 	 	
 	• 	3.5% of the outstanding shares of common stock on the first day of our fiscal year,	
 	 	 	
 	• 	3,000,000 shares, or	
 	 	 	
 	• 	an amount our board may determine.	
       Our board of directors or a committee of our board administers our 2004 Equity Incentive Plan. In the case of options intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code, the committee will consist of two or more “outside directors” within the meaning of Section 162(m) of the Code. The administrator has the power to determine the terms of the awards, including the exercise price, the number of shares subject to each such award, the exercisability of the awards and the form of consideration, if any, payable upon exercise. The administrator also has the authority to institute an exchange program by which outstanding awards may be surrendered in exchange for awards with a lower exercise price.

       The administrator determines the exercise price of options granted under our 2004 Equity Incentive Plan, but with respect to nonstatutory stock options intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code and all incentive stock options, the exercise price must at least be equal to the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed ten years, except that with respect to any participant who owns 10% of the voting power of all classes of our outstanding stock, the term must not exceed five years and the exercise price must equal at least 110% of the fair market value on the grant date. The administrator determines the term of all other options.

       No optionee may be granted an option to purchase more than 1,500,000 shares in any fiscal year. However, in connection with his or her initial service, an optionee may be granted an additional option to purchase up to 1,500,000 shares.

       After termination of an employee, director or consultant, he or she may exercise his or her option for the period of time stated in the option agreement. Generally, if termination is due to death or disability, the option will remain exercisable for 12 months. In all other cases, the option will generally remain exercisable for three months. However, an option generally may not be exercised later than the expiration of its term.

       Stock purchase rights, which represent the right to purchase our common stock, may be issued under our 2004 Equity Incentive Plan. The administrator determines the purchase price of stock purchase rights. Unless the administrator determines otherwise, we will retain a repurchase option on issued shares that we may exercise upon the termination of the purchaser’s service with us for any reason. The administrator determines the rate at which our repurchase option will lapse.

       Stock appreciation rights may be granted under our 2004 Equity Incentive Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant. The administrator determines the terms of stock appreciation rights, including when such rights become exercisable and whether to pay the increased appreciation in cash or with shares of our common stock, or a combination thereof.

       Restricted stock may be granted under our 2004 Equity Incentive Plan. Restricted stock awards are shares of our common stock that vest in accordance with terms and conditions established by the administrator. The administrator will determine the number of shares of restricted stock granted to any employee. The administrator may impose whatever conditions to vesting it determines to be appropriate. For example, the administrator may set restrictions based on the achievement of specific performance goals. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture.

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       Performance units and performance shares may be granted under our 2004 Equity Incentive Plan. Performance units and performance shares are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. The administrator will establish organizational or individual performance goals in its discretion, which, depending on the extent to which they are met, will determine the number or the value of performance units and performance shares to be paid out to participants. Performance units shall have an initial dollar value established by the administrator prior to the grant date. Performance shares shall have an initial value equal to the fair market value of our common stock on the grant date.

       Our 2004 Equity Incentive Plan also provides for the automatic grant of options to our non-employee directors. Each non-employee director appointed or elected to the board after the completion of this offering will receive an initial option to purchase 20,000 shares upon such appointment or election, except for those directors who become non-employee directors by ceasing to be employee directors. In addition, beginning in 2005, non-employee directors who have been directors for at least six months will receive a subsequent option to purchase 15,000 shares following each annual meeting of our stockholders. All options granted under the automatic grant provisions have a term of ten years and an exercise price equal to fair market value on the date of grant. Each initial option becomes exercisable as to one-third of the shares subject to such option on each anniversary of the date of grant, provided the non-employee director remains a service provider on such dates. Each subsequent option shall be exercisable in full on the date of grant.

       Our 2004 Equity Incentive Plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.

       Our 2004 Equity Incentive Plan provides that in the event of a “change of control,” the successor corporation will assume or substitute an equivalent award for each outstanding option, stock appreciation right and stock purchase right. If there is no assumption or substitution of outstanding options, stock appreciation rights and stock purchase rights, the administrator will provide notice to the recipient that he or she has the right to exercise the option, stock appreciation right or stock purchase right as to all of the shares subject to the award, including shares which would not otherwise be exercisable, for a period of time as the administrator may determine from the date of the notice. The award will terminate upon the expiration of such period. In the event an outside director is terminated on or following a change in control, other than pursuant to a voluntary resignation, his or her options will fully vest and become immediately exercisable.

       Our 2004 Equity Incentive Plan will automatically terminate in 2009, unless we terminate it sooner. In addition, our board of directors has the authority to amend, suspend or terminate the 2004 Equity Incentive Plan provided such action does not impair the rights of any participant.

2004 Employee Stock Purchase Plan

       Concurrently with this offering, we intend to establish our 2004 Employee Stock Purchase Plan, and a total of 1,000,000 shares of our common stock will be made available for sale.

       Our board of directors or a committee of our board administers our 2004 Employee Stock Purchase Plan. Our board of directors or its committee has full and exclusive authority to interpret the terms of our 2004 Employee Stock Purchase Plan and determine eligibility.

       All of our employees are eligible to participate if they are customarily employed by us or any participating subsidiary for at least 20 hours per week and more than five months in any calendar year. However, an employee may not be granted an option to purchase stock if such employee:
 	 	 	
 	• 	immediately after the grant owns stock possessing 5% or more of the total combined voting power or value of all classes of our capital stock, or	
 	 	 	
 	• 	has rights to purchase stock under our employee stock purchase plans that accrues at a rate that exceeds $25,000 worth of stock for each calendar year.	
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       Our 2004 Employee Stock Purchase Plan is intended to qualify under Section 423 of the Internal Revenue Code and provides for consecutive, overlapping 24-month offering periods. Each offering period includes four six-month purchase periods. The offering periods generally start on the first trading day on or after May 1 and November 1 of each year, except for the first such offering period which will commence on the first trading day on or after the effective date of this offering and will end on the first trading day on or after the earlier of (a) May 1, 2006 or (b) 27 months from the beginning of the first offering period.

       Our 2004 Employee Stock Purchase Plan permits participants to purchase common stock through payroll deductions of up to 15% of their eligible compensation which includes a participant’s base salary, wages, overtime pay, shift premium and recurring commissions, but does not include payments for incentive compensation or bonuses. A participant may purchase a maximum of 2,500 shares during a six-month purchase period.

       Amounts deducted and accumulated by the participant are used to purchase shares of our common stock at the end of each six-month purchase period. The price is 85% of the lower of the fair market value of our common stock at the beginning of an offering period or after a purchase period end. If the fair market value at the end of a purchase period is less than the fair market value at the beginning of the offering period, participants will be withdrawn from the current offering period following their purchase of shares on the purchase date and will be automatically re-enrolled in a new offering period. Participants may end their participation at any time during an offering period, and will be paid their payroll deductions to date. Participation ends automatically upon termination of employment with us.

       A participant may not transfer rights granted under the 2004 Employee Stock Purchase Plan other than by will, the laws of descent and distribution or as otherwise provided under the 2004 Employee Stock Purchase Plan.

       In the event of a “change of control,” a successor corporation may assume or substitute each outstanding option. If the successor corporation refuses to assume or substitute for the outstanding options, the offering period then in progress will be shortened, and a new exercise date will be set.

       Our board of directors has the authority to amend or terminate our 2004 Employee Stock Purchase Plan, except that, subject to certain exceptions described in the 2004 Employee Stock Purchase Plan, no such action may adversely affect any outstanding rights to purchase stock under our 2004 Employee Stock Purchase Plan.

401(k) Plan

       In July 1998, we adopted a Retirement Savings and Investment Plan, the 401(k) Plan, covering our full-time employees located in the United States. The 401(k) Plan is intended to qualify under Section 401(k) of the Internal Revenues Code, so that contributions to the 401(k) Plan by employees or by us, and the investment earnings thereon, are not taxable to the employees until withdrawn. If our 401(k) Plan qualifies under Section 401(k) of the Internal Revenues Code, our contributions will be deductible by us when made. Our employees may elect to reduce their current compensation by up to the statutorily prescribed annual limit of $13,000 if under 50 years old and $16,000 if 50 years or older in 2004 and to have those funds contributed to the 401(k) Plan. The 401(k) Plan permits us, but does not require us, to make additional matching contributions on behalf of all participants. To date, we have not made any contributions to the 401(k) Plan.

Compensation Committee Interlocks and Insider Participation

       None of the members of our compensation committee has at any time been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Stock Issuances to our Directors, Officers and Principal Stockholders

       In April 1998, we sold 5,300,000 shares of our Series A preferred stock at $1.00 per share. In August 1999, we sold 6,896,545 shares of our Series B preferred stock at $2.90 per share. In November 2000, we sold 11,578,980 shares of our Series C preferred stock at $4.75 per share. In July 2001, we sold 2,333,334 shares of our Series D preferred stock at $6.00 per share. In March and April 2003, we sold 8,015,449 shares of our Series E preferred stock at $5.00 per share. Our Series A, Series B, Series C and Series E preferred stock is convertible into shares of our common stock on a 1-for-0.5 basis. Our Series D preferred stock is convertible into shares of our common stock on a 1-for-0.5160639 basis.

       Upon the closing of this offering, all shares of our outstanding preferred stock will be automatically converted into shares of common stock. We have entered into an agreement pursuant to which our preferred stockholders will have registration rights with respect to their shares of common stock following this offering. For a description of these registration rights, see “Description of Capital Stock.”

       Since our inception, we have from time to time sold shares of our common stock pursuant to option exercises and restricted stock purchases, at per share prices ranging from $0.0075 per share to $1.00, to our directors, officers, founders and consultants, subject to repurchase rights in our favor that lapse over specified periods, typically four years. The repurchase right entitles us to repurchase the unvested shares at the original purchase price paid by the purchaser upon the termination of a purchaser’s services with us.

       Listed below are those persons who participated in the transactions described above who are our executive officers or directors or who beneficially own five percent or more of our securities.

 	 	Common Stock	 	Convertible Preferred Stock	

	 	

	
 	 	 	 	Aggregate	 	 	 	Aggregate	
Name of Purchaser	 	Shares (#)	 	Consideration ($)	 	Series A (#)	 	Series B (#)	 	Series C (#)	 	Series D (#)	 	Series E (#)	 	Consideration ($)	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	 	

	
5% Stockholders	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Entities affiliated with Sevin Rosen Funds(1)	 	 	—	 	 	 	—	 	 	 	2,250,000	 	 	 	1,032,757	 	 	 	1,052,631	 	 	 	—	 	 	 	2,000,000	 	 	 	20,244,993	 	
Entities affiliated with Credit Suisse First Boston(2)(11)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	4,210,527	 	 	 	—	 	 	 	2,000,000	 	 	 	30,000,003	 	
Vulcan Ventures, Inc.	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1,724,137	 	 	 	2,105,264	 	 	 	—	 	 	 	800,000	 	 	 	19,000,001	 	
Entities affiliated with Mayfield(3)	 	 	—	 	 	 	—	 	 	 	2,250,000	 	 	 	1,034,482	 	 	 	578,947	 	 	 	—	 	 	 	400,000	 	 	 	9,999,996	 	
Glaxo Group Limited	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	2,333,334	 	 	 	600,000	 	 	 	17,000,004	 	
Biomedicine, L.P.	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1,724,137	 	 	 	210,526	 	 	 	—	 	 	 	200,000	 	 	 	6,999,996	 	
Entities affiliated with Alta Biopharma Group(4)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1,263,158	 	 	 	—	 	 	 	800,000	 	 	 	10,000,001	 	
Executive Officers and Directors	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
James H. Sabry, M.D., Ph.D.(5)	 	 	250,000	 	 	 	3,750	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Robert I. Blum	 	 	112,500	 	 	 	22,500	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Jay K. Trautman, Ph.D.	 	 	30,000	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
David J. Morgans, Jr., Ph.D.	 	 	17,500	 	 	 	10,150	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
James A. Spudich, Ph.D.(6)	 	 	275,000	 	 	 	8,750	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Stephen Dow(7)	 	 	—	 	 	 	—	 	 	 	2,250,000	 	 	 	1,032,757	 	 	 	1,052,631	 	 	 	—	 	 	 	2,000,000	 	 	 	20,244,993	 	
Grant Heidrich, III(8)	 	 	—	 	 	 	—	 	 	 	2,250,000	 	 	 	1,034,482	 	 	 	631,579	 	 	 	—	 	 	 	405,449	 	 	 	10,277,243	 	
Michael Schmertzler(9)(11)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	4,210,527	 	 	 	—	 	 	 	2,000,000	 	 	 	30,000,003	 	
William J. Rutter, Ph.D.(10)	 	 	3,500	 	 	 	700	 	 	 	—	 	 	 	344,827	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	999,998	 	

 	 	
(1) 	Represents: (a) 6,000 shares of Series A preferred stock and 1,380 shares of Series B preferred stock held by Sevin Rosen Bayless Management Company (which will convert into an aggregate of 3,690 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (b) 2,080,188 shares of Series A preferred stock, 956,086 shares of Series B preferred stock and 195,158 shares of Series C preferred stock held by Sevin Rosen Fund VI L.P. (which will convert into an aggregate of 1,615,716 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (c) 163,812 shares of Series A preferred stock, 75,291 shares of Series B preferred stock and 15,368 shares of Series C preferred stock held by Sevin Rosen VI Affiliates Fund L.P. (which will convert into an aggregate of 127,235 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (d) 825,263 shares of Series C preferred stock and 686,000 shares of Series E preferred stock held by Sevin	

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 	Rosen Fund VIII L.P. (which will convert into an aggregate of 755,631 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (e) 16,842 shares of Series C preferred stock and 14,000 shares of Series E preferred stock held by Sevin Rosen VIII Affiliates Fund L.P. (which will convert into an aggregate of 15,421 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (f) 1,251,900 shares of Series E preferred stock held by Sevin Rosen Fund VII L.P.; (which will convert into an aggregate of 625,950 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); and (g) 48,100 shares of Series E preferred stock held by Sevin Rosen VII Affiliates Fund L.P. (which will convert into an aggregate of 24,050 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split).	

 	 	
(2) 	Represents: (a) 2,893,799 shares of Series C preferred stock and 1,561,993 shares of Series E preferred stock held by Credit Suisse First Boston Equity Partners, L.P. (which will convert into 2,227,896 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (b) 808,891 shares of Series C preferred stock and 436,617 shares of Series E preferred stock held by Credit Suisse First Boston Equity Partners (Bermuda), L.P. (which will convert into 622,754 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (c) 288,000 shares of Series C preferred stock held by EMA Private Equity Fund 2000, L.P. (which will convert into 144,000 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (d) 217,263 shares of Series C preferred stock held EMA Partners Fund 2000, L.P. (which will convert into 108,631 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); and (e) 2,574 shares of Series C preferred stock and 1,390 shares of Series E preferred stock held by Credit Suisse First Boston U.S. Executive Advisors, L.P. An affiliate of Credit Suisse Group, of which Credit Suisse First Boston LLC is an indirect wholly-owned subsidiary, is either the general partner, managing general partner or investment manager of each of these entities (which will convert into 1,982 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split). Credit Suisse Group and Credit Suisse First Boston LLC each disclaims beneficial ownership of the shares owned by such investment partnerships to the extent attributable to partnership interests therein held by persons other than Credit Suisse Group and its affiliates.	

 	 	
(3) 	Represents: (a) 2,137,500 shares of Series A preferred stock, 982,758 shares of Series B preferred stock, 278,499 shares of Series C preferred stock and 353,961 shares of Series E preferred stock held by Mayfield IX (which will convert into 1,876,359 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (b) 112,500 shares of Series A preferred stock, 51,724 shares of Series B preferred stock, 14,658 shares of Series C preferred stock and 18,629 shares of Series E preferred stock held by Mayfield Associates Fund IV (which will convert into 98,755 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (c) 285,790 shares of Series C preferred stock held by Cell Trust (which will convert into 142,895 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); and (d) 27,410 shares of Series E preferred stock by Cell Trust II (which will convert into 13,705 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split).	

 	 	
(4) 	Represents: (a) 1,194,169 shares of Series C preferred stock and 771,614 shares of Series E preferred stock held by Alta BioPharma Partners II, L.P. (which will convert into 982,891 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); and (b) 68,989 shares of Series C preferred stock and 28,386 shares of Series E preferred stock held by Alta Embarcadero BioPharma II, LLC (which will convert into 48,687 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split).	

 	 	
(5) 	Dr. Sabry purchased his shares of common stock in January 1998, at $0.015 per share. Our right to repurchase those shares lapsed as to all of the shares as of January 2002.	

 	 	
(6) 	Dr. Spudich purchased 250,000 of his shares of common stock in January 1998, at $0.015 per share, and 25,000 of his shares in June 1999, at $0.20 per share. Our right to repurchase those shares lapsed as to all of the shares as of January 2002 and September of 2002, respectively. Dr. Spudich subsequently transferred an aggregate of 35,000 shares of common stock.	

 	 	
(7) 	Represents: (a) 6,000 shares of Series A preferred stock and 1,380 shares of Series B preferred stock held by Sevin Rosen Bayless Management Company (which will convert into 3,690 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (b) 2,080,188 shares of Series A preferred stock, 956,086 shares of Series B preferred stock and 195,158 shares of Series C preferred stock held by Sevin Rosen Fund VI L.P. (which will convert into 1,615,716 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (c) 163,812 shares of Series A preferred stock, 75,291 shares of Series B preferred stock and 15,368 shares of Series C preferred stock held by Sevin Rosen VI Affiliates Fund L.P. (which will convert into 127,235 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (d) 825,263 shares of Series C preferred stock and 686,000 shares of Series E preferred stock held by Sevin Rosen Fund VIII L.P. (which will convert into 755,631 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (e) 16,842 shares of Series C preferred stock and 14,000 shares of Series E preferred stock held by Sevin Rosen VIII Affiliates Fund L.P. (which will convert into 15,421 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (f) 1,251,900 shares of Series E preferred stock held by Sevin Rosen Fund VII L.P. (which will convert into 625,950 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); and (g) 48,100 shares of Series E preferred stock held by Sevin Rosen  VII Affiliates Fund L.P. (which will convert into 24,050 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split). Stephen Dow is a general partner of the general partner of each of these entities except for Sevin Rosen Bayless Management Company, of which he is a Vice President. Mr. Dow disclaims beneficial ownership of these shares except to the extent of his proportionate partnership interest in these shares.	

 	 	
(8) 	Represents: (a) 2,137,500 shares of Series A preferred stock and 982,758 shares of Series B preferred stock held by Mayfield IX (which will convert into 1,560,129 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (b) 285,790 shares of Series C preferred stock held by Cell Trust (which will convert into 142,895 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (c) 14,658 shares of Series C preferred stock and 18,629 shares of Series E preferred stock held by Mayfield Associates Fund IV, L.P. (which will convert into 16,643 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (f) 27,410 shares of Series E preferred stock held by Cell Trust II (which will convert into 13,705 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (g) 112,500 shares of Series A preferred stock and 51,724 shares of Series B preferred stock held by Mayfield Associates Fund IV, A California Limited Partnership (which will convert into 82,112 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (h) 278,499 shares of Series C preferred stock and 353,961 shares of Series E preferred stock held by Mayfield IX, L.P. (which will convert into 316,230 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); and (i) 52,632 shares of Series C preferred stock and 5,449 shares of Series E preferred stock held by The A. Grant III & Jeanette Yvonne Heidrich Community Property Trust (which will convert into 29,040 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split). A. Grant Heidrich is a general partner of this entity or is a member of a limited liability company that serves as a general partner. Mr. Heidrich disclaims beneficial ownership of these shares except to the extent of his proportionate partnership or membership interest in these shares.	

 	 	
(9) 	Represents: (a) 2,893,799 shares of Series C preferred stock and 1,561,993 shares of Series E preferred stock held by Credit Suisse First Boston Equity Partners, L.P. (which will convert into 2,227,896 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (b) 808,891 shares of Series C preferred stock and 436,617 shares of Series E preferred stock held by Credit Suisse First Boston Equity Partners (Bermuda), L.P. (which will convert into 622,754 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (c) 288,000 shares of Series C preferred stock held by EMA Private Equity Fund 2000, L.P. (which will convert into 144,000 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); (d) 217,263 shares of Series C preferred stock held EMA Partners Fund 2000, L.P. (which will convert into 108,631 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split); and (e) 2,574 shares of Series C preferred stock and 1,390 shares of Series E preferred stock held by Credit Suisse First Boston U.S. Executive Advisors, L.P. (which will convert into 1,982 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split). Michael Schmertzler is a Managing Director of Aries Advisors, LLC, the sub-advisor to Credit Suisse First Boston Equity Partners, L.P. Mr. Schmertzler disclaims beneficial ownership of these shares except to the extent of his proportionate partnership or membership interest in these shares.	
 	 	
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(10) 	Represents: 344,827 shares of Series B preferred stock (which will convert into 172,413 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split) and 3,500 shares of common stock. Dr. Rutter purchased 3,500 shares of common stock in December 2003 at $0.20 per share. Dr. Rutter subsequently transferred an aggregate of 3,500 shares of common stock. Our right to repurchase those shares lapsed as to all of the shares as of May 2003.	

 	 	
(11) 	At the completion of the offering all of these shares, except for shares constituting 4.99% of the outstanding common stock of the Company upon the closing of this offering (after giving effect to the issuance of the shares in this offering, including shares issued (if any) at the closing pursuant to exercise of the over-allotment option) of these shares will be deposited in a voting trust having Wells Fargo Bank, N.A. as the trustee. Under the terms of the voting trust agreement, the trustee has the power to vote these shares as it believes in its sole judgment is in the best interests of the stockholders of Cytokinetics. In addition, the trustee is required to vote the shares to prevent the election of more than one CSFB affiliate as a director of Cytokinetics. Each entity which deposits shares will retain the power to transfer or sell its shares to itself or other third parties so long as the transferee is not affiliated with CSFB or is otherwise considered an eligible transferee under the terms of the voting trust agreement. The voting trust agreement will expire in April 2014 or such earlier time as CSFB ceases to be an affiliate of Cytokinetics.	
 	 	
Strategic Alliance Agreement with GlaxoSmithKline

       In June 2001, we entered into a strategic alliance agreement with Glaxo Group Limited, a wholly-owned subsidiary of GSK. In the agreement, GSK agreed to pay Cytokinetics an upfront cash payment of $14.0 million. GSK has also committed to reimburse our FTEs conducting research in connection with the strategic alliance and to make additional precommercialization milestone payments and pay royalties based on product sales. As part of such transaction, Glaxo Wellcome International B.V., another wholly-owned subsidiary of GSK, purchased 2,333,334 shares of our Series D preferred stock at price per share of $6.00 and an aggregate price of $14,000,004 (which will convert into 1,204,149 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split). Pursuant to the terms of the stock purchase agreement, GSK has certain restrictions on its ability to buy and sell our securities for up to three years following this offering. As of December 31, 2003, we have recognized a total of $7.0 million, $3.2 million and $19.7 million in licensing fees, milestone payments, and FTE and project reimbursements respectively, from GSK under this strategic alliance. In the future, we may also receive significant precommercialization milestone payments, as well as royalties on product sales.

Investment of GlaxoSmithKline in Series E Preferred Stock Financing

       In connection with our March and April 2003 Series E preferred stock financing, Glaxo Group Limited purchased 600,000 shares of Series E preferred stock at $5.00 per share for an aggregate purchase price of $3,000,000 (which will convert into 300,000 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split).

Investment of GlaxoSmithKline in Concurrent Private Placement

       In March 2004, Glaxo Group Limited entered into a stock purchase agreement whereby it will purchase 583,333 shares of common stock at the offering price of $12.00 per share in a private placement to close immediately prior to this offering.

Investment of Credit Suisse Group Series C and Series E Preferred Stock Financing

       In connection with our November 2000 Series C and March and April 2003 Series E preferred stock financings, affiliates of Credit Suisse Group purchased an aggregate of 4,210,527 shares of Series C preferred stock at $4.75 per share and 2,000,000 shares of Series E preferred stock at $5.00 per share for an aggregate purchase price of $20,000,003 and $10,000,000, respectively. An affiliate of Credit Suisse Group, of which Credit Suisse First Boston LLC is an indirect wholly owned subsidiary, one of the underwriters in the offering made by this prospectus, is either the general manager, managing general partner or investment manager of each of these entities. At the completion of the offering all of these shares, except for shares constituting 4.99% of the outstanding common stock of the Company upon the closing of this offering (after giving effect to the issuance of the shares in this offering, including shares issued (if any) at the closing pursuant to exercise of the over-allotment option) of these shares will be deposited in a voting trust having Wells Fargo Bank, N.A. as the trustee. Under the terms of the voting trust agreement, the trustee has the power to vote these shares as it believes in its sole judgment is in the best interests of the stockholders of

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Cytokinetics. In addition, the trustee is required to vote the shares to prevent the election of more than one CSFB affiliate as a director of Cytokinetics. Each entity which deposits shares will retain the power to transfer or sell its shares to itself or other third parties so long as the transferee is not affiliated with CSFB or is otherwise considered an eligible transferee under the terms of the voting trust agreement. The voting trust agreement will expire in April 2014 or such earlier time as CSFB ceases to be an affiliate of Cytokinetics.

Licensing Arrangement

       Dr. James Spudich, one of our directors, is a Professor of Biochemistry and Developmental Biology at Stanford University. As such, he may receive compensation from the university in respect of inventions and intellectual property he has assigned to it, including certain patent rights which we licensed from the university in April 1998. We have paid technology licensing fees under this agreement, for which Dr. Spudich received no compensation. In the future, we may make additional payments upon achievement of milestones or sales of products we develop using the licensed patents.

Cash Bonus Agreements with Management

       We have entered into Cash Bonus Agreements with certain of our executive officers. Robert I. Blum has an agreement dated September 1, 2002, amended and restated on December 1, 2003 whereby we agree to pay Mr. Blum cash bonuses in the amount of $9,000, $9,000, $40,100, $38,300, $36,500 and $3,600 on December 15, 2003 and June 30, 2004, 2005, 2006, 2007 and 2008, respectively, provided that Mr. Blum remains an employee in good standing.

       We have entered into a Cash Bonus Agreement with David J. Morgans dated September 1, 2002, amended and restated on December 1, 2003, whereby we agree to pay Dr. Morgans cash bonuses in the amount of $7,400, $7,400, $33,100, $31,600, $30,200 and $3,000 on December 15, 2003 and June 30, 2004, 2005, 2006, 2007 and 2008, respectively, provided that Dr. Morgans remains an employee in good standing.

       We have entered into a Cash Bonus Agreement with Jay K. Trautman dated September 1, 2002, amended and restated on December 1, 2003, whereby we agree to pay Dr. Trautman cash bonuses in the amount of $19,300, $19,300, $86,200, $82,300, $78,500 and $7,700 on December 15, 2003 and June 30, 2004, 2005, 2006, 2007 and 2008, respectively, provided that Dr. Trautman remains an employee in good standing.

Loans to Management

       In connection with the employment of Robert I. Blum, we provided a letter of credit dated October 6, 1998, in the amount of $150,000 and with an interest rate of 6.65% per annum, secured by a certificate of deposit, as security for a personal loan obligation of Mr. Blum. We agreed to make all interest payments on the loan. As of December 31, 2003, the amount of the loan is $150,000, and we made interest payments totaling $9,256, $8,987 and $8,625 in 2001, 2002 and 2003, respectively.

       On July 12, 2002, we provided Mr. Blum with a loan, secured by shares of our common stock held by Mr. Blum, per a promissory note dated July 12, 2002, in the amount of $100,000 and an interest rate of 5.75% per annum. Accrued interest is due and payable on July 12, 2003 and 2004. Accrued interest and twenty percent of the original principal balance is due on July 12, 2005, 2006, and 2007. Accrued interest and forty percent of the original principal balance is due on July 12, 2008.

       In connection with the employment of David J. Morgans, Ph.D., we provided Dr. Morgans and Sandra Morgans with unsecured loans per promissory notes, dated May 20, 2002 and October 18, 2000, in the amounts of $37,400 and $150,000 and interest rates of 4.88% per annum, and 5.8%

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per annum, respectively. The total loan amounts, in conjunction with accrued interest, are forgivable over the course of Dr. Morgans’ employment with us.

       On July 12, 2002, we provided Dr. Morgans with a loan, secured by shares of our common stock held by Dr. Morgans, per a promissory note, dated July 12, 2002, in the amount of $82,600 and an interest rate of 5.75% per annum. Accrued interest is due and payable on July 12, 2003 and 2004. Accrued interest and twenty percent of the original principal balance is due on July 12, 2005, 2006, and 2007. Accrued interest and forty percent of the original principal balance is due on July 12, 2008.

       In connection with the employment of Jay K. Trautman, Ph.D., we provided Dr. Trautman with a loan secured by shares of our common stock held by Dr. Trautman, per a promissory note, dated July 12, 2002, in the amount of $215,000 and an interest rate of 5.75% per annum. Accrued interest is due and payable on July 12, 2003 and 2004. Accrued interest and twenty percent of the original principal balance is due on July 12, 2005, 2006, and 2007. Accrued interest and forty percent of the original principal balance is due on July 12, 2008.

       In connection with the employment of James H. Sabry, M.D., Ph.D., we provided Dr. Sabry and Sandra J. Spence with an unsecured loan per a promissory note, dated November 12, 2001, in the amount of $200,000 and an interest rate of 5.18% per annum. The total loan amount, in conjunction with accrued interest, is forgivable over the course of Dr. Sabry’s employment with us.

Other Transactions

       We have a verbal understanding with Dr. William J. Rutter, whereby Dr. Rutter agreed to spend an average of one day per week at Cytokinetics providing general business consulting and become a member of the board effective May 1999. In exchange for these services, we granted Dr. Rutter an option to purchase 62,500 shares of Common Stock at an exercise price of $0.20. The option was granted and approved at the July 27, 1999 board meeting.

       On February 13, 2003, Dr. Charles Homcy became a member of the board of directors. In exchange for these services, we granted Dr. Homcy an option to purchase 30,000 shares of Common Stock at an exercise price of $1.20. The option was granted and approved at the March 19, 2003 board meeting.

       On March 3, 2003, we entered into a consulting agreement with Dr. Charles Homcy, whereby Dr. Homcy agreed to provide Cytokinetics consulting in the specialized field of drug discovery and development. In exchange for these services, we granted Dr. Homcy an option to purchase 12,500 shares of Common Stock at an exercise price of $1.20 per share. The option was granted and approved at the May 21, 2003 board meeting.

       On July 10, 2002, we granted to Dr. James A. Spudich an option to purchase 10,000 shares of our common stock at an exercise price of $1.20 per share in connection with his services on our scientific advisory board. Such options vest monthly over a two-year period.

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PRINCIPAL STOCKHOLDERS

       The following table sets forth information known to us with respect to the beneficial ownership of our common stock as of January 15, 2004 and as adjusted to reflect the sale of common stock offered hereby and in the private placement by:
 	 	 	
 	• 	each stockholder known by us to own beneficially more than five percent of our common stock;	
 	 	 	
 	• 	each of the named executive officers listed in the Summary Compensation Table;	
 	 	 	
 	• 	each of our directors; and	
 	 	 	
 	• 	all of our directors and the named executive officers as a group.	
       Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to stock options and warrants currently exercisable or exercisable within 60 days are deemed to be outstanding for computing the percentage ownership of the person holding these options and the percentage ownership of any group of which the holder is a member, but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Some of the shares of common stock held by our directors, officers and consultants are subject to repurchase rights in our favor. For a discussion of these repurchase rights, see “Related Party Transactions.”

 	 	 	 	Percent of Shares	
 	 	 	 	Beneficially Owned	

	
 	 	Number of Shares	 	 	 	After	
 	 	Beneficially	 	 	 	Offering	
 	 	Owned Prior to	 	Before	 	and Private	
Name and Address of Beneficial Owner	 	The Offering	 	Offering(1)	 	Placement	

	 	

	 	

	 	

	
5% Stockholders	 	 	 	 	 	 	 	 	 	 	 	 	
Entities affiliated with Sevin Rosen Funds(2)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Two Galleria Tower	 	 	 	 	 	 	 	 	 	 	 	 	
 	13455 Noel Road	 	 	 	 	 	 	 	 	 	 	 	 	
 	Dallas, TX 75240	 	 	3,167,694	 	 	 	16.2	%	 	 	12.2%	 	
Entities affiliated with Credit Suisse First Boston(3)(18)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Eleven Madison Ave	 	 	 	 	 	 	 	 	 	 	 	 	
 	New York, NY 10010	 	 	3,105,263	 	 	 	15.9	%	 	 	12.0%	 	
Vulcan Ventures, Inc.(17)	 	 	 	 	 	 	 	 	 	 	 	 	
 	505 Union Station,	 	 	 	 	 	 	 	 	 	 	 	 	
 	505 Fifth Ave. South, Suite 900	 	 	 	 	 	 	 	 	 	 	 	 	
 	Seattle, WA 98104	 	 	2,314,700	 	 	 	11.9	%	 	 	8.9%	 	
Entities affiliated with Mayfield(4)	 	 	 	 	 	 	 	 	 	 	 	 	
 	2800 Sand Hill Road	 	 	 	 	 	 	 	 	 	 	 	 	
 	Suite 250	 	 	 	 	 	 	 	 	 	 	 	 	
 	Menlo Park, CA 94025	 	 	2,131,714	 	 	 	10.9	%	 	 	8.2%	 	
Glaxo Group Limited	 	 	 	 	 	 	 	 	 	 	 	 	
 	Glaxo Wellcome House	 	 	 	 	 	 	 	 	 	 	 	 	
 	Berkeley Avenue	 	 	 	 	 	 	 	 	 	 	 	 	
 	Greenford	 	 	 	 	 	 	 	 	 	 	 	 	
 	Middlesex	 	 	 	 	 	 	 	 	 	 	 	 	
 	England	 	 	 	 	 	 	 	 	 	 	 	 	
 	UB6 ONN	 	 	1,504,149	 	 	 	7.7	%	 	 	8.1%	 	

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 	 	 	 	Percent of Shares	
 	 	 	 	Beneficially Owned	

	
 	 	Number of Shares	 	 	 	After	
 	 	Beneficially	 	 	 	Offering	
 	 	Owned Prior to	 	Before	 	and Private	
Name and Address of Beneficial Owner	 	The Offering	 	Offering(1)	 	Placement	

	 	

	 	

	 	

	
Biomedicine, L.P.(18)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cayman National Bldg., 4th Floor	 	 	 	 	 	 	 	 	 	 	 	 	
 	Elgin Ave	 	 	 	 	 	 	 	 	 	 	 	 	
 	P.O. Box 1790	 	 	 	 	 	 	 	 	 	 	 	 	
 	George Town	 	 	 	 	 	 	 	 	 	 	 	 	
 	Grand Cayman	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cayman Islands	 	 	1,067,331	 	 	 	5.5	%	 	 	4.1%	 	
Entities affiliated with Alta Biopharma Group(5)	 	 	 	 	 	 	 	 	 	 	 	 	
 	One Embarcadero Center	 	 	 	 	 	 	 	 	 	 	 	 	
 	Suite 4050	 	 	 	 	 	 	 	 	 	 	 	 	
 	San Francisco, CA 94111	 	 	1,031,579	 	 	 	5.3	%	 	 	4.0%	 	
Executive Officers and Directors	 	 	 	 	 	 	 	 	 	 	 	 	
James H. Sabry, M.D., Ph.D(6)	 	 	937,500	 	 	 	4.6	%	 	 	3.6%	 	
Robert I. Blum(7)	 	 	554,425	 	 	 	2.8	%	 	 	2.1%	 	
David J. Morgans, Jr., Ph.D(8)	 	 	199,500	 	 	 	1.0	%	 	 	*	 	
Jay K. Trautman, Ph.D(9)	 	 	90,000	 	 	 	*	 	 	 	*	 	
Stephen Dow(10)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Two Galleria Tower	 	 	 	 	 	 	 	 	 	 	 	 	
 	13455 Noel Road	 	 	 	 	 	 	 	 	 	 	 	 	
 	Dallas, TX 75240	 	 	3,167,694	 	 	 	16.2	%	 	 	12.2%	 	
A. Grant Heidrich, III(11)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Mayfield Fund	 	 	 	 	 	 	 	 	 	 	 	 	
 	2800 Sand Hill Road	 	 	 	 	 	 	 	 	 	 	 	 	
 	Suite 250	 	 	 	 	 	 	 	 	 	 	 	 	
 	Menlo Park, CA 94025	 	 	2,160,755	 	 	 	11.1	%	 	 	8.3%	 	
William J. Rutter, Ph.D.(12)	 	 	 	 	 	 	 	 	 	 	 	 	
 	One Market	 	 	 	 	 	 	 	 	 	 	 	 	
 	Suite 1475	 	 	 	 	 	 	 	 	 	 	 	 	
 	Steuart Tower	 	 	 	 	 	 	 	 	 	 	 	 	
 	San Francisco, CA 94105	 	 	231,413	 	 	 	1.2	%	 	 	*	 	
Michael Schmertzler(13)(18)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Eleven Madison Ave	 	 	 	 	 	 	 	 	 	 	 	 	
 	New York, NY 10010	 	 	3,105,263	 	 	 	15.9	%	 	 	12.0%	 	
James A. Spudich, Ph.D.(14)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Stanford School of Medicine	 	 	 	 	 	 	 	 	 	 	 	 	
 	Beckman Center	 	 	 	 	 	 	 	 	 	 	 	 	
 	Room B405	 	 	 	 	 	 	 	 	 	 	 	 	
 	Stanford, CA 94305-5307	 	 	250,000	 	 	 	1.3	%	 	 	1.0%	 	
Charles Homcy, M.D.(15)	 	 	 	 	 	 	 	 	 	 	 	 	
 	Portola Pharmaceuticals	 	 	 	 	 	 	 	 	 	 	 	 	
 	270 East Grand Avenue	 	 	 	 	 	 	 	 	 	 	 	 	
 	South San Francisco, CA 94080	 	 	42,500	 	 	 	*	 	 	 	*	 	
All directors and named executive officers as a group (10 persons)	 	 	10,739,050	 	 	 	51.2	%	 	 	41.4%	 	

 	 	 	
 	*	Represents beneficial ownership of less than one percent (1%) of the outstanding shares of our common stock.	
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 	(1) 	Percentage ownership before the offering is based on the 19,528,865 shares of common stock outstanding on January 15, 2004, after giving effect to the conversion of all of our preferred stock into shares of our common stock.	

 	 	 	
 	(2) 	Represents: (a) 3,690 shares of common stock held by Sevin Rosen Bayless Management Company; (b) 1,615,716 shares of common stock held by Sevin Rosen VI L.P.; (c) 127,235 shares of common stock held by Sevin Rosen Fund VI Affiliates Fund L.P.; (d) 755,631 shares of common stock held by Sevin Rosen Fund VIII L.P.; (e) 15,421 shares of common stock held by Sevin Rosen VIII Affiliates Fund L.P.; (f) 625,950 shares of common stock held by Sevin Rosen Fund VII L.P.; and (g) 24,050 shares of common stock held by Sevin Rosen VII Affiliates Fund L.P.	

 	 	 	
 	(3) 	Represents: (a) 2,227,896 shares of common stock held by Credit Suisse First Boston Equity Partners, L.P.; (b) 622,754 shares of common stock held by Credit Suisse First Boston Equity Partners (Bermuda), L.P.; (c) 144,000 shares of common stock held by EMA Private Equity Fund 2000, L.P.; (d) 108,631 shares of common stock held EMA Partners Fund 2000, L.P.; and (e) 1,982 shares of common stock held by Credit Suisse First Boston U.S. Executive Advisors, L.P. An affiliate of Credit Suisse Group, of which Credit Suisse First Boston LLC is an indirect wholly-owned subsidiary, is either the general partner, managing general partner or investment manager of each of those entities. Credit Suisse Group and Credit Suisse First Boston LLC each disclaims beneficial ownership of the shares owned by such investment partnerships to the extent attributable to partnership interests therein held by persons other than Credit Suisse Group and its affiliates.	

 	 	 	
 	(4) 	Represents: (a) 1,876,359 shares of common stock held by Mayfield IX; (b) 98,755 shares of common stock held by Mayfield Associates Fund IV, L.P.; (c) 142,895 shares of common stock held by Cell Trust; and (d) 13,705 shares of common stock held by Cell Trust II.	

 	 	 	
 	(5) 	Represents: (a) 982,891 shares of common stock held by Alta BioPharma Partners II, L.P.; and (b) 48,687 shares of common stock held by Alta Embarcadero BioPharma II, LLC. Farah Champsi, Managing Director, has voting and investment power with respect to these shares.	

 	 	 	
 	(6) 	Represents: (a) 250,000 shares of common stock held by Dr. Sabry; and (b) options granted to Dr. Sabry to purchase 687,500 shares of common stock that are immediately exercisable. 341,042 shares underlying the option would remain subject to our repurchase right upon termination of Dr. Sabry’s employment.	

 	 	 	
 	(7) 	Represents: (a) 92,500 shares of common stock held by Mr. Blum; (b) 10,000 shares of common stock held by The Brittany Blum 2003 Irrevocable Trust; (c) 10,000 shares of common stock held by The Bridget Blum 2003 Irrevocable Trust; and (d) options granted to Mr. Blum to purchase 441,925 shares of common stock that are immediately exercisable. 298,696 shares underlying the option would remain subject to our repurchase right upon termination of Mr. Blum’s employment.	

 	 	 	
 	(8) 	Represents (a) 17,500 shares of common stock held by Dr. Morgans and (b) options granted to Dr. Morgans to purchase 182,000 shares of common stock that underlying the option immediately exercisable. 95,855 shares underlying the option would remain subject to our repurchase right upon termination of Dr. Morgans’ employment.	

 	 	 	
 	(9) 	Represents: (a) 60,000 shares of common stock held by Dr. Trautman, 29,531 shares of which are subject to our right of repurchase; and (b) options granted to Dr. Trautman to purchase 30,000 shares of common stock that are immediately exercisable. 30,000 shares underlying the option would remain subject to our repurchase right upon termination of Dr. Trautman’s employment.	

 	 	
(10) 	Represents: (a) 3,690 shares of common stock held by Sevin Rosen Bayless Management Company; (b) 1,615,716 shares of common stock held by Sevin Rosen VI L.P.; (c) 127,235 shares of common stock held by Sevin Rosen Fund VI Affiliates Fund L.P.; (d) 755,631 shares of common stock held by Sevin Rosen Fund VIII L.P.; (e) 15,421 shares of common stock held by Sevin Rosen VIII Affiliates Fund L.P.; (f) 625,950 shares of common stock held by Sevin Rosen Fund VII L.P.; and (g) 24,050 shares of common stock held by Sevin Rosen VII Affiliates	

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 	Fund L.P. Stephen Dow is a general partner of the general partner of each of these entities except for Sevin Rosen Bayless Management Company, of which he is a Vice President. Mr. Dow disclaims beneficial ownership of these shares except to the extent of his proportionate partnership interest in these shares.	

(11) 	Represents: (a) 1,876,359 shares of common stock held by Mayfield IX; (b) 98,755 shares of common stock held by Mayfield Associates Fund IV; (c) 142,895 shares of common stock held by Cell Trust; (d) 13,705 shares of common stock held by Cell Trust II; and (d) 58,081 shares of common stock held by The A. Grant III & Jeanette Yvonne Heidrich Community Property Trust. A. Grant Heidrich is a Managing Director of Mayfield IX Management, L.L.C., the General Partner of Mayfield IX and Mayfield Associates Fund IV. Mr. Heidrich disclaims beneficial ownership of the shares held by affiliates of Mayfield, except to the extent of his proportionate partnership interest therein.	

 	 	
(12) 	Represents: (a) 115,266 shares of common stock owned by the William J. Rutter Revocable Trust; (b) 57,147 shares of common stock held by Rutter Investments, L.P.; and (c) options granted to Dr. Rutter to purchase 59,000 shares of common stock that are immediately exercisable.	

 	 	
(13) 	Represents: (a) 2,227,896 shares of common stock held by Credit Suisse First Boston Equity Partners, L.P.; (b) 622,754 shares of common stock held by Credit Suisse First Boston Equity Partners (Bermuda), L.P.; (c) 144,000 shares of common stock held by EMA Private Equity Fund 2000, L.P.; (d) 108,631 shares of common stock held EMA Partners Fund 2000, L.P.; and (e) 1,982 shares of common stock held by Credit Suisse First Boston U.S. Executive Advisors, L.P. Michael Schmertzler is a Managing Director of Aries Advisors, LLC, the sub-advisor to Credit Suisse First Boston Equity Partners, L.P. Mr. Schmertzler disclaims beneficial ownership of these shares except to the extent of his proportionate partnership or membership interest in shares.	

 	 	
(14) 	Represents: (a) 240,000 shares of common stock held by held by Dr. Spudich; and (b) options granted to Dr. Spudich to purchase 10,000 shares of common stock that are immediately exercisable. 1,667 shares underlying the option would remain subject to our repurchase right upon termination of Dr. Spudich’s employment.	

 	 	
(15) 	Represents options granted to Dr. Homcy to purchase 42,500 shares of common stock that are immediately exercisable. 28,125 shares underlying the option would remain subject to repurchase right upon termination of Dr. Homcy’s employment.	

 	 	
(16) 	Michael Kranda, Director of Biotechnology Venture Investments, has voting and investment power with respect to these shares.	

 	 	
(17) 	Philip J. Sutcliffe has voting and investment power with respect to these shares.	

 	 	
(18) 	At the completion of the offering all of these shares, except for shares constituting 4.99% of the outstanding common stock of the Company upon the closing of this offering (after giving effect to the issuance of the shares in this offering, including shares issued (if any) at the closing pursuant to exercise of the over-allotment option) of these shares will be deposited in a voting trust having Wells Fargo Bank, N.A. as the trustee. Under the terms of the voting trust agreement, the trustee has the power to vote these shares as it believes in its sole judgment is in the best interests of the stockholders of Cytokinetics. In addition, the trustee is required to vote the shares to prevent the election of more than one CSFB affiliate as a director of Cytokinetics. Each entity which deposits shares will retain the power to transfer or sell its shares to itself or other third parties so long as the transferee is not affiliated with CSFB or is otherwise considered an eligible transferee under the terms of the voting trust agreement. The voting trust agreement will expire in April 2014 or such earlier time as CSFB ceases to be an affiliate of Cytokinetics.	
 	 	
       Except as otherwise noted above, the address of each person listed on the table is c/o Cytokinetics, Incorporated, 280 East Grand Avenue, South San Francisco, CA 94080.

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DESCRIPTION OF CAPITAL STOCK

General

       We are authorized to issue 120,000,000 shares of common stock, $0.001 par value, and 10,000,000 shares of undesignated preferred stock, $0.001 par value.

Common Stock

       Assuming the conversion of all of our preferred stock into 17,099,637 shares of common stock, as of January 15, 2004, we had 19,528,865 shares of common stock outstanding that were held of record by approximately 139 stockholders.

       The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to receive ratably any dividends that may be declared from time to time by the board of directors out of funds legally available for that purpose. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock then outstanding. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable, and the shares of common stock to be issued upon the closing of this offering will be fully paid and nonassessable.

Preferred Stock

       Upon the closing of this offering, our board of directors will have the authority, without action by our stockholders, to designate and issue up to 10,000,000 shares of preferred stock in one or more series. The board of directors may also designate the rights, preferences and privileges of each series of preferred stock; any or all of which may be greater than the rights of the common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of the common stock until the board of directors determines the specific rights of the holders of the preferred stock. However, these effects might include:
 	 	 	
 	• 	restricting dividends on the common stock;	
 	 	 	
 	• 	diluting the voting power of the common stock;	
 	 	 	
 	• 	impairing the liquidation rights of the common stock; and	
 	 	 	
 	• 	delaying or preventing a change in control of our company without further action by the stockholders.	
       We have no present plans to issue any shares of preferred stock.

Warrants

       As of January 15, 2004, we had the following warrants outstanding to purchase a total of 190,991 shares of our capital stock:

 	• 	100,000 shares of our common stock at an exercise price of $0.58 per share, terminating five years after the date of our initial public offering;	

 	 	 	
 	• 	67,500 shares of our Series A preferred stock, which are convertible into 33,750 shares of our common stock, at an exercise price of $2.00 per share, terminating 2005;	

 	 	 	
 	• 	100,000 shares of our Series B preferred stock, which are convertible into 50,000 shares of our common stock, at an exercise price of $5.80 per share, terminating 2006; and	
 	 	 	
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 	• 	14,483 shares of our Series B preferred stock, which are convertible into 7,241 shares of our common stock, at an exercise price of $5.80 per share, terminating 2006.	

Holders of Registration Rights Can Require Us to Register Shares of Our Stock for Resale

       Following this offering and the private placement, the holders of 17,099,636 shares of common stock issuable upon conversion of preferred stock, 583,333 shares of common stock sold to an affiliate of GSK for cash proceeds of $7 million at a purchase price equal to the assumed initial public offering price of $12.00 per share, and 190,991 shares of common stock issuable upon the exercise of warrants or conversion of preferred stock underlying warrants or their permitted transferees are entitled to rights with respect to registration of these shares under the Securities Act of 1933, as amended. These rights are provided under the terms of our agreement with the holders of registrable securities. Under these registration rights, holders of the then outstanding registrable securities may require on two occasions that we register their shares for public resale. The first such registration requires the election of the holders of registrable securities holding at least 51% of such registrable securities, and the second such registration requires the election of the holders of registrable securities holding at least twenty-five percent of such registrable securities. We are obligated to register these shares only if the requesting holders request the registration of at least 20% of the registrable securities held by such requesting holders. In addition, 12 months after the effective date of the first registration of our securities, holders of at least thirty percent of the registrable securities resulting from the conversion of shares of our Series C preferred stock may require on two occasions that we register their shares for public resale. We are obligated to register these shares resulting from the conversion of our Series C preferred stock only if the requesting holders request the registration of at least thirty percent of the registrable securities held by such requesting holders that resulted from the conversion of our Series C preferred stock. In addition, holders of registrable securities may require that we register their shares for public resale on Form S-3 or similar short-form registration, if we are eligible to use Form S-3 or similar short-form registration, and the value of the securities to be registered is at least $500,000. If we elect to register any of our shares of common stock for any public offering, the holders of registrable securities are entitled to include shares of common stock in the registration. However we may reduce the number of shares proposed to be registered in view of market conditions. We will pay all expenses in connection with any registration, other than underwriting discounts and commissions.

Anti-Takeover Effects of Some Provisions of Delaware Law

       Provisions of Delaware law and our amended and restated certificate of incorporation and amended bylaws to be in effect upon the closing of this offering could make the acquisition of our company through a tender offer, a proxy contest or other means more difficult and could make the removal of incumbent officers and directors more difficult. We expect these provisions to discourage coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of our company to first negotiate with our board of directors. We believe that the benefits provided by our ability to negotiate with the proponent of an unfriendly or unsolicited proposal outweigh the disadvantages of discouraging these proposals. We believe the negotiation of an unfriendly or unsolicited proposal could result in an improvement of its terms.

       We are subject to Section 203 of the Delaware General Corporation Law, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the date the person became an interested stockholder, unless:
 	 	 	
 	• 	prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;	
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 	• 	the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (a) shares owned by persons who are directors and also officers, and (b) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or	
 	 	 	
 	• 	on or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66% of the outstanding voting stock which is not owned by the interested stockholder.	
       Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting securities. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that Section 203 may also discourage attempts that might result in a premium over the market price for the shares of common stock held by stockholders.

Anti-Takeover Effects of Provisions of Our Charter Documents

       Our amended and restated certificate of incorporation to be in effect upon the closing of this offering provides for our board of directors to be divided into three classes serving staggered terms. Approximately one-third of the board of directors will be elected each year. The provision for a classified board could prevent a party who acquires control of a majority of the outstanding voting stock from obtaining control of the board of directors until the second annual stockholders meeting following the date the acquirer obtains the controlling stock interest. The classified board provision could discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company and could increase the likelihood that incumbent directors will retain their positions. Our amended and restated certificate of incorporation to be in effect upon the closing of this offering provides that directors may be removed with cause by the affirmative vote of the holders of the outstanding shares of common stock.

       Our amended bylaws to be in effect upon the closing of this offering establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board of directors. At an annual meeting, stockholders may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors. Stockholders may also consider a proposal or nomination by a person who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given to our Secretary timely written notice, in proper form, of his or her intention to bring that business before the meeting. The amended bylaws do not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting of the stockholders. However, our bylaws may have the effect of precluding the conduct of business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.

       Under Delaware law, a special meeting of stockholders may be called by the board of directors or by any other person authorized to do so in the amended and restated certificate of incorporation or the amended bylaws. Our amended bylaws authorize a majority of our board of directors, the chairman of the board or the chief executive officer to call a special meeting of stockholders.

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Because our stockholders do not have the right to call a special meeting, a stockholder could not force stockholder consideration of a proposal over the opposition of the board of directors by calling a special meeting of stockholders prior to such time as a majority of the board of directors believed or the chief executive officer believed the matter should be considered or until the next annual meeting provided that the requestor met the notice requirements. The restriction on the ability of stockholders to call a special meeting means that a proposal to replace the board also could be delayed until the next annual meeting.

       Delaware law provides that stockholders may execute an action by written consent in lieu of a stockholder meeting. However, Delaware law also allows us to eliminate stockholder actions by written consent. Elimination of written consents of stockholders may lengthen the amount of time required to take stockholder actions since actions by written consent are not subject to the minimum notice requirement of a stockholder’s meeting. However, we believe that the elimination of stockholders’ written consents may deter hostile takeover attempts. Without the availability of stockholder’s actions by written consent, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a stockholders’ meeting. The holder would have to obtain the consent of a majority of the board of directors, the chairman of the board or the chief executive officer to call a stockholders’ meeting and satisfy the notice periods determined by the board of directors. Our amended and restated certificate of incorporation to be in effect upon the closing of this offering provides for the elimination of actions by written consent of stockholders upon the closing of this offering.

Transfer Agent and Registrar

       The transfer agent and registrar for our common stock is                    .

Nasdaq Stock Market Listing

       We have applied to have our common stock listed on the Nasdaq National Market for quotation under the symbol “CYTK”.

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SHARES ELIGIBLE FOR FUTURE SALE

       Prior to this offering, there has been no public market for our stock. Future sales of substantial amounts of our common stock in the public market following this offering or the possibility of these sales occurring could adversely affect prevailing market prices for our common stock or could impair our ability to raise capital through an offering of equity securities.

       After this offering and the private placement, we will have outstanding 25,912,198 shares of common stock, based upon shares outstanding as of January 15, 2004. All of the shares sold in this offering will be freely tradable without restriction under the Securities Act except for any shares purchased by our “affiliates” as that term is defined in Rule 144 under the Securities Act. The remaining 19,528,865 shares of common stock held by existing stockholders are “restricted” shares as that term is defined in Rule 144 under the Securities Act. We issued and sold the restricted shares in private transactions in reliance upon exemptions from registration under the Securities Act. Restricted shares may be sold in the public market only if they are registered under the Securities Act or if they qualify for an exemption from registration, such as Rule 144 or 701 under the Securities Act, which are summarized below.

       Our officers, directors and some of our stockholders, including business partners, who collectively hold an aggregate of 7,335,423 shares, and the underwriters have entered into lock-up agreements in connection with this offering. These lock-up agreements provide that, with limited exceptions, our officers, directors and other stockholders have agreed not to offer, sell, contract to sell, grant any option to purchase or otherwise dispose of any of our shares for a period of 180 days after the effective date of this offering. Goldman, Sachs & Co. may, in its sole discretion and at any time without prior notice, release all or any portion of the shares subject to these lock-up agreements.

       Taking into account the lock-up agreements, the number of shares, other than shares sold in the offering, that will be available for sale in the public market under the provisions of Rules 144 and 701, will be as follows:

 	• 	381,066 shares that become eligible for sale at various times between the date of this offering and the date 90 days after the effective date of this offering;	

 	 	 	
 	• 	an additional 18,565,765 shares that become eligible for sale beginning 180 days after the effective date of this offering;	

 	• 	an additional                    shares that become eligible for sale upon exercise of vested options 90 days after the date of this prospectus and an additional                    shares that become eligible for sale upon the exercise of vested options 180 days after the date of this prospectus; and	

 	• 	an additional 479,972 shares that become eligible for sale at various times thereafter upon the expiration of applicable holding periods.	
 	 	 	
       Following the expiration of the lock-up period,                     shares issued upon exercise of options granted by us prior to the completion of this offering will also be available for sale in the public market pursuant to Rule 701 under the Securities Act unless those shares are held by one of our affiliates, directors or officers.

       Rule 701 permits resale of shares in reliance upon Rule 144 but without compliance with restrictions of Rule 144, including the holding period requirement. In general, under Rule 144 as currently in effect, a person, or persons whose shares are aggregated, who has beneficially owned restricted shares for at least one year, including the holding period of any prior owner except an

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affiliate, would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

 	• 	one percent of the number of shares of common stock then outstanding, which will equal approximately 259,121 shares immediately after the offering, or	

 	• 	the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a Form 144 with respect to such sale.	
       Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. Under Rule 144(k), a person who is not deemed to have been an affiliate of our company at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years including the holding period of any prior owner except an affiliate, is entitled to sell the shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

       Rule 701, as currently in effect, permits our employees, officers, directors or consultants who purchased shares under a written compensatory plan or contract to resell these shares in reliance upon Rule 144 but without compliance with specific restrictions. Rule 701 provides that affiliates may sell their Rule 701 shares under Rule 144 without complying with the holding period requirement and that non-affiliates may sell these shares in reliance on Rule 144 without complying with the holding period, public information, volume limitation or notice provisions of Rule 144.

       We intend to file, shortly after the effectiveness of this offering, a registration statement on Form S-8 under the Securities Act covering all shares of common stock reserved for issuance under the stock plans and subject to outstanding options under our 1997 Stock Option/ Stock Issuance Plan. See “Management — Stock Plans”. Shares of common stock issued upon exercise of options under the Form S-8 will be available for sale in the public market, subject to Rule 144 volume limitations applicable to affiliates and subject to the contractual restrictions described above. As of January 15, 2004, options to purchase 2,186,732 shares of common stock were outstanding. Beginning 90 and 180 days after the effective date of this offering, approximately                     shares and                     shares, respectively, issuable upon the exercise of vested stock options will become eligible for sale in the public market, if the options are exercised.

       Following this offering and the private placement, the holders of an aggregate of 17,099,636 shares of outstanding common stock, 583,333 shares of common stock sold to an affiliate of GSK for cash proceeds of $7 million at a purchase price equal to the assumed initial public offering price of $12.00 per share and 190,991 shares of common stock issuable upon the exercise of warrants or conversion of preferred stock underlying warrants have the right to require us to register their shares for sale upon meeting specific requirements. See “Description of Capital Stock — Registration Rights” for additional information regarding registration rights.

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MATERIAL UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS OF COMMON STOCK

       This section summarizes certain material United States federal income and estate tax considerations relating to the ownership and disposition of common stock. This summary does not provide a complete analysis of all potential tax considerations. The information provided below is based on existing authorities. These authorities may change, possibly retroactively, or the IRS might interpret the existing authorities differently. In either case, the tax considerations of owning or disposing of common stock could differ from those described below. For purposes of this summary, a “non-U.S. holder” is any holder other than a citizen or resident of the United States, a corporation created or organized under the laws of the United States or any political subdivision thereof, a trust that is (i) subject to the primary supervision of a United States court and the control of one of more U.S. persons or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person or an estate whose income is subject to U.S. income tax regardless of source. If a partnership is a beneficial owner of common stock, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. The summary generally does not address tax considerations that may be relevant to particular investors because of their specific circumstances (such as U.S. expatriates, insurance companies, tax-exempt organizations, dealers in securities, banks or other financial institutions, “controlled foreign corporations,” “passive foreign investment companies,” “foreign personal holding companies,” corporations that accumulate earnings to avoid United States federal income tax and investors that hold our common stock as part of a hedge, straddle or conversion transaction), or because they are subject to special rules. Finally, the summary does not describe the effects of any applicable foreign, state, or local laws.

       INVESTORS CONSIDERING THE PURCHASE OF COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE CONSEQUENCES OF FOREIGN, STATE, OR LOCAL LAWS, AND TAX TREATIES.

Dividends

       Payments on the common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and will first be applied against and reduce a holder’s adjusted basis in the common stock, but not below zero, and then the excess, if any, will be treated as gain from the sale of the common stock.

       Amounts treated as dividends paid to a non-U.S. holder on our common stock will generally be subject to U.S. withholding tax at a 30 percent rate. The withholding tax might not apply, however, or might apply at a reduced rate, under the terms of an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence. A non-U.S. holder must demonstrate its entitlement to treaty benefits by certifying its, among other facts, nonresident status. A non-U.S. holder can meet this certification requirement by providing a Form W-8BEN or appropriate substitute form to us or our paying agent. If the holder holds the stock through a financial institution or other agent acting on the holder’s behalf, the holder will be required to provide appropriate documentation to the agent. The holder’s agent will then be required to provide certification to us or our paying agent, either directly or through other intermediaries. For payments made to a foreign partnership or other foreign flowthrough entity, the certification requirements generally apply to the partners or other owners, and the foreign partnership or foreign intermediary will also be required to comply with additional certification requirements. Special rules, described below, apply if a dividend is effectively connected with a U.S. trade or business conducted by the non-U.S. holder.

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Sale of Common Stock

       Non-U.S. holders will generally not be subject to U.S. federal income tax on any gains realized on the sale, exchange, or other disposition of common stock. This general rule, however, is subject to several exceptions. For example, the gain would be subject to U.S. federal income tax if:
 	 	 	
 	• 	the gain is effectively connected with the conduct by the non-U.S. holder of a U.S. trade or business (in which case the special rules described below apply);	
 	 	 	
 	• 	the non-U.S. holder was a citizen or resident of the United States and thus is subject to special rules that apply to expatriates;	
 	 	 	
 	• 	the non-U.S. holder is an individual who holds his or her common stock as a capital asset (generally, an asset held for investment purposes) and who is present in the United States for a period or periods aggregating 183 days or more during the taxable year in which the sale or disposition occurs and other conditions are met; or	
 	 	 	
 	• 	the rules of the Foreign Investment in Real Property Tax Act (or FIRPTA) (described below) treat the gain as effectively connected with a U.S. trade or business.	
       The FIRPTA rules may apply to a sale, exchange or other disposition of common stock if we are, or were within the shorter of five years before the transaction or the non-U.S. holder’s holding period for the common stock, a “U.S. real property holding corporation” (or USRPHC). In general, we would be a USRPHC if interests in U.S. real estate comprised most of our assets. We do not believe that we are a USRPHC or that we will become one in the future. Even if we become a USRPHC, as long as our common stock is regularly traded on an established securities market, however, such common stock will be subject to U.S. federal income tax under the FIRPTA rules only if the non-U.S. holder actually or constructively held more than 5 percent of such regularly traded common stock.

Dividends or Gain Effectively Connected With a U.S. Trade or Business

       If any dividend on common stock, or gain from the sale, exchange or other disposition of common stock, is effectively connected with a U.S. trade or business conducted by the non-U.S. holder, then the dividend or gain will be subject to U.S. federal income tax at the regular graduated rates. If the non-U.S. holder is eligible for the benefits of a tax treaty between the United States and the holder’s country of residence, any “effectively connected” dividend or gain would generally be subject to U.S. federal income tax only if it is also attributable to a permanent establishment or fixed base maintained by the holder in the United States. Payments of dividends that are effectively connected with a U.S. trade or business, and therefore included in the gross income of a non-U.S. holder, will not be subject to the 30 percent withholding tax. To claim exemption from withholding, the holder must certify its qualification, which can be done by filing a Form W-8ECI. If the non-U.S. holder is a corporation, that portion of its earnings and profits that is effectively connected with its U.S. trade or business would generally be subject to a “branch profits tax.” The branch profits tax rate is generally 30 percent, although an applicable income tax treaty might provide for a lower rate.

U.S. Federal Estate Tax

       The estates of nonresident alien individuals are generally subject to U.S. federal estate tax on property with a U.S. situs. Because we are a U.S. corporation, our common stock will be U.S. situs property and therefore will be included in the taxable estate of a nonresident alien decedent. The U.S. federal estate tax liability of the estate of a nonresident alien may be affected by a tax treaty between the United States and the decedent’s country of residence.

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Backup Withholding and Information Reporting

       The Code and the Treasury regulations require those who make specified payments to report the payments to the IRS. Among the specified payments are dividends and proceeds paid by brokers to their customers. The required information returns enable the IRS to determine whether the recipient properly included the payments in income. This reporting regime is reinforced by “backup withholding” rules. These rules require the payors to withhold tax from payments subject to information reporting if the recipient fails to cooperate with the reporting regime by failing to provide his taxpayer identification number to the payor, furnishing an incorrect identification number, or repeatedly failing to report interest or dividends on his returns. The withholding tax rate is currently 28 percent. The backup withholding rules do not apply to payments to corporations, whether domestic or foreign.

       Payments to non-U.S. holders of dividends on common stock will generally not be subject to backup withholding, and payments of proceeds made to non-U.S. holders by a broker upon a sale of common stock will not be subject to information reporting or backup withholding, in each case so long as the non-U.S. holder certifies its nonresident status. Some of the common means of certifying nonresident status are described under “— Dividends.” We must report annually to the IRS any dividends paid to each non-U.S. holder and the tax withheld, if any, with respect to such dividends. Copies of these reports may be made available to tax authorities in the country where the non-U.S. holder resides.

       Any amounts withheld from a payment to a holder of common stock under the backup withholding rules can be credited against any U.S. federal income tax liability of the holder.

       THE PRECEDING DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY AND IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING, AND DISPOSING OF OUR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.

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UNDERWRITING

       Cytokinetics and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co., Credit Suisse First Boston LLC, Pacific Growth Equities, LLC and Lazard Frères & Co. LLC are the representatives of the underwriters.
 	 	 	 	 	 	
Underwriters	 	Number of Shares	

	 	

	
Goldman, Sachs & Co. 	 	 	 	 	
Credit Suisse First Boston LLC	 	 	 	 	
Pacific Growth Equities, LLC	 	 	 	 	
Lazard Frères & Co. LLC	 	 	 	 	

	 	
 	Total	 	 	5,800,00	 	

	 	

       The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

       If the underwriters sell more shares than the total number set forth in the table above, the underwriters have an option to buy up to an additional 870,000 shares from Cytokinetics to cover such sales. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

       The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by Cytokinetics. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase                     additional shares.

Paid by Cytokinetics	

	
 	 	No Exercise	 	Full Exercise	

	 	

	
Per Share	 	$	 	 	 	$	 	 	

	 	 	 	

	 	
 	Total	 	$	 	 	 	$	 	 	

	 	 	 	

	 	
       Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $          per share from the initial public offering price. Any such securities dealers may resell any shares purchased from the underwriters to certain other brokers or dealers at a discount of up to $          per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms.

       Subject to limited exceptions including the private placement of up to $7.0 million of the Company’s common stock issued to an affiliate of GlaxoSmithKline immediately prior to the completion of the offering, Cytokinetics, its directors, officers and stockholders have agreed with the underwriters not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives. This agreement does not apply to Cytokinetics with respect to options or shares of its common stock issued pursuant to any existing employee benefit plans or to new shares of Cytokinetics’ common stock issued or sold in connection with any corporate strategic development transaction or any merger or acquisition transaction up to an aggregate amount of ten percent (10%) of the outstanding shares of Cytokinetics’ common stock following completion of the

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offering of shares offered by this prospectus. See “Shares Eligible for Future Sale” for a discussion of certain transfer restrictions.

       Prior to the offering, there has been no public market for the shares. The initial public offering price has been negotiated among Cytokinetics and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be Cytokinetics’ historical performance, estimates of the business potential and earnings prospects of Cytokinetics, an assessment of Cytokinetics’ management and the consideration of the above factors in relation to market valuation of companies in related businesses.

       An application has been made to quote the common stock on the Nasdaq National Market under the symbol “CYTK”.

       In connection with the offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Shorts sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares from Cytokinetics in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option granted to them. “Naked” short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.

       The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

       Purchases to cover a short position and stabilizing transactions may have the effect of preventing or retarding a decline in the market price of Cytokinetics’ stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the Nasdaq National Market, in the over-the-counter market or otherwise.

       Each underwriter has represented, warranted and agreed that (i) it has not offered or sold and, prior to the expiry of a period of six months from the Closing date, will not offer or sell any shares to persons in the United Kingdom except to persons whose ordinary activities involve them acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (“FSMA”)) received by it in connection with the issue or sale of any shares in circumstances in which section 21(1) of the FSMA does not apply to the Issuer; and (iii) it has complied and will comply with

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all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

       The shares may not be offered or sold, transferred or delivered, as part of their initial distribution or at any time thereafter, directly or indirectly, to any individual or legal entity in the Netherlands other than to individuals or legal entities who or which trade or invest in securities in the conduct of their profession or trade, which includes banks, securities intermediaries, insurance companies, pension funds, other institutional investors and commercial enterprises which, as an ancillary activity, regularly trade or invest in securities.

       The shares being offered may not be offered or sold by means of any document other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and no advertisement, invitation or document relating to the shares being offered may be issued, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares being offered which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder.

       This prospectus has not been and will not be registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each syndicate member acknowledges that the shares may not be offered or sold, or be made the subject of an invitation for subscription or purchase, nor may this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares being offered be circulated or distributed, whether directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor or other person specified Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “Securities and Futures Act”) (ii) to a sophisticated investor, and in accordance with the conditions, specified in Section 275 of the Securities and Futures Act, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act.

       Each underwriter has acknowledged and agreed that the shares being offered have not been registered under the Securities and Exchange Law of Japan and are not being offered or sold and may not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan, except (1) pursuant to an exemption from the registration requirements of the Securities and Exchange Law of Japan and (ii) in compliance with any other applicable requirements of Japanese law. As part of this offering, the underwriters may offer securities in Japan to a list of 49 offerees in accordance with the above provisions.

       The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.

       Cytokinetics estimates that its share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $                    .

       Cytokinetics has agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.

       At the completion of the offering all of these shares, except for shares constituting 4.99% of the outstanding common stock of the Company upon the closing of this offering (after giving effect to the issuance of the shares in this offering, including shares issued (if any) at the closing pursuant to exercise of the over-allotment option) of these shares will be deposited in a voting trust having Wells Fargo Bank, N.A. as the trustee. Under the terms of the voting trust agreement, the trustee has the power to vote these shares as it believes in its sole judgment is in the best interests of the stockholders of Cytokinetics. In addition, the trustee is required to vote the shares to prevent the

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election of more than one CSFB affiliate as a director of Cytokinetics. Each entity which deposits shares will retain the power to transfer or sell its shares to itself or other third parties so long as the transferee is not affiliated with CSFB or is otherwise considered an eligible transferee under the terms of the voting trust agreement. The voting trust agreement will expire in April 2014 or such earlier time as CSFB ceases to be an affiliate of Cytokinetics.

       In connection with the Company’s Series C and Series E preferred stock financings, affiliates of Credit Suisse Group purchased an aggregate of 4,210,527 shares of Series C preferred stock and 2,000,000 shares of Series E preferred stock for an aggregate purchase price of $20,000,003 and $10,000,000, respectively (which are convertible into 3,105,263 shares of common stock upon consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split). Because Credit Suisse First Boston LLC is an underwriter and, as a result of its affiliation with Credit Suisse Group, may receive more than 10% of the entire net proceeds in this offering, the underwriters may be deemed to have a “conflict of interest” under Rule 2710(c)(8) of the Conduct Rules of the National Association of Securities Dealers, Inc. Accordingly, this offering will be made in compliance with the applicable provisions of Rule 2720 of the conduct rules. Rule 2720 requires that the initial public offering price can be no higher than that recommended by a “qualified independent underwriter,” as defined by the NASD. Goldman, Sachs & Co. has served in that capacity and performed due diligence investigations and reviewed and participated in the preparation of the registration statement of which this Prospectus forms a part. Goldman, Sachs & Co. has received $10,000 from the Company as compensation for such role.

       A prospectus in electronic format will be made available on the websites maintained by one or more of the underwriters. The underwriters may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.

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VALIDITY OF SECURITIES

       The validity of the common stock offered hereby will be passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California, and for the underwriters by Latham & Watkins LLP, Menlo Park, California. A member of Wilson Sonsini Goodrich & Rosati and an investment partnership comprised of current and former members of Wilson Sonsini Goodrich & Rosati beneficially own an aggregate of 8,620 shares of our common stock.

EXPERTS

       The financial statements as of December 31, 2002 and 2003 and for each of the three years in the period ended December 31, 2003 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

       We have filed with the Securities and Exchange Commission, a registration statement on Form S-1 under the Securities Act with respect to the common stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to Cytokinetics and the common stock offered hereby, you should refer to the registration statement and to the exhibits and schedules filed therewith. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules therewith may be inspected without charge at the public reference room maintained by the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of all or any portion of the registration statement may be obtained from such offices upon payment of prescribed fees. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC.

97

Table of Contents

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Index to Financial Statements
 	 	 	 	 	
 	 	Page	

	
Report of Independent Auditors	 	 	F-2	 	
Balance Sheets	 	 	F-3	 	
Statements of Operations	 	 	F-4	 	
Statements of Stockholders’ Deficit	 	 	F-5	 	
Statements of Cash Flows	 	 	F-7	 	
Notes to Financial Statements	 	 	F-8	 	
F-1

Table of Contents

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of
Cytokinetics, Incorporated
(a development stage enterprise):

The reverse stock split transaction described in Note 13 to the financial statements has not been consummated at the date of our opinion when it has been consummated, we will be in a position to issue the following report:

“In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Cytokinetics, Incorporated (a development stage enterprise) at December 31, 2002 and 2003, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003 and, cumulatively, for the period from August 5, 1997 (date of inception) to December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.”
 	 	
 	/s/ PRICEWATERHOUSECOOPERS LLP	
San Jose, California
March 10, 2004, except for Note 13
as to which the date is                     , 2004

F-2

Table of Contents

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Balance Sheets
(in thousands, except share and per share data)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	Pro forma	
 	 	 	 	Stockholders’	
 	 	December 31,	 	Equity at	

	 	December 31,	
 	 	2002	 	2003	 	2003	

	 	

	 	

	
 	 	 	 	 	 	(Note 10)	
 	 	 	 	 	 	(unaudited)	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cash and cash equivalents	 	$	16,388	 	 	$	10,991	 	 	 	 	 	
 	Short-term investments	 	 	10,425	 	 	 	24,197	 	 	 	 	 	
 	Accounts receivable	 	 	8	 	 	 	74	 	 	 	 	 	
 	Related party accounts receivable	 	 	8	 	 	 	189	 	 	 	 	 	
 	Prepaids and other current assets	 	 	1,117	 	 	 	1,625	 	 	 	 	 	

	 	 	 	

	 	 	 	 	 	
 	 	Total current assets	 	 	27,946	 	 	 	37,076	 	 	 	 	 	
Long-term investments	 	 	3,648	 	 	 	7,857	 	 	 	 	 	
Property and equipment, net	 	 	9,742	 	 	 	8,870	 	 	 	 	 	
Related party notes receivable	 	 	1,146	 	 	 	1,146	 	 	 	 	 	
Restricted cash	 	 	13,106	 	 	 	7,199	 	 	 	 	 	
Other assets	 	 	580	 	 	 	725	 	 	 	 	 	

	 	 	 	

	 	 	 	 	 	
 	 	Total assets	 	$	56,168	 	 	$	62,873	 	 	 	 	 	

	 	 	 	

	 	 	 	 	 	
Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)	 	 	 	 	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Accounts payable	 	$	1,609	 	 	$	1,589	 	 	 	 	 	
 	Accrued liabilities	 	 	2,241	 	 	 	3,060	 	 	 	 	 	
 	Short-term portion of equipment financing lines	 	 	2,415	 	 	 	2,008	 	 	 	 	 	
 	Short-term portion of deferred revenue	 	 	3,110	 	 	 	2,800	 	 	 	 	 	

	 	 	 	

	 	 	 	 	 	
 	 	Total current liabilities	 	 	9,375	 	 	 	9,457	 	 	 	 	 	
Long-term portion of equipment financing lines	 	 	7,077	 	 	 	8,075	 	 	 	 	 	
Long-term portion of deferred revenue	 	 	7,000	 	 	 	4,200	 	 	 	 	 	

	 	 	 	

	 	 	 	 	 	
 	 	Total liabilities	 	 	23,452	 	 	 	21,732	 	 	 	 	 	

	 	 	 	

	 	 	 	 	 	
Commitments (Note 7)	 	 	 	 	 	 	 	 	 	 	 	 	
Convertible preferred stock, $0.001 par value:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Authorized: 37,300,000 shares	 	 	 	 	 	 	 	 	 	 	 	 	
 	Issued and outstanding: 26,108,859 shares in 2002, 34,124,308 shares in 2003 and none pro forma (unaudited) (Note 10)	 	 	 	 	 	 	 	 	 	 	 	 	
 	(Liquidation preference: $94,300 in 2002 and $134,377 in 2003)	 	 	93,304	 	 	 	133,172	 	 	$	—	 	

	 	 	 	

	 	 	 	

	 	
 	 	 	93,304	 	 	 	133,172	 	 	 	—	 	

	 	 	 	

	 	 	 	

	 	
Stockholders’ equity (deficit):	 	 	 	 	 	 	 	 	 	 	 	 	
 	Common stock, $0.001 par value:	 	 	 	 	 	 	 	 	 	 	 	 	
Authorized: 61,500,000 shares	 	 	 	 	 	 	 	 	 	 	 	 	
Issued and outstanding: 1,926,596 shares in 2002, 2,307,258 shares in 2003 and 19,411,240 shares pro forma (unaudited) (Note 10)	 	 	2	 	 	 	2	 	 	 	19	 	
 	Additional paid-in capital	 	 	809	 	 	 	5,646	 	 	 	138,801	 	
 	Deferred stock-based compensation	 	 	(50	)	 	 	(3,651	)	 	 	(3,651	)	
 	Accumulated other comprehensive income	 	 	40	 	 	 	46	 	 	 	46	 	
 	Deficit accumulated during the development stage	 	 	(61,389	)	 	 	(94,074	)	 	 	(94,074	)	

	 	 	 	

	 	 	 	

	 	
 	 	Total stockholders’ equity (deficit)	 	 	(60,588	)	 	 	(92,031	)	 	$	41,141	 	

	 	 	 	

	 	 	 	

	 	
 	 	Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	 	$	56,168	 	 	$	62,873	 	 	 	 	 	

	 	 	 	

	 	 	 	 	 	

The accompanying notes are an integral part of these financial statements.

F-3

Table of Contents

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Statements of Operations
(in thousands, except per share data)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	Period from	
 	 	 	 	 	 	 	 	August 5, 1997	
 	 	 	 	(date of	
 	 	Years Ended December 31,	 	inception) to	

	 	December 31,	
 	 	2001	 	2002	 	2003	 	2003	

	 	

	 	

	 	

	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development revenues from related party	 	$	6,764	 	 	$	8,470	 	 	$	7,703	 	 	$	22,937	 	
 	Research and development and grant revenues	 	 	302	 	 	 	126	 	 	 	74	 	 	 	502	 	
 	License revenues from related party	 	 	1,400	 	 	 	2,800	 	 	 	2,800	 	 	 	7,000	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	Total revenues	 	 	8,466	 	 	 	11,396	 	 	 	10,577	 	 	 	30,439	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development (1)	 	 	20,961	 	 	 	28,424	 	 	 	34,004	 	 	 	100,817	 	
 	General and administrative (1)	 	 	5,897	 	 	 	6,953	 	 	 	9,163	 	 	 	28,136	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	Total operating expenses	 	 	26,858	 	 	 	35,377	 	 	 	43,167	 	 	 	128,953	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Operating loss	 	 	(18,392	)	 	 	(23,981	)	 	 	(32,590	)	 	 	(98,514	)	
Interest and other income	 	 	3,232	 	 	 	2,232	 	 	 	2,395	 	 	 	9,271	 	
Interest and other expense	 	 	(714	)	 	 	(1,331	)	 	 	(2,490	)	 	 	(4,831	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net loss	 	$	(15,874	)	 	$	(23,080	)	 	$	(32,685	)	 	$	(94,074	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net loss per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted	 	$	(11.18	)	 	$	(13.25	)	 	$	(17.10	)	 	 	 	 	
Weighted-average number of shares used in per share calculations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted	 	 	1,420	 	 	 	1,742	 	 	 	1,911	 	 	 	 	 	
Pro forma net loss per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted (unaudited) (Note 10)	 	 	 	 	 	 	 	 	 	$	(1.81	)	 	 	 	 	
Weighted-average number of shares used in pro forma per share calculations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic and diluted (unaudited) (Note 10)	 	 	 	 	 	 	 	 	 	 	18,029	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(1) Includes the following stock-based compensation charges:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Research and development	 	$	86	 	 	$	4	 	 	$	609	 	 	$	922	 	
 	General and administrative	 	 	27	 	 	 	2	 	 	 	317	 	 	 	347	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	$	113	 	 	$	6	 	 	$	926	 	 	$	1,269	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
The accompanying notes are an integral part of these financial statements.

F-4

Table of Contents

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Statements of Stockholder’s Deficit
(in thousands, except share and per share data)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	Accumulated	 	Deficit	 	 	
 	 	 	 	 	 	 	 	Other	 	Accumulated	 	 	
 	 	Common Stock	 	Additional	 	Deferred	 	Comprehensive	 	During the	 	Total	

	 	Paid-In	 	Stock-Based	 	Income	 	Development	 	Stockholders’	
 	 	Shares	 	Amount	 	Capital	 	Compensation	 	(Loss)	 	Stage	 	Deficit	

	 	

	 	

	 	

	 	

	 	

	 	

	
Issuance of common stock upon exercise of stock options for cash at $0.015 per share	 	 	147,625	 	 	$	—	 	 	$	2	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	2	 	
Issuance of common stock to founders at $0.015 per share in exchange for cash in January 1998.	 	 	563,054	 	 	 	1	 	 	 	7	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	8	 	
Net loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(2,015	)	 	 	(2,015	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Balances, December 31, 1998.	 	 	710,679	 	 	 	1	 	 	 	9	 	 	 	—	 	 	 	—	 	 	 	(2,015	)	 	 	(2,005	)	
Issuance of common stock upon exercise of stock options for cash at $0.015-$0.58 per share	 	 	287,500	 	 	 	—	 	 	 	69	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	69	 	
Issuance of warrants, valued using Black- Scholes model	 	 	—	 	 	 	—	 	 	 	41	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	41	 	
Deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	237	 	 	 	(237	)	 	 	—	 	 	 	—	 	 	 	—	 	
Amortization of deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	—	 	 	 	123	 	 	 	—	 	 	 	—	 	 	 	123	 	
Components of comprehensive loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Unrealized loss on investments	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(8	)	 	 	—	 	 	 	(8	)	
 	Net loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(7,341	)	 	 	(7,341	)	

	 	
 	 	Total comprehensive loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(7,349	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Balances, December 31, 1999	 	 	998,179	 	 	 	1	 	 	 	356	 	 	 	(114	)	 	 	(8	)	 	 	(9,356	)	 	 	(9,121	)	
Issuance of common stock upon exercise of stock options for cash at $0.015-$0.58 per share	 	 	731,661	 	 	 	1	 	 	 	194	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	195	 	
Deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	93	 	 	 	(93	)	 	 	—	 	 	 	—	 	 	 	—	 	
Amortization of deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	—	 	 	 	101	 	 	 	—	 	 	 	—	 	 	 	101	 	
Components of comprehensive loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net change in unrealized gain (loss) on investments	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	86	 	 	 	—	 	 	 	86	 	
 	Net loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(13,079	)	 	 	(13,079	)	

	 	
 	 	Total comprehensive loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(12,993	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Balances, December 31, 2000	 	 	1,729,840	 	 	 	2	 	 	 	643	 	 	 	(106	)	 	 	78	 	 	 	(22,435	)	 	 	(21,818	)	
Issuance of common stock upon exercise of stock options for cash at $0.015-$1.20 per share	 	 	102,480	 	 	 	—	 	 	 	56	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	56	 	
Repurchase of common stock	 	 	(33,334	)	 	 	—	 	 	 	(19	)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(19	)	
Compensation expense for acceleration of options	 	 	—	 	 	 	—	 	 	 	20	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	20	 	
Deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	45	 	 	 	(45	)	 	 	—	 	 	 	—	 	 	 	—	 	
Amortization of deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	—	 	 	 	93	 	 	 	—	 	 	 	—	 	 	 	93	 	
Components of comprehensive loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net change in unrealized gain on investments	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	190	 	 	 	—	 	 	 	190	 	
 	Net loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(15,874	)	 	 	(15,874	)	

	 	
 	 	Total comprehensive loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(15,684	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
The accompanying notes are an integral part of these financial statements.

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Table of Contents
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	Accumulated	 	Deficit	 	 	
 	 	 	 	 	 	 	 	Other	 	Accumulated	 	 	
 	 	Common Stock	 	Additional	 	Deferred	 	Comprehensive	 	During the	 	Total	

	 	Paid-In	 	Stock-Based	 	Income	 	Development	 	Stockholders’	
 	 	Shares	 	Amount	 	Capital	 	Compensation	 	(Loss)	 	Stage	 	Deficit	

	 	

	 	

	 	

	 	

	 	

	 	

	
Balances, December 31, 2001	 	 	1,798,986	 	 	 	2	 	 	 	745	 	 	 	(58	)	 	 	268	 	 	 	(38,309	)	 	 	(37,352	)	
Issuance of common stock upon exercise of stock options for cash at $0.015-$1.20 per share	 	 	131,189	 	 	 	—	 	 	 	68	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	68	 	
Repurchase of common stock	 	 	(3,579	)	 	 	—	 	 	 	(2	)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(2	)	
Deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	(2	)	 	 	2	 	 	 	—	 	 	 	—	 	 	 	—	 	
Amortization of deferred compensation	 	 	—	 	 	 	—	 	 	 	—	 	 	 	6	 	 	 	—	 	 	 	—	 	 	 	6	 	
Components of comprehensive loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net change in unrealized gain on investments	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(228	)	 	 	—	 	 	 	(228	)	
 	Net loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(23,080	)	 	 	(23,080	)	

	 	
 	 	Total comprehensive loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(23,308	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Balances, December 31, 2002	 	 	1,926,596	 	 	 	2	 	 	 	809	 	 	 	(50	)	 	 	40	 	 	 	(61,389	)	 	 	(60,588	)	
Issuance of common stock upon exercise of stock options for cash at $0.20-$1.20 per share	 	 	380,662	 	 	 	—	 	 	 	310	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	310	 	
Stock-based compensation	 	 	—	 	 	 	—	 	 	 	158	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	158	 	
Deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	4,369	 	 	 	(4,369	)	 	 	—	 	 	 	—	 	 	 	—	 	
Amortization of deferred stock-based compensation	 	 	—	 	 	 	—	 	 	 	—	 	 	 	768	 	 	 	—	 	 	 	—	 	 	 	768	 	
Components of comprehensive loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net change in unrealized gain on investments	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	6	 	 	 	—	 	 	 	6	 	
 	Net loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(32,685	)	 	 	(32,685	)	

	 	
 	 	Total comprehensive loss	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(32,679	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Balances, December 31, 2003	 	 	2,307,258	 	 	$	2	 	 	$	5,646	 	 	$	(3,651	)	 	$	46	 	 	$	(94,074	)	 	$	(92,031	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
The accompanying notes are an integral part of these financial statements.

F-6

Table of Contents

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Statements of Cash Flows
(in thousands)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	Period from	
 	 	 	 	 	 	 	 	August 5,	
 	 	 	 	1997 (date of	
 	 	Years Ended December 31,	 	inception) to	

	 	December 31,	
 	 	2001	 	2002	 	2003	 	2003	

	 	

	 	

	 	

	
 	 	 	 	 	 	 	 	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(15,874	)	 	$	(23,080	)	 	$	(32,685	)	 	$	(94,074	)	
Adjustments to reconcile net loss to net cash used in operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Depreciation and amortization	 	 	1,614	 	 	 	2,849	 	 	 	3,181	 	 	 	8,895	 	
 	Loss on disposal of equipment	 	 	156	 	 	 	14	 	 	 	224	 	 	 	394	 	
 	Gain on sale of investments	 	 	(84	)	 	 	—	 	 	 	—	 	 	 	(84	)	
 	Allowance for doubtful accounts	 	 	386	 	 	 	(195	)	 	 	—	 	 	 	191	 	
 	Non-cash expense related to warrants issued for equipment financing lines and facility lease	 	 	7	 	 	 	7	 	 	 	—	 	 	 	41	 	
 	Non-cash interest expense	 	 	—	 	 	 	—	 	 	 	59	 	 	 	59	 	
 	Non-cash compensation expense for acceleration of options	 	 	20	 	 	 	—	 	 	 	—	 	 	 	20	 	
 	Stock-based compensation	 	 	93	 	 	 	6	 	 	 	926	 	 	 	1,249	 	
 	Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Accounts receivable	 	 	—	 	 	 	—	 	 	 	(66	)	 	 	(74	)	
 	 	Related party accounts receivable	 	 	(1,261	)	 	 	1,054	 	 	 	(181	)	 	 	(380	)	
 	 	Prepaids and other assets	 	 	(444	)	 	 	(342	)	 	 	(33	)	 	 	(1,150	)	
 	 	Accounts payable	 	 	1,280	 	 	 	(1,173	)	 	 	498	 	 	 	1,589	 	
 	 	Accrued liabilities	 	 	132	 	 	 	1,222	 	 	 	819	 	 	 	3,060	 	
 	 	Other assets	 	 	(406	)	 	 	(175	)	 	 	(145	)	 	 	(725	)	
 	 	Deferred revenue	 	 	12,600	 	 	 	(2,490	)	 	 	(3,110	)	 	 	7,000	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	 	Net cash used in operating activities	 	 	(1,781	)	 	 	(22,303	)	 	 	(30,513	)	 	 	(73,989	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Increase (decrease) in restricted cash	 	 	(6,011	)	 	 	(6,870	)	 	 	5,907	 	 	 	(7,199	)	
Purchases of property and equipment	 	 	(3,808	)	 	 	(6,570	)	 	 	(3,051	)	 	 	(18,183	)	
Proceeds from sale of equipment	 	 	24	 	 	 	—	 	 	 	—	 	 	 	24	 	
Issuance of notes receivable	 	 	(200	)	 	 	(750	)	 	 	—	 	 	 	(1,146	)	
Purchases of investments	 	 	(65,422	)	 	 	—	 	 	 	(54,971	)	 	 	(171,231	)	
Proceeds from sales and maturities of investments	 	 	51,889	 	 	 	36,768	 	 	 	36,995	 	 	 	139,307	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	 	 	Net cash provided by (used in) investing activities	 	 	(23,528	)	 	 	22,578	 	 	 	(15,120	)	 	 	(58,428	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Proceeds from issuance of preferred stock, net of issuance costs	 	 	13,842	 	 	 	(50	)	 	 	39,868	 	 	 	133,172	 	
Proceeds from issuance of common stock	 	 	56	 	 	 	68	 	 	 	310	 	 	 	708	 	
Repurchase of common stock	 	 	(19	)	 	 	(2	)	 	 	—	 	 	 	(21	)	
Proceeds from equipment financing lines	 	 	3,545	 	 	 	6,373	 	 	 	1,971	 	 	 	13,802	 	
Repayment of equipment financing lines	 	 	(396	)	 	 	(1,520	)	 	 	(1,913	)	 	 	(4,253	)	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net cash provided by financing activities	 	 	17,028	 	 	 	4,869	 	 	 	40,236	 	 	 	143,408	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Net increase (decrease) in cash and cash equivalents	 	 	(8,281	)	 	 	5,144	 	 	 	(5,397	)	 	 	10,991	 	
Cash and cash equivalents, beginning of period	 	 	19,525	 	 	 	11,244	 	 	 	16,388	 	 	 	—	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Cash and cash equivalents, end of period	 	$	11,244	 	 	$	16,388	 	 	 	10,991	 	 	$	10,991	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Supplemental disclosure of cash flow information:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Cash paid for interest	 	$	180	 	 	$	697	 	 	$	833	 	 	$	1,709	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	Cash paid for taxes	 	$	6	 	 	$	63	 	 	$	15	 	 	$	84	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
Supplemental disclosure of significant non-cash investing and financing activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Deferred stock-based compensation	 	$	45	 	 	$	(2	)	 	$	4,369	 	 	$	4,742	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	Purchases of property and equipment through accounts payable	 	$	2,502	 	 	$	518	 	 	$	—	 	 	$	3,020	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
 	Penalty on restructuring of equipment financing lines	 	$	—	 	 	$	—	 	 	$	475	 	 	$	475	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	
The accompanying notes are an integral part of these financial statements.

F-7

Table of Contents

CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements

Note 1 — Formation and Business of the Company:

       Cytokinetics, Incorporated, (the “Company”) was incorporated in Delaware on August 5, 1997 to discover, develop and commercialize novel small molecule drugs specifically targeting the cytoskeleton. The Company has been primarily engaged in conducting research, developing drug candidates and product technologies, recruiting personnel and raising capital.

Note 2 — Summary of Significant Accounting Policies:

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 the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk and Other Risks and Uncertainties

       Financial instruments which potentially subject the Company to concentrations of risk consist principally of cash and cash equivalents, investments and accounts receivable. The Company’s cash and cash equivalents are invested in deposits with two major banks in the United States. Deposits in these banks may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash, cash equivalents, and investments.

       The Company performs an ongoing credit evaluation of its’ customers’ financial conditions and generally does not require collateral to secure accounts receivable. The Company’s exposure to credit risk associated with non-payment is affected principally by conditions or occurrences within GlaxoSmithKline (“GSK”). The Company historically has not experienced significant losses relating to accounts receivable from its primary customer. 96% of the Company’s revenues for the year ended December 31, 2001 and 99% of the Company’s revenues for both the years ended December 31, 2002 and 2003 were derived from GSK.

       Drug candidates developed by the Company may require approvals or clearances from the Food and Drug Administration (“FDA”) or other international regulatory agencies prior to commercialized sales. There can be no assurance that the Company’s drug candidates will receive any of the required approvals or clearances. If the Company was denied approval or clearance or such approval was delayed, it may have a material adverse impact on the Company.

Cash and Cash Equivalents

       Cash equivalents are stated at cost, which approximates market value. The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents.

Investments

       Investments consist of US Corporate Bonds and commercial paper with maturities ranging from three months to two years. The Company has classified all investments as available-for-sale and, as a result, carries such amounts at fair value. Unrealized gains and losses are included in accumulated other comprehensive income (loss) in stockholders’ equity until realized. Realized gains and losses on sales of all such securities are reported in earnings and computed using the specific identification

F-8

Table of Contents
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

cost method. Realized gains or losses and charges for other-than-temporary declines in value, if any, on available-for-sale securities are reported in other income or expense as incurred. The Company periodically evaluates these investments for other-than-temporary impairment.

Fair Value of Financial Instruments

       For financial instruments consisting of cash and cash equivalents, accounts payable and accrued liabilities included in the Company’s financial statements, the carrying amounts are reasonable estimates of fair value due to their short maturities. Estimated fair values for marketable securities, which are separately disclosed elsewhere, are based on quoted market prices for the same or similar instruments. Based on borrowing rates currently available to the Company, the carrying value of the equipment financing lines approximate fair value.

Property and Equipment

       Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the related assets, which is generally three to five years. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term or the estimated useful life of the related assets, typically five years. Upon sale or retirement of assets, the costs and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred.

Impairment of long-lived assets

       In accordance with the provisions of Statement of Financial Accounting Standards Board (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets,” the Company reviews long-lived assets, including property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Under SFAS No. 144, an impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. Impairment, if any, is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value. Through December 31, 2003, there have been no such impairments.

Revenue Recognition

       The Company recognizes revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin, or SAB, No. 101, Revenue Recognition in Financial Statements, as amended by SAB Nos. 101A and 101B. SAB No. 101 requires that four basic criteria must be met before revenue can be recognized: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the fee is fixed and determinable; and collectibility is reasonably assured. Determination of whether persuasive evidence of an arrangement exists and whether delivery has occurred or services have been rendered are based on management’s judgments regarding the fixed nature of the fee charged for research performed and milestones met, and the collectibility of those fees. Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.

       Research and development revenues, which are earned under agreements with third parties for contract research and development activities, are recorded as the related expenses are incurred.

F-9

Table of Contents
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

Charges to the third parties are based upon negotiated rates for full time equivalent employees of the Company and actual out-of-pocket costs. Rates for full time equivalent employees are intended to approximate the Company’s anticipated costs. Milestone payments are non-refundable and recognized as revenue when earned, as evidenced by achievement of the specified milestones and the absence of ongoing performance obligations. Any amounts received in advance of performance are recorded as deferred revenue. None of the revenues recognized to date are refundable if the relevant research effort is not successful.

       Grant revenues are recorded as research is performed. Grant revenues are not refundable.

       License revenues received in connection with strategic alliance agreements are deferred and recognized on a straight-line basis over the term of the agreement.

Research and Development Expenditures

       Research and development costs are charged to operations as incurred.

Income Taxes

       The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

Net Loss Per Common Share

       Basic net loss per share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per share is computed by giving effect to all potential dilutive common shares, including options, common stock subject to repurchase, warrants and convertible preferred stock. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share follows (in thousands):

 	 	Years Ended December 31,	

	
 	 	2001	 	2002	 	2003	

	 	

	 	

	
Numerator:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Net loss	 	$	(15,874	)	 	$	(23,080	)	 	 	(32,685	)	

	 	 	 	

	 	 	 	

	 	
Denominator:	 	 	 	 	 	 	 	 	 	 	 	 	
 	Weighted-average number of common shares outstanding	 	 	1,766	 	 	 	1,877	 	 	 	1,978	 	
 	Less: Weighted-average shares subject to repurchase	 	 	(346	)	 	 	(135	)	 	 	(67	)	

	 	 	 	

	 	 	 	

	 	
Weighted-average number of common shares outstanding used in computing basic and diluted net loss per share	 	 	1,420	 	 	 	1,742	 	 	 	1,911	 	

	 	 	 	

	 	 	 	

	 	

F-10

Table of Contents
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

Anti-dilutive Securities

       The following outstanding options, common stock subject to repurchase, convertible preferred stock and warrants were excluded from the computation of diluted net loss per common share for the periods presented because including them would have had an antidilutive effect (in thousands):

 	 	Years Ended December 31,	

	
 	 	2001	 	2002	 	2003	

	 	

	 	

	
Convertible preferred stock (as if converted)	 	 	13,096	 	 	 	13,096	 	 	 	17,104	 	
Options to purchase common stock	 	 	1,412	 	 	 	2,061	 	 	 	2,244	 	
Common stock subject to repurchase	 	 	216	 	 	 	89	 	 	 	144	 	
Warrants to purchase common stock	 	 	100	 	 	 	100	 	 	 	100	 	
Warrants to purchase convertible preferred stock (as if converted)	 	 	84	 	 	 	84	 	 	 	91	 	

	 	 	 	

	 	 	 	

	 	
 	 	 	14,908	 	 	 	15,430	 	 	 	19,683	 	

	 	 	 	

	 	 	 	

	 	

Stock-based Compensation

       The Company accounts for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees,” Statement of Financial Accounting Standards No. 123 (“SFAS No. 123”), “Accounting for Stock-Based Compensation” and complies with the disclosure requirements of Statement of Financial Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation and Disclosure an Amendment of FASB Statement No. 123.” Under APB 25, compensation expense is based on the difference, if any, on the date of grant, between the estimated fair value of the Company’s common stock and the exercise price. SFAS No. 123 defines a “fair value” based method of accounting for an employee stock option or similar equity investment.

       The Company accounts for equity instruments issued to nonemployees in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force (“EITF”) Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods, or Services.”

       As the determination of fair value of all options granted to employees after such time the Company becomes a public company will include an expected volatility factor in addition to the factors described in the following table, the following results may not be representative of future periods.

F-11

Table of Contents
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

       The following table illustrates the effect on net loss if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation arrangements (in thousands):

 	 	Years Ended December 31,	

	
 	 	2001	 	2002	 	2003	

	 	

	 	

	
Net loss, as reported	 	$	(15,874	)	 	$	(23,080	)	 	$	(32,685	)	
Add: Stock-based employee compensation expense included in reported net loss	 	 	20	 	 	 	—	 	 	 	536	 	
Deduct: Total stock-based employee compensation determined under fair value based method for all awards	 	 	(88	)	 	 	(79	)	 	 	(619	)	

	 	 	 	

	 	 	 	

	 	
Adjusted net loss	 	$	(15,942	)	 	$	(23,159	)	 	$	(32,768	)	

	 	 	 	

	 	 	 	

	 	
Net loss per common share, basic and diluted:	 	 	 	 	 	 	 	 	 	 	 	 	
 	As reported	 	$	(11.18	)	 	$	(13.25	)	 	$	(17.10	)	

	 	 	 	

	 	 	 	

	 	
 	Adjusted	 	$	(11.23	)	 	$	(13.29	)	 	$	(17.15	)	

	 	 	 	

	 	 	 	

	 	

       The value of each option granted is estimated on the date of grant using the minimum value method with the following weighted average assumptions:

 	 	Years Ended December 31,	

	
 	 	2001	 	2002	 	2003	

	 	

	 	

	
Risk-free interest rate	 	 	6.33	%	 	 	2.78	%	 	 	2.80	%	
Expected life (in years)	 	 	5	 	 	 	5	 	 	 	5	 	
Dividend yield	 	 	0.00	%	 	 	0.00	%	 	 	0.00	%	

       Based on the above assumptions, the weighted average estimated minimum values of options granted were $0.30, $0.53 and $4.67 per share for the years ended December 31, 2001, 2002 and 2003, respectively.

Recent Accounting Pronouncements

       In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.” FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. During December 2003, the FASB issued FIN 46R, a revision to FIN 46. FIN 46R provides a broad deferral of the latest date by which all public entities must apply FIN 46 to certain variable interest entities, to the first reporting period ending after March 15, 2004. We do not expect the adoption of FIN 46 to have a material impact upon our financial position, cash flows or results of operations.

       In May, 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability or an asset in some circumstances. Many of those instruments were previously classified as equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and

F-12

Table of Contents
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of SFAS No. 150 and still existing at the beginning of the interim period of adoption. While the effective date of certain elements of SFAS No. 150 has been deferred, we do not expect the adoption of SFAS No. 150 to have a material impact upon our financial position, cash flows or results of operations.

Note 3 — Investments:

       The amortized cost and fair value of short-term and long-term investments at December 31, 2002 and 2003 are as follows (in thousands):

 	 	December 31, 2002	

	
 	 	Amortized	 	Unrealized	 	Unrealized	 	 	
 	 	Cost	 	Gains	 	Losses	 	Fair Value	 	Maturity Dates	

	 	

	 	

	 	

	 	

	
US Corporate Bonds	 	$	9,147	 	 	$	32	 	 	$	(10	)	 	$	9,169	 	 	 	01/03 - 11/03	 	
Foreign Corporate Bonds	 	 	1,253	 	 	 	3	 	 	 	—	 	 	 	1,256	 	 	 	02/03	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Total short-term investments	 	$	10,400	 	 	$	35	 	 	$	(10	)	 	$	10,425	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
US Corporate Bonds	 	$	3,633	 	 	$	15	 	 	$	—	 	 	$	3,648	 	 	 	02/04	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Total long-term investments	 	$	3,633	 	 	$	15	 	 	$	—	 	 	$	3,648	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	

 	 	 	
 	 	December 31, 2003	

	
 	 	Amortized	 	Unrealized	 	Unrealized	 	 	
 	 	Cost	 	Gains	 	Losses	 	Fair Value	 	Maturity Dates	

	 	

	 	

	 	

	 	

	
US Corporate Bonds	 	$	24,182	 	 	$	16	 	 	$	(1	)	 	$	24,197	 	 	 	1/04 - 8/04	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Total short-term investments	 	 	24,182	 	 	 	16	 	 	 	(1	)	 	 	24,197	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
US Corporate Bonds	 	 	7,826	 	 	 	31	 	 	 	—	 	 	 	7,857	 	 	 	7/05 - 8/05	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	
Total long-term investments	 	$	7,826	 	 	$	31	 	 	$	—	 	 	$	7,857	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	

       There were no realized gains or losses in 2002 or 2003.

F-13

Table of Contents
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

Note 4 — Balance Sheet Components (in thousands):

 	 	December 31,	

	
 	 	2002	 	2003	

	 	

	
Property and equipment, net:	 	 	 	 	 	 	 	 	
 	Computer and laboratory equipment	 	$	13,830	 	 	$	15,531	 	
 	Furniture and fixtures	 	 	387	 	 	 	246	 	
 	Leasehold improvements	 	 	982	 	 	 	823	 	

	 	 	 	

	 	
 	 	 	15,199	 	 	 	16,600	 	
 	Less: Accumulated depreciation and amortization	 	 	(5,457	)	 	 	(7,730	)	

	 	 	 	

	 	
 	 	$	9,742	 	 	$	8,870	 	

	 	 	 	

	 	

 	 	 	
 	 	December 31,	

	
 	 	2002	 	2003	

	 	

	
Accrued liabilities:	 	 	 	 	 	 	 	 	
 	Payroll related	 	$	928	 	 	$	1,348	 	
 	Consulting and professional fees	 	 	452	 	 	 	464	 	
 	Other accrued expenses	 	 	861	 	 	 	1,248	 	

	 	 	 	

	 	
 	 	$	2,241	 	 	$	3,060	 	

	 	 	 	

	 	

Note 5 — Related Party Transactions:

       In 1998, the Company entered into a licensing agreement with certain universities where the Company’s founding scientists are also affiliates of the universities. The Company agreed to pay technology license fees, as well as milestone payments for technology developed under the licensing agreement. The Company is also obligated to make minimum royalty payments, as specified in the agreement commencing the year of product market introduction or upon an agreed upon anniversary of the licensing agreement. In 2001, 2002 and 2003, $125,000, $56,000 and $45,000 was paid to the universities under this agreement, respectively.

       In 2001, the Company entered into a strategic alliance agreement with the holders of Series D Convertible Preferred Stock. In the agreement, the stockholders agreed to pay the Company an upfront licensing fee of $14,000,000 for rights to certain technologies. In addition, the stockholders agreed to pay the Company milestone payments regarding performance and developments within agreed upon projects. In conjunction with these projects, the stockholders agreed to reimburse the Company’s costs associated with the strategic alliance. In 2001, the Company received $14,000,000 for the licensing fee, which is being recognized ratably over the term of the agreement. For the year ended December 31, 2001, $1,400,000 was recognized as license revenue under this agreement and for each of the years ended December 31, 2002 and 2003, $2,800,000 has been recognized as license revenue under this agreement. At December 31, 2002 and 2003, license revenue of $9,800,000 and $7,000,000, respectively, was deferred. The Company also received and recognized as revenue $2,000,000, $1,000,000 and $200,000 in performance milestone payments and $4,764,000, $7,470,000 and $7,488,000 in FTE and other reimbursements for the years ended December 31, 2001, 2002 and 2003 respectively, as no ongoing performance obligations exist.

F-14

Table of Contents
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

       In 2001 and 2002, the Company extended loans for $200,000 and $100,000, respectively, to officers of the Company. The loans accrue interest at 5.18% and 5.75% and mature on November 12, 2010 and July 12, 2008, respectively. In 2002 the Company extended loans totaling $650,000 to various executives and employees of the Company. The loans accrue interest at rates ranging from 4.88% to 5.80% and will mature at various dates between 2005 and 2011. Certain of the loans will be forgiven if the officers or executives remain with the Company through the maturation of their respective loans. The Company did not extend any loans to executives or employees of the Company in 2001 or 2003. At December 31, 2003, $1.1 million is included in related party notes receivable.

       The Company co-signed a loan with a major bank in the United States on the behalf of an executive of the Company. The Company has a restricted cash investment in the amount of $150,000 to collateralize the note in case of officer default (included in restricted cash), and agreed to make all interest payments on the loan. As of December 31, 2003, the amount of the loan is $150,000, and the Company made interest payments totaling $8,000, $9,000 and $9,000 in 2001, 2002 and 2003 respectively.

Note 6 — Equipment Financing Line:

       In September of 1998, the Company obtained an equipment line of credit. The Company could borrow an amount not to exceed $1,500,000, available in minimum installments of $250,000 until September 1999, upon which the line expired. In 1999, the Company made three draws on this line of credit for $663,000, $253,000 and $370,000 with effective interest rates of 13.24%, 13.3% and 13.09%, respectively. All of these loans are payable in 48 monthly installments with an additional 15% ending balloon payment. In connection with this line the Company issued warrants (Note 8).

       In December 1999, the Company obtained an additional equipment line of credit. The Company could borrow an amount not to exceed $5,000,000, available until December 2000, upon which the line expired. In 2000, the Company made two draws on this line of credit for $549,000 and $78,000 with effective interest rates of 13.17% and 15.18%, respectively. These loans are payable in 48 and 36 monthly installments, respectively, with an additional 15% ending balloon payment. In connection with this line, the Company issued warrants (Note 8).

       In January 2001, the Company entered into a new financing agreement under which the Company may borrow up to $6,000,000 through a financing line of credit. In 2001, the Company made four draws on this line of credit for $1,702,000, $140,000, $997,000, and $706,000 with effective interest rates of 10.34%, 10.4%, 10.34%, and 10.4%, respectively, and with financing terms of 60 months, 36 months, 60 months, and 36 months, respectively. In 2002, the Company made one additional draw on this line of credit for $2,448,000 with an effective interest rate of 10.34% and with financing terms of 60 months. In connection with this line, the Company is obligated to maintain a $5,550,000 letter of credit as collateral against the line of credit (Note 7).

       In July 2002, the Company entered into a new financing agreement under which the Company may borrow up to $7,500,000 through a financing line of credit. In 2002, the Company made three draws on this line of credit for $1,568,000, $1,821,000, and $535,000 with effective interest rates of 8.77%, 7.61%, and 7.64%, respectively, and with financing terms of 60 months for all draws. In connection with this line, the Company is obligated to maintain a $7,500,000 letter of credit as collateral against the line of credit (Note 7).

F-15

Table of Contents
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

       In March 2003, the Company executed an additional draw of approximately $1,110,000 on the July 2002 line of credit with an effective interest rate of 7.59% and a term of 60 months. In May 2003, the Company refinanced the outstanding balance of approximately $4,800,000 under the January 2001 line of credit and drew an additional $248,000, with an interest rate of 7.56% and a term of 60 months. In October 2003, the Company refinanced the outstanding balance of approximately $9,300,000 under the January 2001 line of credit (as previously refinanced) and the July 2002 line of credit, with an interest rate of 4.25% and a term of 60 months. In November 2003, the Company executed an additional draw of $614,000 on the $7,500,000 line of credit with an effective interest rate of 4.25% and a term of 60 months. In connection with this line, the Company is obligated to maintain a security deposit as collateral (Note 7).

       Minimum equipment lease line principal payments are as follows (in thousands):
 	 	 	 	 	
2004	 	 	2,008	 	
2005	 	 	1,933	 	
2006	 	 	2,017	 	
2007	 	 	2,104	 	
2008	 	 	2,021	 	

	 	
Total minimum principal payments	 	$	10,083	 	

	 	

Note 7 — Commitments:

Leases

       The Company leases office space and equipment under noncancelable operating leases with various expiration dates through 2013. Rent expense was $2,250,000, $2,220,000, $2,200,100 and $8,450,500 for the years ended December 31, 2001, 2002 and 2003, and for the period from August 5, 1997 (date of inception) through December 31, 2003, respectively. The terms of the facility lease provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period, and has deferred the rent expense paid but not incurred.

       During 2001, the Company subleased a portion of their building. Sublease income for the year ended December 31, 2001 was $313,000 which has been offset against rent expense.

       Future minimum lease payments under noncancelable operating leases are as follows
(in thousands):
 	 	 	 	 	
Year Ending December 31,	 	Operating Leases	

	 	

	
2004	 	$	1,689	 	
2005	 	 	1,656	 	
2006	 	 	1,552	 	
2007	 	 	1,598	 	
2008 through end of lease	 	 	8,698	 	

	 	
 	 	$	15,193	 	

	 	

Restricted Cash

       During 1999, $75,000 of cash was pledged as collateral for the corporate employee credit cards issued to employees for travel and other expenses and is classified as restricted cash on the balance sheet. During 2001, this amount was increased by $10,500 due to the increase in

F-16

Table of Contents
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

headcount. During 2003, the Company changed credit card issuers and this collateral is no longer required.

       The Company also had a restricted certificate of deposit in the amount of $150,000 during 2003 and 2002 (see Note 5) pledged as collateral on a loan.

       In 2001, the Company purchased a $6,000,000 certificate of deposit to collateralize a letter of credit in conjunction with an equipment financing line (see Note 6). This amount was classified as restricted cash at December 31, 2001. In October 2002, the Company renegotiated the terms of the letter of credit and pledged $5,550,000 of its investment account to collateralize the renegotiated letter of credit. The balance pledged shall automatically be reduced by $90,000 each month until October 31, 2003. At December 31, 2002, $5,370,000 was included in restricted cash. Due to debt restructuring during 2003, this certificate of deposit is no longer required.

       The Company further pledged $7,500,000 of its investment account in July 2002 to collateralize a new letter of credit in conjunction with the new financing line obtained on July 1, 2002 (Note 6). The balance pledged shall automatically be reduced by $125,000 each month until December 31, 2003. At December 31, 2002 $7,500,000 was included in restricted cash. Due to debt restructuring during 2003, this certificate of deposit is no longer required.

       In October 2003, the Company entered into a debt restructure with GE Capital (Note 6). Per the terms of the Security Pledge agreements, the Company was required to pledge $7,049,000, which is included in restricted cash at December 31, 2003.

Note 8 — Convertible Preferred Stock:

       Under the Company’s Certificate of Incorporation, the Company’s Convertible Preferred Stock is issuable in series.

       In April 1998, the Company sold 5,300,000 shares of Series A Convertible Preferred Stock at $1.00 per share to new investors for net cash proceeds of $5,269,000.

       In August 1999, the Company sold 6,896,545 shares of Series B Convertible Preferred Stock at $2.90 per share to new and existing investors for net cash proceeds of $19,336,000.

       In November 2000, the Company sold 11,578,980 shares of Series C Convertible Preferred Stock at $4.75 per share to new and existing investors for net cash proceeds of $54,857,000.

       In July 2001, the Company sold 2,333,334 shares of Series D Convertible Preferred Stock at $6.00 per share to new investors for net cash proceeds of $13,842,000.

       In March and April 2003, the Company sold 8,015,449 shares of Series E Convertible Preferred Stock at $5.00 per share to new and existing investors for net cash proceeds of $39,868,000.

F-17

Table of Contents
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

       As of December 31, 2001 and 2002, the Convertible Preferred Stock comprised (in thousands, except share and per share data):
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Number of	 	Number of Shares	 	 	 	Liquidation	 	 	
 	 	Shares	 	Issued and	 	Proceeds, Net of	 	Preference per	 	Annual Dividends	
 	 	Authorized	 	Outstanding	 	Issuance Cost	 	Share	 	per Share	

	 	

	 	

	 	

	 	

	
Series A	 	 	5,550,000	 	 	 	5,300,000	 	 	$	5,269	 	 	$	1.00	 	 	$	0.10	 	
Series B	 	 	7,000,000	 	 	 	6,896,545	 	 	 	19,336	 	 	$	2.90	 	 	$	0.29	 	
Series C	 	 	12,250,000	 	 	 	11,578,980	 	 	 	54,857	 	 	$	4.75	 	 	$	0.475	 	
Series D	 	 	2,500,000	 	 	 	2,333,334	 	 	 	13,842	 	 	$	6.00	 	 	$	0.60	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	 	 	 	 	
 	 	 	27,300,000	 	 	 	26,108,859	 	 	$	93,304	 	 	 	 	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	 	 	 	 	

       As of December 31, 2003, the Convertible Preferred Stock comprised (in thousands, except share and per share data):
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Number of	 	Number of Shares	 	 	 	Liquidation	 	 	
 	 	Shares	 	Issued and	 	Proceeds, Net of	 	Preference per	 	Annual Dividends	
 	 	Authorized	 	Outstanding	 	Issuance Cost	 	Share	 	per Share	

	 	

	 	

	 	

	 	

	
Series A	 	 	5,550,000	 	 	 	5,300,000	 	 	$	5,269	 	 	$	1.00	 	 	$	0.10	 	
Series B	 	 	7,000,000	 	 	 	6,896,545	 	 	 	19,336	 	 	$	2.90	 	 	$	0.29	 	
Series C	 	 	12,250,000	 	 	 	11,578,980	 	 	 	54,857	 	 	$	4.75	 	 	$	0.475	 	
Series D	 	 	2,500,000	 	 	 	2,333,334	 	 	 	13,842	 	 	$	6.00	 	 	$	0.60	 	
Series E	 	 	10,000,000	 	 	 	8,015,449	 	 	 	39,868	 	 	$	5.00	 	 	$	0.50	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	 	 	 	 	
 	 	 	37,300,000	 	 	 	34,124,308	 	 	$	133,172	 	 	 	 	 	 	 	 	 	

	 	 	 	

	 	 	 	

	 	 	 	 	 	 	 	 	 	

       The holders of Convertible Preferred Stock have various rights and preferences as follows:

Voting

       Each share of Series A, Series B, Series C, Series D and Series E Convertible Preferred Stock has voting rights equal to an equivalent number of shares of Common Stock into which it is convertible and votes together as one class with the Common Stock.

Dividends

       Holders of Convertible Preferred Stock are entitled to receive noncumulative dividends at the rates specified above when and if declared by the Board of Directors. The holders of Series A, Series B, Series C, Series D and Series E Convertible Preferred Stock will also be entitled to participate in dividends on Common Stock, when and if declared by the Board of Directors, based on the number of shares of Common Stock held on an as-if converted basis. Such dividends shall not be cumulative. No dividends on Convertible Preferred Stock or Common Stock have been declared by the Board from inception through December 31, 2003.

Liquidation

       In the event of any liquidation, dissolution or winding up of the Company, including a merger, acquisition or sale of assets where the beneficial owners of the Company’s Common Stock and Convertible Preferred Stock own less than 50% of the resulting voting power of the surviving entity, the holders of Convertible Preferred Stock are entitled to receive an amount equal to the liquidation preference specified above plus any declared but unpaid dividends prior to and in preference to any

F-18

Table of Contents
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

distribution to the holders of Common Stock. If, upon the occurrence of such event, the assets and funds thus distributed among the holders of the Convertible Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of the Convertible Preferred Stock in proportion to the per share preferential amount each such holder is otherwise entitled to receive. A change of control or sale of substantially all of the assets of the Company is considered to be a liquidation event; accordingly, the Convertible Preferred Stock is considered redeemable under generally accepted accounting principles and therefore classified as temporary equity.

Conversion

       Each share of Convertible Preferred Stock, at the option of the holder, is convertible into the number of fully paid and nonassessable shares of Common Stock which results from dividing the conversion price per share in effect for the shares of such series of Convertible Preferred Stock at the time of conversion into the original issue price per share of such series of Convertible Preferred Stock. The initial conversion price per share of Series A, Series B, Series C, Series D and Series E Convertible Preferred Stock shall be the original issue price. The initial conversion price of Series A, Series B, Series C, Series D and Series E Convertible Preferred Stock is subject to adjustment from time to time, as described in the Company’s Restated Certificate of Incorporation.

       Conversion is automatic for the holders of Series A, Series B, Series C, Series D and Series E Convertible Preferred Stock at the then effective conversion rate immediately upon the closing of a firm commitment underwritten initial public offering pursuant to an effective registration statement under the Securities Act of 1933 covering the offer and sale of common stock in which the aggregate proceeds raised equals or exceeds $40,000,000. If the aggregate proceeds are less than $40,000,000 conversion is automatic upon the approval of at least 51% of the then outstanding shares of Preferred Stock, with all series voting together as a single class. The Company has reserved 17,099,624 shares of Common Stock for issuance upon conversion of Convertible Preferred Stock.

       The Company’s Convertible Preferred Stock is subject to an antidilution conversion price adjustment feature which was triggered for Series D when the Company issued Series E for a consideration per share less than the initial conversion price for Series D. The conversion price for Series D shall be adjusted downward from its initial conversion price. As of December 31, 2003 the Company has issued 8,015,449 shares of Series E Convertible Preferred Stock for consideration of $5.00 per share.

       As of December 31, 2003 each share of Series A, Series B, Series C and Series E Convertible Preferred stock is convertible into common stock on a 2-for-1 basis and each share of Series D Convertible Preferred Stock is convertible into common stock on a 1.93-for1 basis.

Warrants for Convertible Preferred Stock

       In connection with an equipment line of credit, the Company issued a warrant to purchase 67,500 shares of Series A Convertible Preferred Stock for $1.00 per share in September 1999. The Company valued the warrants by using the Black-Scholes pricing model in fiscal 1999 when the line was drawn upon using the full term of seven years, a risk-free interest rate of 6.33%, a dividend yield of 0%, and volatility of 60%. The fair value was netted against the equipment line and charged to interest expense over the life of the equipment line. The amount charged to interest expense was

F-19

Table of Contents
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

$7,000, $7,000, none and $30,000 for the years ended December 31, 2001, 2002, 2003 and for the period from August 5, 1997 (date of inception) through December 31, 2003, respectively.

       In connection with obtaining Series B Convertible Preferred Stock financing in August 1999, the Company agreed to issue warrants to purchase Series B Convertible Preferred Stock at $2.90 per share. The Company determined in July 2001 that the number of shares issuable under the warrant was 100,000 shares. The warrant was valued at $467,000 using the Black-Scholes pricing model using the contractual term of seven years, a risk-free interest rate of 5.37%, a dividend yield of 0%, and volatility of 60%. As the warrant relates to preferred stock issuance costs, the valuation was recorded as an issuance cost as an offset to Convertible Preferred Stock.

       In connection with an equipment line of credit, the Company issued a warrant to purchase shares of Series B Convertible Preferred Stock at $2.90 per share. The Company determined in February 2004 that the number of shares issuable under the warrant is 14,483 shares. The value of the warrant was calculated using the Black-Scholes pricing model and was deemed insignificant.

       Upon the effective date of the registration statement for the Company’s initial public offering of its equity securities, the shares purchaseable under these warrants will be shares of the Company’s common stock, in the same number that the holder otherwise would have been entitled to purchase had this warrant remained exercisable for shares of Convertible Preferred Stock.

Note 9 — Stockholders’ Deficit:

Common Stock

       The Company’s Certificate of Incorporation, as amended, authorize the Company to issue 61,500,000 shares of $0.001 par value Common Stock. A portion of the shares sold are subject to a right of repurchase by the Company at the original purchase price of the stock subject to vesting, which is generally over a four year period from the earlier of the grant date or employee hire date, as applicable, until vesting is complete. As of December 31, 2003, 144,327 shares had been exercised under the employee stock option plan and are subject to repurchase. At December 31, 2003, in accordance with the provisions of EITF Issue No. 00-23 “Issues Related to the Accounting for Stock Compensation under APB 25 and FIN 44,” the Company recorded the refundable exercise price related to the unvested shares which are subject to repurchase as a liability of $95,000.

       In connection with the building lease, the Company issued warrants to purchase 100,000 shares of Common Stock for $0.58 per share in July 1999. The Company valued the warrants by using the Black-Scholes pricing model in 1999 using the contractual term of five years, a risk-free interest rate of 6.33%, a dividend yield of 0%, and volatility of 60%. The fair value was capitalized in other assets and amortized over the life of the building lease, which expired in August 2000. The amount charged to rent expense was $11,000 from August 5, 1997 (date of inception) through December 31, 2003.

Stock Option Plans

       In 1997, the Company adopted the 1997 Stock Option/ Stock Issuance Plan (the “Plan”). The Plan provides for the granting of stock options to employees and consultants of the Company. Options granted under the Plan may be either incentive stock options or nonqualified stock options. Incentive stock options (“ISO”) may be granted only to Company employees (including officers and directors who are also employees). Nonqualified stock options (“NSO”) may be granted to Company employees and consultants. The Company has reserved 4,416,172 shares of Common Stock for issuance under the Plan.

F-20

Table of Contents
CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

       Options under the Plan may be granted for periods of up to ten years and at prices no less than 85% of the estimated fair value of the shares on the date of grant as determined by the Board of Directors, provided, however, that (i) the exercise price of an ISO and NSO shall not be less than 100% and 85% of the estimated fair value of the shares on the date of grant, respectively, and (ii) with respect to any 10% shareholder, the exercise price of an ISO or NSO shall not be less than 110% of the estimated fair market value of the shares on the date of grant and the term of the grant shall not exceed five years. Options may be exercisable immediately and are subject to repurchase options held by the Company which lapse over a maximum period of ten years at such times and under such conditions as determined by the Board of Directors. To date, options granted generally vest over four or five years (generally 25% after one year and monthly thereafter). Activity under the Plan is as follows:
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Options	 	Options	 	Weighted	
 	 	Available for	 	Outstanding and	 	Average Exercise	
 	 	Grant	 	Exercisable	 	Price per Share	

	 	

	 	

	
Options authorized	 	 	1,461,945	 	 	 	—	 	 	$	—	 	
Options granted	 	 	(833,194	)	 	 	833,194	 	 	 	0.10	 	
Options exercised	 	 	—	 	 	 	(147,625	)	 	 	0.015	 	
Options canceled	 	 	—	 	 	 	—	 	 	 	—	 	

	 	 	 	

	 	 	 	 	 	
Balances at December 31, 1998	 	 	628,751	 	 	 	685,569	 	 	 	0.12	 	
Options granted	 	 	(545,250	)	 	 	545,250	 	 	 	0.22	 	
Options exercised	 	 	—	 	 	 	(287,500	)	 	 	0.24	 	
Options canceled	 	 	13,125	 	 	 	(13,125	)	 	 	0.20	 	

	 	 	 	

	 	 	 	 	 	
Balances at December 31, 1999	 	 	96,626	 	 	 	930,194	 	 	 	0.24	 	
Increase in authorized shares	 	 	1,704,227	 	 	 	—	 	 	 	—	 	
Options granted	 	 	(967,500	)	 	 	967,500	 	 	 	0.58	 	
Options exercised	 	 	—	 	 	 	(731,661	)	 	 	0.26	 	
Options canceled	 	 	68,843	 	 	 	(68,843	)	 	 	0.28	 	

	 	 	 	

	 	 	 	 	 	
Balances at December 31, 2000	 	 	902,196	 	 	 	1,097,190	 	 	 	0.52	 	
Options granted	 	 	(525,954	)	 	 	525,954	 	 	 	1.12	 	
Options exercised	 	 	—	 	 	 	(102,480	)	 	 	0.54	 	
Options canceled	 	 	109,154	 	 	 	(109,154	)	 	 	0.26	 	

	 	 	 	

	 	 	 	 	 	
Balances at December 31, 2001	 	 	485,396	 	 	 	1,411,510	 	 	 	0.74	 	
Increase in authorized shares	 	 	1,250,000	 	 	 	—	 	 	 	 	 	
Options granted	 	 	(932,612	)	 	 	932,612	 	 	 	1.20	 	
Options exercised	 	 	—	 	 	 	(131,189	)	 	 	0.64	 	
Options canceled	 	 	152,322	 	 	 	(152,322	)	 	 	0.78	 	

	 	 	 	

	 	 	 	 	 	
Balances at December 31, 2002	 	 	955,106	 	 	 	2,060,611	 	 	 	0.94	 	
Options granted	 	 	(613,764	)	 	 	613,764	 	 	 	1.38	 	
Options exercised	 	 	—	 	 	 	(380,662	)	 	 	1.02	 	
Options canceled	 	 	49,313	 	 	 	(49,313	)	 	 	0.88	 	

	 	 	 	

	 	 	 	 	 	
Balances at December 31, 2003	 	 	390,655	 	 	 	2,244,400	 	 	 	1.06	 	

	 	 	 	

	 	 	 	 	 	

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CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

       The options outstanding and currently exercisable by exercise price at December 31, 2003 are as follows:

 	 	Options Outstanding at December 31, 2003	

	
 	 	 	 	Weighted Average	 	 	
 	 	 	 	Remaining Contractual Life	 	 	
Exercise Price	 	Number Outstanding	 	(Years)	 	Number Vested	

	 	

	 	

	 	

	
$0.20	 	 	72,250	 	 	 	5.56	 	 	 	72,250	 	
$0.58	 	 	560,388	 	 	 	6.69	 	 	 	406,235	 	
$1.00	 	 	85,243	 	 	 	7.12	 	 	 	61,007	 	
$1.20	 	 	1,384,594	 	 	 	8.67	 	 	 	448,774	 	
$2.00	 	 	141,925	 	 	 	9.96	 	 	 	0	 	

	 	 	 	 	 	 	 	

	 	
 	 	 	2,244,400	 	 	 	 	 	 	 	998,266	 	

	 	 	 	 	 	 	 	

	 	

       As of December 31, 2003 the weighted average exercise price of outstanding, exercisable and vested options was $1.06 per share. As of December 31, 2002, there were 704,780 options outstanding, exercisable and vested at a weighted average exercise price of $0.37 per share.

Stock-based Compensation

       In anticipation of the Company’s initial public offering, the Company has determined that, for financial reporting purposes, the estimated value of its common stock was in excess of the exercise prices. Accordingly, for stock options issued to employees, the Company has recorded deferred stock-based compensation, and is amortizing the related expense on a straight line basis over the service period, which is generally four years. During the year ended December 31, 2003, the Company recorded deferred stock compensation in the amount of $4.0 million. During the year ended December 31, 2003, the Company recorded amortization of stock-based compensation of $536,000 in connection with options granted to employees.

       In 2001, the Company accelerated the vesting of options to two employees in connection with related severance packages. The acceleration was accounted for in accordance with FIN No. 44 “Accounting for Certain Transactions Involving Stock Compensation” as a one-time charge to the statement of operations. The charge for the year ended December 31, 2001 was $20,000. The charge was equal to the intrinsic value difference between the exercise price of the accelerated options and the fair value of the common stock on the date of acceleration.

       Stock-based compensation expense related to stock options granted to non-employees is recognized, on a straight-line basis, as the stock options are earned. The Company believes that the fair value of the stock options is more reliably measurable than the fair value of the services

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CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

received. The fair value of the stock options granted is calculated at each reporting date using the Black-Scholes option-pricing model as prescribed by SFAS No. 123 using the following assumptions:

 	 	Years Ended	
 	 	December 31,	

	
 	 	2002	 	2003	

	 	

	
Risk-free interest rate	 	 	4.48	%	 	 	3.35	%	
Expected life (in years)	 	 	10	 	 	 	10	 	
Dividend yield	 	 	0.00	%	 	 	0.00	%	
Volatility	 	 	70	%	 	 	70	%	

       Based on the above assumptions, the weighted average fair values of options granted were $4.13 and $6.96 per share for the years ended December 31, 2002 and 2003, respectively. There were no options granted to non-employees in 2001.

       The stock-based compensation expense will fluctuate as the fair market value of the common stock fluctuates. From August 5, 1997 (date of inception) to December 31, 2003, the Company has recorded $736,000 of deferred stock-based compensation related to options granted to non-employees. In connection with the grant of stock options to non-employees, the Company has recorded $93,000, $6,000 and $390,000 of stock-based compensation expense in 2001, 2002 and 2003, respectively, and $713,000 for the period from August 5, 1997 (date of inception) through December 31, 2003.

Note 10 — Pro Forma Common Shares Outstanding and Pro Forma Net Loss Per Share (Unaudited)

       The pro forma common shares outstanding at December 31, 2003, the pro forma weighted-average common shares outstanding during the year ended December 31, 2002 and the pro forma weighted-average common shares outstanding during the year ended December 31, 2003 reflect the automatic conversion of all shares of convertible preferred stock outstanding into 17,103,982 shares of common stock as if such conversion had occurred on January 1, 2003 or the date of issuance, if later, in connection with the Company’s contemplated initial public offering.

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CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

       A reconciliation of the numerator and denominator used in the calculation of pro forma net loss per share follows (in thousands):
 	 	 	 	 	 	
 	 	Year Ended	
 	 	December 31,	

	
 	 	2003	

	
Numerator:	 	 	 	 	
 	Net loss	 	$	(32,685	)	

	 	
Denominator:	 	 	 	 	
 	Weighted-average number of shares outstanding used in computing basic net loss per share	 	 	1,911	 	
 	Adjustments to reflect the effect of the assumed conversion of the preferred stock from the date of issuance	 	 	16,118	 	

	 	
 	Weighted-average number of shares used in computing basic and diluted pro forma net income per share	 	 	18,029	 	

	 	

Note 11 — Employee Benefit Plans:

       The Company sponsors a 401(k) defined contribution plan covering all employees. There were no employer contributions in 2001, 2002 or 2003.

Note 12 — Taxes:

       The Company did not record an income tax provision in the years ended December 31, 2001, 2002 and 2003 since the Company had a net taxable loss in each of those periods.

       Deferred tax assets and liabilities consist of the following (in thousands):

 	 	December 31,	

	
 	 	2002	 	2003	

	 	

	
Deferred tax assets:	 	 	 	 	 	 	 	 	
Fixed assets	 	$	1,814	 	 	$	997	 	
Reserves and accruals	 	 	6,333	 	 	 	5,166	 	
Net operating loss carryforwards	 	 	16,119	 	 	 	29,829	 	
Research and development credits	 	 	3,658	 	 	 	6,079	 	

	 	 	 	

	 	
 	 	 	27,924	 	 	 	42,071	 	
Less: Valuation allowance	 	 	(27,924	)	 	 	(42,071	)	

	 	 	 	

	 	
 	 	$	—	 	 	$	—	 	

	 	 	 	

	 	

       Management believes that, based on a number of factors, it is more likely than not that the deferred tax assets will not be realized, such that a full valuation allowance has been recorded.

       The Company has federal and state net operating loss carryforwards and tax credit carryforwards of approximately $81.0 million and $36.8 million at December 31, 2003. The federal and state operating loss carryforwards expire in 2018 and 2008, respectively, if not utilized.

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CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

       The Tax Reform Act of 1986 limits the use of operating loss tax credit carryforwards in certain situations where charges occur in stock ownership of a company. In the event the Company has a change in ownership; utilization of the carryforwards could be restricted.

Note 13 — Subsequent Events:

Initial Public Offering

       On January 21, 2004, the Board of Directors authorized management of the Company to file a registration statement with the Securities and Exchange Commission permitting the Company to sell shares of its common stock to the public. If the initial public offering is closed under the terms presently anticipated, all of the convertible preferred stock outstanding will automatically convert into shares of common stock. Unaudited pro forma stockholders’ equity, as adjusted for the assumed conversion of the preferred stock, is set forth on the balance sheet.

Authorized number of shares

       On January 21, 2004, the Board of Directors approved an amendment to the Company’s amended and restated certificate of incorporation increasing the authorized number of shares to 130,000,000, of which 120,000,000 are designated as common stock and 10,000,000 are designated as preferred stock. The amendment is subject to stockholder approval and the closing of the Company’s initial public offering.

2004 Equity Incentive Plan

       On January 21, 2004, the Board of Directors adopted the 2004 Equity Incentive Plan (“the 2004 Plan”), subject to stockholder approval. The 2004 Plan provides for the granting of incentive stock options, nonstatutory stock options and restricted stock purchase rights and stock bonuses to employees, and consultants.

       A total of 3,200,000 shares of common stock have been authorized for issuance pursuant to the 2004 Plan. On January 1, 2005, and annually thereafter, the authorized shares will automatically be increased by a number of shares equal to the lesser of:
 	 	 	
 	• 	3,000,000 shares;	
 	 	 	
 	• 	3.5% of the outstanding shares on such date; or	
 	 	 	
 	• 	an amount determined by the Board of Directors.	
Employee Stock Purchase Plan

       On January 21, 2004, the Board of Directors adopted the 2004 Employee Stock Purchase Plan (the “Purchase Plan”), subject to shareholder approval. 1,000,000 shares of common stock were reserved for issuance pursuant to the Purchase Plan.

Stock Split

       On March 9, 2004, the Company’s Board of Directors approved a one for two reverse stock split of the Company’s common stock. Stockholders’ approval of the reverse stock split was obtained on March 10, 2004. The one for two reverse stock split will be effected immediately prior to the effectiveness of the Registration Statement. All share and per share amounts for the Company’s

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CYTOKINETICS, INCORPORATED
(A Development Stage Enterprise)

Notes to Financial Statements — (Continued)

common stock for all periods presented in the accompanying financial statements have been retroactively adjusted to give effect to the stock split.

Restricted stock agreement

       On March 10, 2004, the Company entered into an agreement to sell $7,000,000 of restricted common stock to an affiliate of GSK upon the completion of the initial public offering at a per share price equal to the per share initial public offering price.

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CARDIOVASCULAR PROGRAM The cardiac sarcomere is the Cardiac myosin attaches to actin fundamental unit of muscle generating contractile force contraction in the heart (yellow = myosin, pink = actin) Congestive heart failure is a disease characterized by compromised contractile function of the heart that impacts its ability to effectively pump blood throughout the body. In our cardiovascular program, we have discovered and optimized small molecule compounds that improve cardiac contractility by specifically targeting and activating cardiac myosin, a cytoskeletal protein essential for cardiac muscle contraction. CELL BIOLOGY DRIVEN DRUG DISCOVERY PROCESS Targets PUMA™ Cytometrix™ System Technologies Animal Development Hits Study Candidate IND Application Lead Pre-clinical Optimized Development Hit Compounds We have developed proprietary automated technologies, including our PUMA™ system and Cytometrix™ technologies, to enable early identification and prioritization of compounds that are highly selective for their intended protein targets without other cellular effects, and may thereby be less likely to give rise to clinical side effects. The integrated use of these technologies enables us to efficiently focus our research efforts and resources on those compounds directed at novel cytoskeletal protein targets that are more likely to yield attractive drug candidates.	

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      No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

TABLE OF CONTENTS
 	 	 	 	 	
 	 	Page	

	
Prospectus Summary	 	 	1	 	
Risk Factors	 	 	8	 	
Special Note Regarding Forward-Looking Statements	 	 	24	 	
Use of Proceeds	 	 	25	 	
Dividend Policy	 	 	25	 	
Capitalization	 	 	26	 	
Dilution	 	 	27	 	
Selected Financial Data	 	 	29	 	
Management’s Discussion and Analysis of Financial Condition and Results of Operations	 	 	30	 	
Business	 	 	40	 	
Management	 	 	64	 	
Certain Relationships and Related Party Transactions	 	 	75	 	
Principal Stockholders	 	 	80	 	
Description of Capital Stock	 	 	84	 	
Shares Eligible for Future Sale	 	 	88	 	
United States Federal Income Tax Consequences to Non-United States Holders	 	 	 	 	
Underwriting	 	 	93	 	
Validity of Securities	 	 	97	 	
Experts	 	 	97	 	
Where You Can Find Additional Information	 	 	97	 	
Index to Financial Statements	 	 	F-1	 	

          Through and including                     , 2004 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

                            Shares
Cytokinetics,
Incorporated
Common Stock

Goldman, Sachs & Co.
Credit Suisse First Boston
Pacific Growth Equities, LLC
Lazard

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.     	Other Expenses of Issuance and Distribution.	
       The following table sets forth the costs and expenses, other than the underwriting discounts, payable by the Registrant in connection with the sale of the securities being registered. All amounts are estimates except the SEC registration fee, the NASD filing fee and the Nasdaq/NMS listing fee.
 	 	 	 	 	 	
SEC Registration Fee	 	$	6,977.63	 	
NASD Filing Fee	 	 	9,125.00	 	
Nasdaq National Market Listing Fee	 	 	100,000.00	 	
Printing Costs	 	 	300,000.00	 	
Legal Fees and Expenses	 	 	750,000.00	 	
Accounting Fees and Expenses	 	 	500,000.00	 	
Blue Sky Fees and Expenses	 	 	*	 	
Transfer Agent and Registrar Fees	 	 	*	 	
Miscellaneous	 	 	*	 	

	 	
 	Total	 	$	*	 	

	 	

* 	to be completed by amendment	

Item 14.     	Indemnification of Directors and Officers.	
       Section 145 of the Delaware General Corporation Law (“Section 145”) permits indemnification of officers and directors of the Company under certain conditions and subject to certain limitations. Section 145 also provides that a corporation has the power to maintain insurance on behalf of its officers and directors against any liability asserted against such person and incurred by him or her in such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of Section 145.

       Article IX of the Registrant’s Bylaws provides for mandatory indemnification of its directors and officers and permissible indemnification of employees and other agents to the maximum extent not prohibited by the Delaware General Corporation Law. The rights to indemnity thereunder continue as to a person who has ceased to be a director, officer, employee or agent. In addition, expenses incurred by a director or executive officer in defending any civil, criminal, administrative or investigative action, suit or proceeding by reason of the fact that he or she is or was a director or officer of the Registrant (or was serving at the Registrant’s request as a director or officer of another corporation) shall be paid by the Registrant in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Registrant as authorized by the relevant section of the Delaware General Corporation Law.

       As permitted by Section 102(b)(7) of the Delaware General Corporation Law, the Registrant’s Certificate of Incorporation provides that, pursuant to Delaware law, its directors shall not be personally liable for monetary damages for breach of the directors’ fiduciary duty as directors to the Registrant and its stockholders. This provision in the Certificate of Incorporation does not eliminate the directors’ fiduciary duty, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director’s duty of loyalty to the Registrant for acts or omission not in good faith or involving international misconduct, for knowing violations of law, for actions leading to improper personal benefit to the director, and for payment of

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dividends or approval of Stock repurchases or redemptions that are unlawful under Section 174 of the Delaware General Corporation Law. The provision also does not affect a director’s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws.

       The Registrant has entered into indemnification agreements with each of its directors and executive officers. Generally, the indemnification agreements attempt to provide the maximum protection permitted by Delaware law as it may be amended from time to time. Moreover, the indemnification agreements provide for certain additional indemnification. Under such additional indemnification provisions, however, an individual will not receive indemnification for judgments, settlements or expenses if he or she is found liable to the Registrant (except to the extent the court determines he or she is fairly and reasonably entitled to indemnity for expenses), for settlements not approved by the Registrant or for settlements and expenses if the settlement is not approved by the court. The indemnification agreements provide for the Registrant to advance to the individual any and all reasonable expenses (including legal fees and expenses) incurred in investigating or defending any such action, suit or proceeding. In order to receive an advance of expenses, the individual must submit to the Registrant copies of invoices presented to him or her for such expenses. Also, the individual must repay such advances upon a final judicial decision that he or she is not entitled to indemnification.

       The Registrant intends to enter into additional indemnification agreements with each of its directors and executive officers to effectuate these indemnity provisions and to purchase directors’ and officers’ liability insurance.

       In addition to the foregoing, the Underwriting Agreement contains certain provisions by which the Underwriters have agreed to indemnify the Registrant, each person, if any, who controls the Registrant within the meaning of Section 15 of the Securities Act, each director of the Registrant, each officer of the Registrant who signs the Registration Statement, with respect to information furnished in writing by or on behalf of the Underwriters for use in the Registration Statement.

       At present, there is no pending litigation or proceeding involving a director, officer, employee or other agent of the Registrant in which indemnification is being sought, nor is the Registrant aware of any threatened litigation that may result in a claim for indemnification by any director, officer, employee or other agent of the Registrant.

Item 15.     	Recent Sales of Unregistered Securities.	
       Since December 31, 2000, we have sold and issued the following securities:

Preferred Stock

 	       (1) In July 2001, we sold an aggregate of 2,333,334 shares of our Series D preferred stock to an investor at a price of $6.00 per share for an aggregate purchase price of $14,000,004 (which will convert into 1,204,149 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split).	

 	 	
 	       (2) In March and April 2003, we sold an aggregate of 8,015,449 shares of our Series E preferred stock to investors at a price of $5.00 per share for an aggregate purchase price of $40,077,245 (which will convert into 4,007,724 shares of common stock upon the consummation of this offering, as adjusted to reflect the 1-for-2 reverse stock split).	
 	 	
       The sales of the above securities were deemed to be exempt from registration in reliance on Section 4(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving any public offering. All recipients were either accredited or sophisticated investors, as those terms are defined in the Securities Act and the regulations promulgated thereunder. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other

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instruments issued in such transactions. All recipients either received adequate information about us or had access, through employment or other relationships, to such information.

Stock Options and Stock Purchase Rights

 	       (1) From December 31, 2000 through January 15, 2004, we granted stock options and stock purchase rights to acquire an aggregate of 2,136,644 shares of our common stock at prices ranging from $1.00 to $2.00 per share to employees, consultants and directors pursuant to our 1997 Stock Option/ Stock Issuance Plan.	

 	 	
 	       (2) From December 31, 2000 through January 15, 2004, we issued an aggregate of 736,297 shares of our common stock to employees, consultants and directors pursuant to the exercise of stock options and stock purchase rights under our 1997 Stock Option/ Stock Issuance Plan, for aggregate consideration of $671,461.	
 	 	
       The sales of the above securities were deemed to be exempt from registration in reliance on Rule 701 promulgated under Section 3(b) under the Securities Act as transactions pursuant to a compensatory benefit plan or a written contract relating to compensation.

Item 16.     	Exhibits and Financial Statement Schedules	
      (a) Exhibits
 	 	 	 	 	 	 	 	 	
Exhibit	 	 	 	Sequential	
Number	 	Description	 	Page Number	

	 	

	 	

	
 	1.1	 	 	Form of Underwriting Agreement.	 	 	 	 	
 	3.1†	 	 	Form of Amended and Restated Certificate of Incorporation of the Registrant to be filed after the closing of the offering made under this Registration Statement.	 	 	 	 	
 	3.2†	 	 	Form of Amended and Restated Bylaws of the Registrant to be in effect after the closing of the offering made under this Registration Statement.	 	 	 	 	
 	4.1*	 	 	Specimen Common Stock Certificate.	 	 	 	 	
 	4.2†	 	 	Fourth Amended and Restated Investors Rights Agreement, dated March 21, 2003, by and among the Registrant and certain stockholders of the Registrant.	 	 	 	 	
 	4.3	 	 	Loan and Security Agreement, dated September 25, 1998, by and between the Registrant and Comdisco.	 	 	 	 	
 	4.4	 	 	Amendment No. One to Loan and Security Agreement, dated February 1, 1999.	 	 	 	 	
 	4.5	 	 	Warrant for the purchase of shares of Series A preferred stock, dated September 25, 1998, issued by the Registrant to Comdisco.	 	 	 	 	
 	4.6	 	 	Loan and Security Agreement, dated December 16, 1999, by and between the Registrant and Comdisco	 	 	 	 	
 	4.7	 	 	Amendment No. 1 to Loan and Security Agreement, dated June 29, 2000, by and between the Registrant and Comdisco.	 	 	 	 	
 	4.8	 	 	Warrant for the purchase of shares of Series B preferred stock, dated December 16, 1999, issued by the Registrant to Comdisco.	 	 	 	 	
 	4.9	 	 	Master Security Agreement, dated February 2, 2001, by and between the Registrant and General Electric Capital Corporation.	 	 	 	 	
 	4.10	 	 	Cross-Collateral and Cross-Default Agreement by and between the Registrant and Comdisco.	 	 	 	 	
 	4.11	 	 	Warrant for the purchase of shares of common stock, dated July 20, 1999, issued by the Registrant to Bristow Investments, L.P.	 	 	 	 	

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Exhibit	 	 	 	Sequential	
Number	 	Description	 	Page Number	

	 	

	 	

	
 	4.12	 	 	Warrant for the purchase of shares of common stock, dated July 20, 1999, issued by the Registrant to the Laurence and Magdalena Shushan Family Trust.	 	 	 	 	
 	4.13	 	 	Warrant for the purchase of shares of common stock, dated July 20, 1999, issued by the Registrant to Slough Estates USA Inc.	 	 	 	 	
 	4.14	 	 	Warrant for the purchase of shares of Series B preferred stock, dated August 30, 1999, issued by the Registrant to The Magnum Trust.	 	 	 	 	
 	5.1	 	 	Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation	 	 	 	 	
 	10.1	 	 	Form of Indemnification Agreement between the Registrant and each of its directors and officers.	 	 	 	 	
 	10.2†	 	 	1997 Stock Option/ Stock Issuance Plan.	 	 	 	 	
 	10.3†	 	 	2004 Equity Incentive Plan.	 	 	 	 	
 	10.4†	 	 	2004 Employee Stock Purchase Plan.	 	 	 	 	
 	10.5†	 	 	Build-to-Suit Lease, dated May 27, 1997, by and between Britannia Pointe Grand Limited Partnership and Metaxen, LLC.	 	 	 	 	
 	10.6†	 	 	First Amendment to Lease, dated April 13, 1998, by and between Britannia Pointe Grand Limited Partnership and Metaxen, LLC.	 	 	 	 	
 	10.7†	 	 	Sublease Agreement, dated May 1, 1998, by and between the Registrant and Metaxen LLC.	 	 	 	 	
 	10.8†	 	 	Sublease Agreement, dated March 1, 1999, by and between Metaxen, LLC and Exelixis Pharmaceuticals, Inc.	 	 	 	 	
 	10.9†	 	 	Assignment and Assumption Agreement and Consent, dated July 11, 1999, by and among Exelixis Pharmaceuticals, Metaxen, LLC, Xenova Group PLC and Britannia Pointe Grande Limited Partnership.	 	 	 	 	
 	10.10†	 	 	Second Amendment to Lease, dated July 11, 1999, by and between Britannia Pointe Grand Limited Partnership and Exelixis Pharmaceuticals, Inc.	 	 	 	 	
 	10.11†	 	 	First Amendment to Sublease Agreement, dated July 20, 1999, by and between the Registrant and Metaxen.	 	 	 	 	
 	10.12†	 	 	Agreement and Consent, dated July 20, 1999, by and among Exelixis Pharmaceuticals, Inc., the Registrant and Britannia Pointe Grand Limited Partnership.	 	 	 	 	
 	10.13†	 	 	Amendment to Agreement and Consent, dated July 31, 2000, by and between the Registrant, Exelixis, Inc., and Britannia Pointe Grande Limited Partnership.	 	 	 	 	
 	10.14†	 	 	Assignment and Assumption of Lease, dated September 28, 2000, by and between Exelixis, Inc. and the Registrant.	 	 	 	 	
 	10.15†	 	 	Sublease Agreement, dated September 28, 2000, by and between the Registrant and Exelixis, Inc.	 	 	 	 	
 	10.16†	 	 	Sublease Agreement, dated December 29, 1999, by and between the Registrant and COR Therapeutics, Inc.	 	 	 	 	
 	10.17(1)	†	 	Collaboration and License Agreement, dated June 20, 2001, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.18(1)	†	 	Memorandum, dated June 20, 2001, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.19(1)	†	 	Letter Amendment to Collaboration Agreement, dated October 28, 2002, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	

II-4

Table of Contents
 	 	 	 	 	 	 	 	 	
Exhibit	 	 	 	Sequential	
Number	 	Description	 	Page Number	

	 	

	 	

	
 	10.20(1)	†	 	Letter Amendment to Collaboration Agreement, dated November 5, 2002, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.21(1)	†	 	Letter Amendment to Collaboration Agreement, dated December 13, 2002, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.22(1)	†	 	Letter Amendment to Collaboration Agreement, dated July 11, 2003, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.23(1)	†	 	Letter Amendment to Collaboration Agreement, dated July 28, 2003, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.24(1)	†	 	Letter Amendment to Collaboration Agreement, dated July 28, 2003, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.25(1)	†	 	Letter Amendment to Collaboration Agreement, dated July 28, 2003, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	10.26†	 	 	Series D Preferred Stock Purchase Agreement, dated June 20, 2001, by and between the Registrant and Glaxo Wellcome International B.V.	 	 	 	 	
 	10.27†	 	 	Amendment No. 1 to Series D Preferred Stock Purchase Agreement, dated April 2, 2003, by and among the Registrant, Glaxo Wellcome International B.V. and Glaxo Group Limited.	 	 	 	 	
 	10.28(1)	†	 	Exclusive License Agreement between The Board of Trustees of the Leland Stanford Junior University, The Regents of the University of California, and the Registrant dated April 21, 1998.	 	 	 	 	
 	10.29†	 	 	Modification Agreement between The Regents of the University of California, The Board of Trustees of the Leland Stanford Junior University and the Registrant, dated September 1, 2000.	 	 	 	 	
 	10.30(1)	†	 	Collaboration and License Agreement, dated December 15, 2003, by and between AstraZeneca AB and the Registrant.	 	 	 	 	
 	10.31(1)	†	 	Collaboration Agreement, dated December 28, 2001, by and between Exelixis, Inc. and the Registrant.	 	 	 	 	
 	10.32(1)	†	 	First Letter Amendment of Collaboration Agreement, dated April 10, 2003, by and between Exelixis, Inc. and the Registrant.	 	 	 	 	
 	10.33†	 	 	Robert I. Blum Promissory Note, dated July 12, 2002.	 	 	 	 	
 	10.34†	 	 	David J. Morgans and Sandra Morgans Promissory Note, dated May 20, 2002.	 	 	 	 	
 	10.35†	 	 	David J. Morgans and Sandra Morgans Promissory Note, dated October 18, 2000.	 	 	 	 	
 	10.36†	 	 	David J. Morgans Promissory Note, dated July 12, 2002.	 	 	 	 	
 	10.37†	 	 	Jay K. Trautman Promissory Note, dated July 12, 2002.	 	 	 	 	
 	10.38†	 	 	James H. Sabry and Sandra J. Spence Promissory Note, dated November 12, 2001.	 	 	 	 	
 	10.39†	 	 	Robert I. Blum Cash Bonus Agreement, dated September 1, 2002.	 	 	 	 	
 	10.40†	 	 	Robert I. Blum Amended and Restated Cash Bonus Agreement, dated December 1, 2003.	 	 	 	 	
 	10.41†	 	 	David J. Morgans Cash Bonus Agreement, dated September 1, 2002.	 	 	 	 	
 	10.42†	 	 	David J. Morgans Amended and Restated Cash Bonus Agreement, dated December 1, 2003.	 	 	 	 	
 	10.43†	 	 	Jay K. Trautman Cash Bonus Agreement, dated September 1, 2002.	 	 	 	 	
 	10.44†	 	 	Jay K. Trautman Amended and Restated Cash Bonus Agreement, dated December 1, 2003.	 	 	 	 	

II-5

Table of Contents
 	 	 	 	 	 	 	 	 	
Exhibit	 	 	 	Sequential	
Number	 	Description	 	Page Number	

	 	

	 	

	
 	10.45	 	 	Common Stock Purchase Agreement, dated March 10, 2004, by and between the Registrant and Glaxo Group Limited.	 	 	 	 	
 	23.1	 	 	Consent of PricewaterhouseCoopers LLP, Independent Accountants.	 	 	 	 	
 	23.2*	 	 	Consent of Counsel (included in Exhibit 5.1).	 	 	 	 	
 	24.1	 	 	Power of Attorney (see Page II-7 of the original filing).	 	 	 	 	

 	 	 	
 	*	To be filed by amendment.	

 	†	Previously filed.	

(1) 	Pursuant to a request for confidential treatment, portions of the Exhibit have been redacted from the publicly filed document and have been furnished separately to the SEC as required by Rule 406 under the Securities Act.	
       (b) Financial statement schedules

II-6

Table of Contents

REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors of Cytokinetics, Incorporated:

       Our audits of the financial statements referred to in our report dated March 10, 2004, except for Note 13, as to which the date is                      , 2004, appearing in the Amendment No. 1 to the Registration Statement on Form S-1 of Cytokinetics, Incorporated also included an audit of the Schedule II, Valuation and Qualifying Accounts, in this Form S-1. In our opinion, the financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related financial statements.

/s/ PRICEWATERHOUSECOOPERS LLP

San Jose, California
March 10, 2004

II-7

Table of Contents

Schedule II

CYTOKINETICS, INCORPORATED

VALUATION AND QUALIFYING ACCOUNTS
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Additions	 	 	 	 	
 	 	 	 	(reductions)	 	 	 	 	
 	 	Balance at	 	to Costs	 	 	 	Balance at	
 	 	Beginning	 	and	 	 	 	End of	
 	 	of Period	 	Expenses	 	Write-offs	 	Period	

	 	

	 	

	 	

	
Allowance for doubtful accounts:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Year ended December 31, 2001	 	$	—	 	 	$	386	 	 	$	—	 	 	$	386	 	
 	Year ended December 31, 2002	 	 	386	 	 	 	(195	)	 	 	(191	)	 	 	—	 	
 	Year ended December 31, 2003	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	

       All other financial statement schedules have been omitted because the information required to be set forth herein is not applicable or is shown either in the financial statements or the notes thereto.

Item 17.     	Undertakings.	
       The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

       Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

       The undersigned registrant hereby undertakes that:
 	 	
 	       (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.	
 	 	
 	       (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.	
II-8

Table of Contents

SIGNATURES

       Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of South San Francisco, state of California, on March 11, 2004.
 	 	
 	CYTOKINETICS, INCORPORATED	

 	By: 	/s/ JAMES H. SABRY, M.D., PH.D.	

	
 	James H. Sabry, M.D., Ph.D.	
 	President and Chief Executive Officer	

       Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	 	Title	 	Date	

	 	

	 	

	
 	
/s/ JAMES H. SABRY, M.D., PH.D.

James H. Sabry, M.D., Ph.D.	 	Director, President and Chief Executive Officer
(Principal Executive Officer)	 	March 11, 2004	
 	
/s/ ROBERT I. BLUM

Robert I. Blum	 	Executive Vice President, Finance & Corporate Development and Chief Financial Officer
(Principal Financial and Accounting Officer)	 	March 11, 2004	
 	
*

Stephen Dow	 	Director	 	March 11, 2004	
 	
* 

A. Grant Heidrich, III	 	Director	 	March 11, 2004	
 	
*

Charles Homcy, M.D.	 	Director	 	March 11, 2004	
 	
*

William J. Rutter, Ph.D.	 	Director	 	March 11, 2004	
 	
*

Michael Schmertzler	 	Director	 	March 11, 2004	
 	
*

James A. Spudich, Ph.D.	 	Director	 	March 11, 2004	
 	
By: /s/ JAMES H. SABRY, M.D., PH.D.

James H. Sabry, M.D., Ph.D.
Attorney-in-Fact	 	 	 	 	

II-9

Table of Contents

EXHIBIT INDEX
 	 	 	 	 	
Exhibit	 	 	
Number	 	Description	

	 	

	
 	1.1	 	 	Form of Underwriting Agreement.	
 	3.1†	 	 	Form of Amended and Restated Certificate of Incorporation of the Registrant to be filed after the closing of the offering made under this Registration Statement.	
 	3.2†	 	 	Form of Amended and Restated Bylaws of the Registrant to be in effect after the closing of the offering made under this Registration Statement.	
 	4.1*	 	 	Specimen Common Stock Certificate.	
 	4.2†	 	 	Fourth Amended and Restated Investors Rights Agreement, dated March 21, 2003, by and among the Registrant and certain stockholders of the Registrant.	
 	4.3	 	 	Loan and Security Agreement, dated September 25, 1998, by and between the Registrant and Comdisco.	
 	4.4	 	 	Amendment No. One to Loan and Security Agreement, dated February 1, 1999	
 	4.5	 	 	Warrant for the purchase of shares of Series A preferred stock, dated September 25, 1998, issued by the Registrant to Comdisco.	
 	4.6	 	 	Loan and Security Agreement, dated December 16, 1999, by and between the Registrant and Comdisco	
 	4.7	 	 	Amendment No. 1 to Loan and Security Agreement, dated June 29, 2000, by and between the Registrant and Comdisco.	
 	4.8	 	 	Warrant for the purchase of shares of Series B preferred stock, dated December 16, 1999, issued by the Registrant to Comdisco.	
 	4.9	 	 	Master Security Agreement, dated February 2, 2001, by and between the Registrant and General Electric Capital Corporation.	
 	4.10	 	 	Cross-Collateral and Cross-Default Agreement by and between the Registrant and Comdisco.	
 	4.11	 	 	Warrant for the purchase of shares of common stock, dated July 20, 1999, issued by the Registrant to Bristow Investments, L.P.	
 	4.12	 	 	Warrant for the purchase of shares of common stock, dated July 20, 1999, issued by the Registrant to the Laurence and Magdalena Shushan Family Trust.	
 	4.13	 	 	Warrant for the purchase of shares of common stock, dated July 20, 1999, issued by the Registrant to Slough Estates USA Inc.	
 	4.14	 	 	Warrant for the purchase of shares of Series B preferred stock, dated August 30, 1999, issued by the Registrant to The Magnum Trust.	
 	5.1	 	 	Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation	
 	10.1	 	 	Form of Indemnification Agreement between the Registrant and each of its directors and officers.	
 	10.2†	 	 	1997 Stock Option/ Stock Issuance Plan.	
 	10.3†	 	 	2004 Equity Incentive Plan.	
 	10.4†	 	 	2004 Employee Stock Purchase Plan.	
 	10.5†	 	 	Build-to-Suit Lease, dated May 27, 1997, by and between Britannia Pointe Grand Limited Partnership and Metaxen, LLC.	
 	10.6†	 	 	First Amendment to Lease, dated April 13, 1998, by and between Britannia Pointe Grand Limited Partnership and Metaxen, LLC.	
 	10.7†	 	 	Sublease Agreement, dated May 1, 1998, by and between the Registrant and Metaxen LLC.	
 	10.8†	 	 	Sublease Agreement, dated March 1, 1999, by and between Metaxen, LLC and Exelixis Pharmaceuticals, Inc.	

Table of Contents
 	 	 	 	 	
Exhibit	 	 	
Number	 	Description	

	 	

	
 	10.9†	 	 	Assignment and Assumption Agreement and Consent, dated July 11, 1999, by and among Exelixis Pharmaceuticals, Metaxen, LLC, Xenova Group PLC and Britannia Pointe Grande Limited Partnership.	
 	10.10†	 	 	Second Amendment to Lease, dated July 11, 1999, by and between Britannia Pointe Grand Limited Partnership and Exelixis Pharmaceuticals, Inc.	
 	10.11†	 	 	First Amendment to Sublease Agreement, dated July 20, 1999, by and between the Registrant and Metaxen.	
 	10.12†	 	 	Agreement and Consent, dated July 20, 1999, by and among Exelixis Pharmaceuticals, Inc., the Registrant and Britannia Pointe Grand Limited Partnership.	
 	10.13†	 	 	Amendment to Agreement and Consent, dated July 31, 2000, by and between the Registrant, Exelixis, Inc., and Britannia Pointe Grande Limited Partnership.	
 	10.14†	 	 	Assignment and Assumption of Lease, dated September 28, 2000, by and between Exelixis, Inc. and the Registrant.	
 	10.15†	 	 	Sublease Agreement, dated September 28, 2000, by and between the Registrant and Exelixis, Inc.	
 	10.16†	 	 	Sublease Agreement, dated December 29, 1999, by and between the Registrant and COR Therapeutics, Inc.	
 	10.17(1)	†	 	Collaboration and License Agreement, dated June 20, 2001, by and between the Registrant and Glaxo Group Limited.	
 	10.18(1)	†	 	Memorandum, dated June 20, 2001, by and between the Registrant and Glaxo Group Limited.	
 	10.19(1)	†	 	Letter Amendment to Collaboration Agreement, dated October 28, 2002, by and between the Registrant and Glaxo Group Limited.	
 	10.20(1)	†	 	Letter Amendment to Collaboration Agreement, dated November 5, 2002, by and between the Registrant and Glaxo Group Limited.	
 	10.21(1)	†	 	Letter Amendment to Collaboration Agreement, dated December 13, 2002, by and between the Registrant and Glaxo Group Limited.	
 	10.22(1)	†	 	Letter Amendment to Collaboration Agreement, dated July 11, 2003, by and between the Registrant and Glaxo Group Limited.	
 	10.23(1)	†	 	Letter Amendment to Collaboration Agreement, dated July 28, 2003, by and between the Registrant and Glaxo Group Limited.	
 	10.24(1)	†	 	Letter Amendment to Collaboration Agreement, dated July 28, 2003, by and between the Registrant and Glaxo Group Limited.	
 	10.25(1)	†	 	Letter Amendment to Collaboration Agreement, dated July 28, 2003, by and between the Registrant and Glaxo Group Limited.	
 	10.26†	 	 	Series D Preferred Stock Purchase Agreement, dated June 20, 2001, by and between the Registrant and Glaxo Wellcome International B.V.	
 	10.27†	 	 	Amendment No. 1 to Series D Preferred Stock Purchase Agreement, dated April 2, 2003, by and among the Registrant, Glaxo Wellcome International B.V. and Glaxo Group Limited.	
 	10.28(1)	†	 	Exclusive License Agreement between The Board of Trustees of the Leland Stanford Junior University, The Regents of the University of California and the Registrant, dated April 21, 1998.	
 	10.29†	 	 	Modification Agreement between The Regents of the University of California, The Board of Trustees of the Leland Stanford Junior University and the Registrant, dated September 1, 2000.	
 	10.30(1)	†	 	Collaboration and License Agreement, dated December 15, 2003, by and between AstraZeneca AB and the Registrant.	

Table of Contents
 	 	 	 	 	
Exhibit	 	 	
Number	 	Description	

	 	

	
 	10.31(1)	†	 	Collaboration Agreement, dated December 28, 2001, by and between Exelixis, Inc. and the Registrant.	
 	10.32(1)	†	 	First Letter Amendment of Collaboration Agreement, dated April 10, 2003, by and between Exelixis, Inc. and the Registrant.	
 	10.33†	 	 	Robert I. Blum Promissory Note, dated July 12, 2002.	
 	10.34†	 	 	David J. Morgans and Sandra Morgans Promissory Note, dated May 20, 2002.	
 	10.35†	 	 	David J. Morgans and Sandra Morgans Promissory Note, dated October 18, 2000.	
 	10.36†	 	 	David J. Morgans Promissory Note, dated July 12, 2002.	
 	10.37†	 	 	Jay K. Trautman Promissory Note, dated July 12, 2002.	
 	10.38†	 	 	James H. Sabry and Sandra J. Spence Promissory Note, dated November 12, 2001.	
 	10.39†	 	 	Robert I. Blum Cash Bonus Agreement, dated September 1, 2002.	
 	10.40†	 	 	Robert I. Blum Amended and Restated Cash Bonus Agreement, dated December 1, 2003.	
 	10.41†	 	 	David J. Morgans Cash Bonus Agreement, dated September 1, 2002.	
 	10.42†	 	 	David J. Morgans Amended and Restated Cash Bonus Agreement, dated December 1, 2003.	
 	10.43†	 	 	Jay K. Trautman Cash Bonus Agreement, dated September 1, 2002.	
 	10.44†	 	 	Jay K. Trautman Amended and Restated Cash Bonus Agreement, dated December 1, 2003.	
 	10.45	 	 	Common Stock Purchase Agreement, dated March 10, 2004, by and between the Registrant and Glaxo Group Limited	
 	23.1	 	 	Consent of PricewaterhouseCoopers LLP, Independent Accountants.	
 	23.2*	 	 	Consent of Counsel (included in Exhibit 5.1).	
 	24.1	 	 	Power of Attorney (see Page II-7 of the original filing).	

 	 	 	
 	*	To be filed by amendment.	

 	†	Previously filed.	

(1) 	Pursuant to a request for confidential treatment, portions of the Exhibit have been redacted from the publicly filed document and have been furnished separately to the SEC as required by Rule 406 under the Securities Act.	

Exhibit 1.1

CYTOKINETICS, INCORPORATED

COMMON STOCK, $0.001 PAR VALUE

----------

UNDERWRITING AGREEMENT

[________], 2004

Goldman, Sachs & Co.,
Credit Suisse First Boston LLC,
Pacific Growth Equities, LLC,
Lazard Freres & Co. LLC,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004

Ladies and Gentlemen:

Cytokinetics, Incorporated, a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of [_______] shares (the "Firm Shares") and, at the election of the
Underwriters, up to [_______] additional shares (the "Optional Shares") of
common stock, $0.001 par value ("Stock") of the Company (the Firm Shares and the
Optional Shares that the Underwriters elect to purchase pursuant to Section 2
hereof being collectively called the "Shares").

1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:

(a) A registration statement on Form S-1 (File No. 333-112261) (the
"Initial Registration Statement") in respect of the Shares has been filed with
the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you, and, excluding exhibits thereto, to you for
each of the other Underwriters, have been declared effective by the Commission
in such form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Securities Act"),
which became effective upon filing, no other document with respect to the
Initial Registration Statement has heretofore been filed with the Commission;
and no stop order suspending the effectiveness of the Initial Registration
Statement, any post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose has been
initiated by the Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule 424(a) of
the rules and regulations of the Commission under the Securities Act (the "Rules
and Regulations") is hereinafter called a "Preliminary Prospectus"; the various
parts of the Initial Registration Statement and the Rule 462(b) Registration

Statement, if any, including all exhibits thereto and including the information
contained in the form of final prospectus filed with the Commission pursuant to
Rule 424(b) under the Securities Act in accordance with Section 5(a) hereof and
deemed by virtue of Rule 430A under the Securities Act to be part of the Initial
Registration Statement at the time it was declared effective, each as amended at
the time such part of the Initial Registration Statement became effective or
such part of the Rule 462(b) Registration Statement, if any, became or hereafter
becomes effective, are hereinafter collectively called the "Registration
Statement"; such final prospectus, in the form first filed pursuant to Rule
424(b) under the Securities Act, is hereinafter called the "Prospectus";

(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Securities Act and the Rules and Regulations, and did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through Goldman, Sachs &
Co. expressly for use therein;

(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not, as of the
applicable effective date as to the Registration Statement and any amendment
thereto, and as of the applicable filing date as to the Prospectus and any
amendment or supplement thereto, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that this
representation and warranty shall (i) apply to the Prospectus in light of the
circumstances under which they were made and (ii) not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through Goldman, Sachs & Co. expressly
for use therein;

(d) The statistical, industry-related and market-related data included in
the Registration Statement and the Prospectus are based on or derived from
sources which the Company reasonably and in good faith believes are reliable and
accurate, and such data agree with the sources from which they are derived;

(e) The Company has not sustained since the date of the latest audited
financial statements included in the Prospectus any material loss or material
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been any change in the capital stock or long-term debt of the Company or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the management, financial position,
stockholders' equity or results of operations of the Company, otherwise than as
set forth or contemplated in the Prospectus;

(f) The Company has good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by it,
free and clear of all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company; and any real property and buildings held under
lease by the Company are held by it 

2

under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere in any material respect with the use made of such
real property and buildings by the Company;

(g) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Delaware, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, or is not
reasonably likely to be subject to any material liability or disability by
reason of the failure to be so qualified in any such jurisdiction;

(h) The Company has no subsidiaries and does not own or control, directly
or indirectly, any corporation, association or other entity;

(i) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and non-assessable and
conform to the description of the Stock contained in the Prospectus;

(j) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly authorized and, when issued and delivered
against payment therefor as provided herein, will be validly issued and fully
paid and non-assessable and will conform to the description of the Stock
contained in the Prospectus;

(k) The issue and sale of the Shares by the Company and the compliance by
the Company with all of the provisions of this Agreement and the consummation of
the transactions herein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which the Company
is bound or to which any of the property or assets of the Company is subject,
nor will such action result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties, except in any conflict,
breach, violation or default which individually, or in the aggregate, would not
have a material adverse effect on the condition (financial or otherwise),
results of operations, business or prospects of the Company (a "Material Adverse
Effect"); and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body or
self-regulatory organizations is required for the issue and sale of the Shares
or the consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Securities Act of the Shares and
such consents, approvals, authorizations, registrations or qualifications as may
be required under state securities or Blue Sky laws or applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD") and regulations in
connection with the purchase and distribution of the Shares by the Underwriters;

(l) Except as disclosed in the Registration Statement and the Prospectus,
no holder of any security of the Company has any rights to require registration
of any security of the Company as part or on account of, or otherwise in
connection with, the offer and sale of the Shares contemplated hereby, and any
such rights so disclosed or otherwise have either been fully complied with by
the Company or effectively waived by the holders thereof, and any such waivers
remain in full force and effect;

3

(m) The Company has not prior to the date hereof, made any offer or sale
of any securities which could be "integrated" for purposes of the Securities Act
and the Rules and Regulations with the offer and sale of the Shares pursuant to
the Registration Statement. Except as disclosed in the Registration Statement
and the Prospectus, the Company has not sold or issued any securities during the
six-month period preceding the date of the Prospectus, including but not limited
to any sales pursuant to Rule 144A or Regulation D or S under the Securities Act
and the Rules and Regulations, other than Stock issued pursuant to employee
benefit plans, qualified stock option plans or the employee compensation plans
or pursuant to outstanding options, rights or warrants as described in the
Registration Statement and the Prospectus;

(n) The Company is not in violation of its Certificate of Incorporation or
By-laws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it or any of its properties may be bound
which would have a Material Adverse Effect;

(o) The statements set forth in the Prospectus under the captions
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Research and Development", "Business - Our Strategic Alliances",
"Management - Stock Plans" and "Certain Relationships and Related Party
Transactions", insofar as they purport to describe the agreements and benefit
plans referred to therein, under the captions "Description of Capital Stock" and
"Shares Eligible for Future Sale", insofar as they purport to constitute a
summary of the terms of the Stock, under the captions "Business - Government
Regulation", "United States Federal Tax Considerations for Non-United States
Holders" and "Underwriting", insofar as they purport to describe the provisions
of the laws and documents referred to therein, are accurate and are complete in
all material respects;

(p) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company is a party or of which any
property of the Company is the subject which, if determined adversely to the
Company, would have a Material Adverse Effect; and, to the Company's knowledge,
no such proceedings are threatened;

(q) There are no contracts or other documents (including, without
limitation, any voting agreement), which are required to be described in the
Registration Statement and the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act and the Rules and Regulations and
which have not been so described or filed;

(r) No relationship, direct or indirect, exists between or among the
Company and any director, officer or stockholder of the Company which is
required by the Securities Act and the Rules and Regulations to be described in
the Registration Statement or the Prospectus which is not so described and
described as required in material compliance with such requirement. There are no
outstanding loans, advances (except normal advances for business expenses in the
ordinary course of business) or guarantees of indebtedness by the Company to or
for the benefit of any of the officers or directors of the Company or any of
their respective family members, except as disclosed in the Registration
Statement and the Prospectus. The Company has not, in violation of the
Sarbanes-Oxley Act, directly or indirectly, extended or maintained credit,
arranged for the extension of credit, or renewed an extension of credit, in the
form of a personal loan to or for any director or executive officer of the
Company;

(s) Except as disclosed in the Registration Statement and the Prospectus,
there are no contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or 

4

other like payment in connection with the transactions contemplated by this
Agreement, the Registration Statement and the Prospectus or, to the Company's
knowledge, any arrangements, agreements, understandings, payments or issuance
with respect to the Company or any of its officers, directors, stockholders,
partners, employees, or affiliates that may affect the Underwriters'
compensation as determined by the NASD;

(t) Pursuant to the "safe harbor" provided to bona fide research and
development companies under Rule 3a-8 of the Investment Company Act of 1940, as
amended (the "Investment Company Act"), the Company is not and, after giving
effect to the offering and sale of the Shares, will not be an "investment
company", as such term is defined in the Investment Company Act;

(u) Neither the Company nor any of its affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba within the
meaning of Section 517.075, Florida Statutes;

(v) PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company, are independent public accountants as required by the
Securities Act and the Rules and Regulations;

(w) The Company has entered into contracts with insurers of recognized
financial responsibility for insurance coverage against such losses and risks
and in such amounts as the Company believes are prudent and customary in the
business in which the Company is engaged; and the Company has no reason to
believe that it will not be able to renew its existing insurance coverage at
then prevailing rates applicable to similarly situated organizations as and when
such coverage expires;

(x) The Company holds, except where the failure to do so would not have a
Material Adverse Effect, and is operating in compliance in all respects with,
all franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals, clearances and orders of any federal, state or foreign
governmental authority required for the ownership of the properties of the
Company or the conduct of its business (including, but not limited to, those
that may be required by the U.S. Food and Drug Administration, the U.S. Drug
Enforcement Agency, and all corresponding regulatory agencies or bodies outside
of the United States (collectively, "Government Licenses") and all such
Government Licenses are valid and in full force and effect; the Company is has
complied at all times in all material respects with all applicable federal,
state, local and foreign laws, regulations, orders and decrees; the Company has
not received, and has no reason to believe it will receive, any notice of
proceedings relating to the suspension, revocation or modification of any
Government Licenses nor has any reason to believe that any such Governmental
Licenses will not be renewed in the ordinary course;

(y) Except as disclosed in the Registration Statement and Prospectus, the
Company owns, possesses, licenses or has other rights to use the patents and
patent applications, copyrights, trademarks, service marks, trade names,
technology, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary rights) and other intellectual property (or could
acquire such intellectual property upon commercially reasonable terms) necessary
to conduct its business in the manner in which it is being conducted and in the
manner in which it is contemplated to be conducted as set forth in the
Prospectus (collectively, the "Company Intellectual Property"); except as
disclosed in the Registration Statement and Prospectus, to the Company's
knowledge, none of the patents owned or licensed by the Company is unenforceable
or invalid, and, to the Company's knowledge, none of the patent applications
owned or licensed by the Company would be unenforceable or invalid if issued as
patents; the Company is not obligated to pay a royalty, grant a license, or
provide other consideration to any third party in connection with the Company
Intellectual 

5

Property other than as disclosed in the Prospectus; except as disclosed in the
Registration Statement and Prospectus, the Company has not received any notice
of violation or conflict with rights of others with respect to the Company
Intellectual Property; except as disclosed in the Registration Statement and
Prospectus, there are no pending or to the Company's knowledge, threatened
actions, suits, proceedings or claims by others that the Company is infringing
any patent, trade secret, trade mark, service mark, copyright or other
intellectual property or proprietary right; and except as disclosed in the
Registration Statement and Prospectus, the products or processes of the Company
referenced in the Prospectus do not, to the knowledge of the Company, violate or
conflict with any intellectual property or proprietary right of any third
person, or any discovery, invention, product or process that is the subject of a
patent application filed by any third person;

(z) The studies, tests and preclinical and clinical trials conducted by or
on behalf of the Company that are described in the Prospectus were and, if still
pending, are being conducted in all material respects in accordance with
experimental protocols, procedures and controls pursuant to accepted
professional scientific standards and all applicable local, state and federal
and foreign laws, rules, regulations and guidances, including, but not limited
to, the Federal Food, Drug and Cosmetic Act and implementing regulations at 21
C.F.R. Parts 50, 54, 56, 58 and 312; the descriptions of the results of such
studies, tests and trials contained in the Prospectus are accurate and complete
in all material respects; the Company is not aware of any studies, tests or
trails the results of which reasonably call into question the clinical trial
results described or referred to in the Prospectus when viewed in the context in
which such results are described and the clinical state of development; and the
Company has not received any notices or correspondence from the U.S. Food and
Drug Administration or any foreign, state or local governmental body exercising
comparable authority requiring the termination, suspension or material
modification of any studies, tests or preclinical or clinical trials conducted
by or on behalf of the Company;

(aa) The Company has complied at all times in all material respects with
all applicable Environmental Health and Safety Laws, holds all permits and
licenses and has received all approvals under Environmental Health and Safety
Laws necessary for the conduct of the business of the Company except where
failure to do so would not have a Material Adverse Effect, and is in compliance
in all material respects with its environmental permits; no property currently
owned or operated by the Company (including soils, groundwater, surface water,
buildings or other structures) is, to the knowledge of the Company, contaminated
with any Hazardous Substance; no property formerly owned or operated by the
Company was, to the knowledge of the Company, contaminated with any Hazardous
Substance during or prior to such period of ownership or operation except as
would not result in material liability to the Company; the Company, to its
knowledge, is not subject to liability for any Hazardous Substance disposal or
contamination on any third-party property; the Company is not aware of any past
or present release or threat of release of any Hazardous Substance by the
Company that would have a Material Adverse Effect; the Company has not received
any notice, demand, letter, claim or request for information alleging that the
Company may be in violation of or subject to liability under any Environmental
Health and Safety Law. For the purposes of this section, "Environmental Health
and Safety Law" shall mean any law, statute, ordinance, rule, regulation, order,
decree, or requirement of any court or governmental agency or body having
jurisdiction over the Company or any of its properties relating to: (i) the
protection, investigation or restoration of the environment, health, safety, or
natural resources, (ii) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance, (iii) noise, odor, indoor air,
employee exposure, wetlands, pollution, contamination or any injury or threat of
injury to persons or property, or (iv) the handling, storage, shipment or
production of pharmaceutical or biohazardous substances. For the purposes of
this section, "Hazardous Substance" shall mean any substance that 

6

is: (A) listed, classified or regulated pursuant to any Environmental Health and
Safety Law, (B) any petroleum product or by-product, asbestos-containing
material, lead-containing paint, polychlorinated biphenyls, radioactive material
or radon, or (C) any other substance that may be the subject of regulatory
action by any court or government agency or body having jurisdiction over the
Company or any of its properties in connection with any Environmental Health and
Safety Law; and

(bb) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $[_______], the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction, the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.

The Company hereby grants to the Underwriters the right to purchase at
their election up to [_______] Optional Shares, at the purchase price per share
set forth in clause (a) of the paragraph above, for the sole purpose of covering
sales of shares in excess of the number of Firm Shares, provided that the
purchase price per Optional Share shall be reduced by an amount per share equal
to any dividends or distributions declared by the Company and payable on the
Firm Shares but not payable on the Optional Shares. Any such election to
purchase Optional Shares may be exercised only by written notice from you to the
Company, given within a period of 30 calendar days after the date of this
Agreement, setting forth the aggregate number of Optional Shares to be purchased
and the date on which such Optional Shares are to be delivered, as determined by
you but in no event earlier than the First Time of Delivery (as defined in
Section 4 hereof) or, unless you and the Company otherwise agree in writing,
earlier than two or later than ten business days after the date of such notice.

3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.

4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in
such names as Goldman, Sachs & Co. may request upon at least forty-eight
hours' prior notice to the Company shall be delivered by or on behalf of
the Company to Goldman, Sachs & Co., through the facilities of the
Depository Trust Company ("DTC"), for the account of such Underwriter,
against payment by or on behalf of

7

such Underwriter of the purchase price therefor by wire transfer of
Federal (same-day) funds to the account specified by the Company to
Goldman, Sachs & Co. at least forty-eight hours in advance. The Company
will cause the certificates representing the Shares to be made available
for checking and packaging at least twenty-four hours prior to the Time of
Delivery (as defined below) with respect thereto at the office of DTC or
its designated custodian (the "Designated Office"). The time and date of
such delivery and payment shall be, with respect to the Firm Shares, 9:30
A.M., New York City time, on [_______], 2004 or such other time and date
as Goldman, Sachs & Co. and the Company may agree upon in writing, and,
with respect to the Optional Shares, 9:30 A.M., New York time, on the date
specified by Goldman, Sachs & Co. in the written notice given by Goldman,
Sachs & Co. of the Underwriters' election to purchase such Optional
Shares, or such other time and date as Goldman, Sachs & Co. and the
Company may agree upon in writing. Such time and date for delivery of the
Firm Shares is herein called the "First Time of Delivery", such time and
date for delivery of the Optional Shares, if not the First Time of
Delivery, is herein called the "Second Time of Delivery", and each such
time and date for delivery is herein called a "Time of Delivery".

(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(l) hereof, will be delivered at the
offices of Latham & Watkins LLP, 505 Montgomery Street, Suite 1900, San
Francisco, CA 94111 (the "Closing Location"), and the Shares will be
delivered at the Designated Office, all at such Time of Delivery. A
meeting will be held at the Closing Location at 2:00 P.M., California
time, on the New York Business Day next preceding such Time of Delivery,
at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York Business
Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which
is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.

(c) The Company hereby confirms its engagement of Goldman, Sachs & Co. as,
and Goldman, Sachs & Co. hereby confirms its agreement with the Company to
render services as, a "qualified independent underwriter" within the
meaning of Rule 2720(b)(15) of the NASD with respect to the offering and
sale of the Shares. Goldman, Sachs & Co., in its capacity as qualified
independent underwriter and not otherwise, is referred to herein as the
"QIU". As compensation for the services of the QIU hereunder, the Company
agrees to pay the QIU $10,000 on the first Time of Delivery.

5. The Company agrees with each of the Underwriters:

(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if applicable,
such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus which shall be disapproved by you
promptly after reasonable notice thereof; to advise you, promptly after it
receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and
to furnish you with copies thereof; to advise you, promptly after it
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus

8

or prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the withdrawal
of such order;

(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may reasonably request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;

(c) Prior to 10:00 A.M., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to
time, to furnish the Underwriters with written and electronic copies of
the Prospectus in New York City in such quantities as you may reasonably
request, and, if the delivery of a prospectus is required at any time
prior to the expiration of nine months after the time of issue of the
Prospectus in connection with the offering or sale of the Shares and if at
such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary during such
period to amend or supplement the Prospectus in order to comply with the
Securities Act and the Rules and Regulations, to notify you and upon your
request to prepare and furnish without charge to each Underwriter and to
any dealer in securities as many written and electronic copies as you may
from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or omission
or effect such compliance, and in case any Underwriter is required to
deliver a prospectus in connection with sales of any of the Shares at any
time nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and
deliver to such Underwriter as many written and electronic copies as you
may request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the Securities Act;

(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Securities Act), an earnings statement of the Company (which
need not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations (including, at the option of the Company,
Rule 158);

(e) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, not
to offer, sell, contract to sell, pledge or otherwise dispose of, except
as provided hereunder any securities of the Company that are substantially
similar to the Shares, including but not limited to any securities that
are convertible into or exchangeable for, or that represent the right to
receive, Stock or any such substantially similar securities (other than
(i) pursuant to any employee stock option plan or stock ownership plan
existing on the date of this Agreement, (ii) upon the conversion or

9

exchange of convertible or exchangeable securities outstanding as of the
date hereof, (iii) up to $7.0 million of the Company's common stock issued
to GlaxoSmithKline immediately prior to the completion of the offering and
sale of the Shares at a per share price equal to the per share price of
the Shares or (iv) new shares of the Company's common stock issued or sold
in connection with any corporate strategic development transaction or any
merger or acquisition transaction up to an aggregate amount of ten percent
(10%) of the outstanding shares of the Company's common stock following
completion of the offering and sale of the Shares, provided that any
recipient of such shares agrees to be bound by the provisions of this
Section 5(e)), without your prior written consent;

(f) To make available to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a balance
sheet and statements of income, stockholders' equity and cash flows of the
Company certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective
date of the Registration Statement), to make available to its stockholders
consolidated summary financial information of the Company for such
quarter;

(g) During a period of three years from the effective date of the
Registration Statement, to make available to you copies of all reports or
other communications (financial or other) furnished to stockholders, and
to make available to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission
or any national securities exchange on which any class of securities of
the Company is listed; and (ii) such additional, non-confidential
information concerning the business and financial condition of the Company
as you may from time to time reasonably request (such financial statements
to be on a consolidated basis to the extent the accounts of the Company
are consolidated in reports furnished to its stockholders generally or to
the Commission);

(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds;"

(i) To use its best efforts to list for quotation the Shares on the
National Association of Securities Dealers Automated Quotations National
Market System ("NASDAQ");

(j) To file with the Commission such information on Form 10-Q or
Form 10-K as may be required by Rule 463 under the Securities Act;

(k) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b), and the Company shall at the time of filing
either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment of
such fee pursuant to Rule 111(b) under the Securities Act; and

(l) Upon request of any Underwriter, to furnish, or cause to be
furnished, to such Underwriter an electronic version of the Company's
trademarks, servicemarks and corporate logo for use on the website, if
any, operated by such Underwriter for the purpose of facilitating the
on-line offering of the Shares (the "License"); provided, however, that
the License shall be used solely for the purpose described above, is
granted without any fee and may not be assigned or transferred.

6. The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's 

10

counsel and accountants in connection with the registration of the Shares under
the Securities Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost of
printing or producing any agreement among the Underwriters in connection with
this Agreement ("Agreement among Underwriters"), this Agreement, the Blue Sky
Memorandum, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Shares; (iii) all expenses in connection with the qualification of the Shares
for offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey
(iv) all fees and expenses in connection with listing the Shares on the NASDAQ;
(v) the filing fees incident to, and the fees and disbursements of counsel for
the Underwriters in connection with, securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of the
Shares; (vi) the cost of preparing stock certificates; (vii) the cost and
charges of any transfer agent or registrar; (viii) the fees and expenses of the
QIU; and (ix) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section. It is understood, however, that, except as provided in this Section,
and Sections 8 and 11 hereof, the Underwriters will pay all of their own costs
and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected with
any offers they may make.

7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:

(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the Rules and Regulations and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective; no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;

(b) Latham & Watkins LLP, counsel for the Underwriters, shall have
furnished to you their written opinion, dated such Time of Delivery, in
the form attached here to as Annex II(a);

(c) Wilson Sonsini Goodrich & Rosati, Professional Corporation,
counsel for the Company, shall have furnished to you their written
opinion, dated such Time of Delivery, in form attached hereto as Annex
II(b);

(d) Swiss Law Group, LLC, special patent counsel for the Company,
shall have furnished to you their written opinion, dated such Time of
Delivery, in form attached hereto as Annex II(c);

(e) Townsend and Townsend and Crew LLP, special patent counsel for
the Company, shall have furnished to you their written opinion, dated such
Time of Delivery, in form attached hereto as Annex II(d);

11

(f) Beyer, Weaver & Thomas, special patent counsel for the Company,
shall have furnished to you their written opinion, dated such Time of
Delivery, in form attached hereto as Annex II(e);

(g) David Lowin, special patent counsel for the Company, shall have
furnished to you their written opinion, dated such Time of Delivery, in
form attached hereto as Annex II(e);

(h) On the date of the Prospectus at a time prior to the execution
of this Agreement, at 9:30 A.M., New York City time, on the effective date
of any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time of
Delivery, PricewaterhouseCoopers LLP shall have furnished to you a letter
or letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, to the effect set forth in Annex I hereto
(the executed copy of the letter delivered prior to the execution of this
Agreement is attached as Annex I(a) hereto and a draft of the form of
letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex I(b) hereto);

(i) (i) The Company shall not have sustained since the date of the
latest audited financial statements included in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus, and (ii) since the respective
dates as of which information is given in the Prospectus there shall not
have been any change in the capital stock or long-term debt of the Company
or any change, or any development involving a prospective change, in or
affecting the management, financial position, stockholders' equity or
results of operations of the Company, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) is in the reasonable judgment of the
Representatives, and in any such case described in clause (ii) is in the
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;

(j) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities, if any, by
any "nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities, if any;

(k) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on NASDAQ; (ii) a
suspension or material limitation in trading in the Company's securities
on NASDAQ; (iii) a general moratorium on commercial banking activities
declared by either Federal, New York or California State authorities or a
material disruption in commercial banking or securities settlement or
clearance services in the United States; (iv) the outbreak or escalation
of hostilities involving the United States or the declaration by the
United States of a national emergency or war or (v) the occurrence of any
other calamity or crisis or any change in financial, political or economic
conditions in the United States or elsewhere, if the effect of any such
event specified in clause (iv) or (v) in the reasonable judgment of the
Representatives makes it impracticable or inadvisable to proceed with the
public offering or 

12

the delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;

(l) The Shares to be sold at such Time of Delivery shall have been
duly listed for quotation on NASDAQ;

(m) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from at least [_____]% of the stockholders
of the Company, substantially to the effect set forth in Annex III hereto;

(n) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and

(o) The Company shall have furnished or caused to be furnished to
you at such Time of Delivery certificates of officers of the Company
reasonably satisfactory to you as to the accuracy of the representations
and warranties of the Company herein at and as of such Time of Delivery,
as to the performance by the Company of all of its obligations hereunder
to be performed at or prior to such Time of Delivery, as to the matters
set forth in subsections (a) and (e) of this Section and as to such other
matters as you may reasonably request.

8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through Goldman, Sachs & Co. expressly for use
therein.

(b) Each Underwriter will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Goldman, Sachs
& Co. expressly for use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.

13

(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.

(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (d) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable 

14

considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the total
underwriting discounts and commissions received by such Underwriter. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
in this subsection (d) to contribute are several in proportion to their
respective underwriting obligations and not joint.

(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Securities Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company (including any
person who, with his or her consent, is named in the Registration Statement as
about to become a director of the Company) and to each person, if any, who
controls the Company within the meaning of the Securities Act.

(f) The Company will indemnify and hold harmless Goldman, Sachs & Co., in
its capacity as QIU, against any losses, claims, damages or liabilities, joint
or several, to which the QIU may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or (iii) any act or omission to act or any alleged act or omission to
act by Goldman, Sachs & Co. as QIU in connection with any transaction
contemplated by this Agreement or undertaken in preparing for the purchase, sale
and delivery of the Shares, except as to this clause (iii) to the extent that
any such loss, claim, damage or liability results from the gross negligence or
bad faith of Goldman, Sachs & Co. in performing the services as QIU, and will
reimburse the QIU for any legal or other expenses reasonably incurred by the QIU
in connection with investigating or defending any such action or claim as such
expenses are incurred.

(g) Promptly after receipt by the QIU under subsection (f) above of notice
of the commencement of any action, the QIU shall, if a claim in respect thereof
is to be made against the Company under such subsection, notify the Company in
writing of the commencement thereof; but the omission so to notify the Company
shall not relieve it from any liability which it may have to the QIU otherwise
than under such subsection. In case any such action shall be brought against the
QIU and it shall notify the Company of the commencement thereof, the Company
shall be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to the QIU (who shall not,
except with the consent of the QIU, be counsel to the Company), and, after
notice from the indemnifying party to the QIU of its election so to assume the
defense thereof, the indemnifying party shall not be liable to the QIU under
such subsection for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by the QIU, in connection with the defense
thereof other than reasonable costs of investigation. The Company shall not,
without the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment 

15

with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the QIU
is an actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the QIU from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of QIU.

(h) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless Goldman, Sachs & Co., in its capacity as
QIU, under subsection (f) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then the
Company shall contribute to the amount paid or payable by the QIU as a result of
such losses, claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the QIU on the other from the offering of the
Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the QIU failed to give the
notice required under subsection (b) above, then the Company shall contribute to
such amount paid or payable by the QIU in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the QIU on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the QIU on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company, as set forth in the table on the cover page of the Prospectus,
bear to the fee payable to the QIU pursuant to Section 3 hereof. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the QIU on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the QIU agree that it would not be just
and equitable if contributions pursuant to this subsection (h) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this subsection
(h). The amount paid or payable by the QIU as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (h) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

(i) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the QIU
within the meaning of the Act.

9. (a) If any Underwriter shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such Shares,
then the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such Shares, or the Company notifies you that it has so arranged for
the purchase of such Shares, you or the Company shall have the right to postpone
such Time of Delivery 

16

for a period of not more than seven days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus,
or in any other documents or arrangements, and the Company agrees to file
promptly any amendments to the Registration Statement or the Prospectus which in
your opinion may thereby be made necessary. The term "Underwriter" as used in
this Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such Shares.

(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.

(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.

10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Shares.

11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason, any Shares
are not delivered by or on behalf of the Company as provided herein, the Company
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Shares not so delivered, but the Company shall then be
under no further liability to any Underwriter except as provided in Sections 6
and 8 hereof.

12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives.

17

All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail to the
address of the Company set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to an Underwriter pursuant to
Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its Underwriters'
Questionnaire, or telex constituting such Questionnaire, which address will be
supplied to the Company by you upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.

13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and, to the extent provided in Sections 8 and
10 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.

14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business. As used herein, the terms "you" and
"your" refer to Goldman, Sachs & Co. on behalf of the Underwriters.

15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.

17. The Company is authorized, subject to applicable law, to disclose any
and all aspects of this potential transaction that are necessary to support any
U.S. federal income tax benefits expected to be claimed with respect to such
transaction, and all materials of any kind (including tax opinions and other tax
analyses) related to those benefits, without the Underwriters imposing any
limitation of any kind.

18

If the foregoing is in accordance with your understanding, please sign and
return to us eight (8) counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement between each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.

Very truly yours,

Cytokinetics, Incorporated

By: 
.........................................
Name:
Title:

Accepted as of the date hereof:

Goldman, Sachs & Co.
Credit Suisse First Boston LLC
Pacific Growth Equities, LLC
Lazard Freres & Co. LLC

By:
....................................
(Goldman, Sachs & Co.)

On behalf of each of the Underwriters

SCHEDULE I

NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF             PURCHASED IF
FIRM SHARES              MAXIMUM OPTION
UNDERWRITER                                  TO BE PURCHASED              EXERCISED
-----------                                  ---------------              ---------

Goldman, Sachs & Co...............................................
Credit Suisse First Boston LLC....................................
Pacific Growth Equities, LLC......................................
Lazard Freres & Co. LLC...........................................

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

Total.........................................
===============           =================

ANNEX I

FORM OF COMFORT LETTER

Pursuant to Section 7(d) of the Underwriting Agreement,
PricewaterhouseCoopers LLP shall furnish letters to the Underwriters to the
effect that:

(i) They are independent certified public accountants with respect
to the Company within the meaning of the Securities Act and the applicable
published rules and regulations thereunder;

(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable, pro
forma financial information) examined by them and included in the
Prospectus or the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Securities Act
and the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited interim financial statements, selected financial data, pro
forma financial information, and/or condensed financial statements derived
from audited financial statements of the Company for the periods specified
in such letter, as indicated in their reports thereon, copies of which
have been separately furnished to the representatives of the Underwriters
(the "Representatives") and are attached hereto;

(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed statements of income, balance sheets and
consolidated statements of cash flows included in the Prospectus as
indicated in their reports thereon copies of which have been separately
furnished to the Representatives and are attached hereto and on the basis
of specified procedures including inquiries of officials of the Company
who have responsibility for financial and accounting matters regarding
whether the unaudited condensed financial statements referred to in
paragraph (vi)(A)(i) below comply as to form in all material respects with
the applicable accounting requirements of the Securities Act and the
related published rules and regulations, nothing came to their attention
that cause them to believe that the unaudited condensed financial
statements do not comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the related
published rules and regulations;

(iv) The unaudited selected financial information with respect to
the results of operations and financial position of the Company for the
five most recent fiscal years included in the Prospectus agrees with the
corresponding amounts (after restatements where applicable) in the audited
financial statements for such five fiscal years which were included or
incorporated by reference in the Company's Annual Reports on Form 10-K for
such fiscal years;

(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and
on the basis of limited procedures specified in such letter nothing came
to their attention as a result of the foregoing procedures that caused
them to believe that this information does not conform in all material
respects with the disclosure requirements of Items 301, 302, 402 and
503(d), respectively, of Regulation S-K;

(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim

I-1

financial statements of the Company, inspection of the minute books of the
Company since the date of the latest audited financial statements included
in the Prospectus, inquiries of officials of the Company responsible for
financial and accounting matters and such other inquiries and procedures
as may be specified in such letter, nothing came to their attention that
caused them to believe that:

(A) (i) the unaudited statements of income, balance sheets and
statements of cash flows included in the Prospectus do not comply as
to form in all material respects with the applicable accounting
requirements of the Securities Act and the related published rules
and regulations, or (ii) any material modifications should be made
to the unaudited condensed statements of income, balance sheets and
statements of cash flows included in the Prospectus for them to be
in conformity with generally accepted accounting principles;

(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with
the basis for the corresponding amounts in the audited financial
statements included in the Prospectus;

(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived any unaudited
condensed financial statements referred to in clause (A) and any
unaudited income statement data and balance sheet items included in
the Prospectus and referred to in clause (B) were not determined on
a basis substantially consistent with the basis for the audited
financial statements included in the Prospectus;

(D) any unaudited pro forma condensed financial statements
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
Securities Act and the published rules and regulations thereunder or
the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;

(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the capital
stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial
statements included in the Prospectus) or any increase in the
long-term debt of the Company, or any decreases in net current
assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in the
latest balance sheet included in the Prospectus, except in each case
for changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such letter;
and

(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in clause (E) there were any decreases in net revenues or
operating profit or the total or per share amounts of net income or
other items specified by the Representatives, or any increases in
any items specified 

I-2

by the Representatives, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in
each case for decreases or increases which the Prospectus discloses
have occurred or may occur or which are described in such letter;
and

(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraphs
(iii) and (vi) above, they have carried out certain specified procedures,
not constituting an examination in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and
financial information specified by the Representatives, which are derived
from the general accounting records of the Company, which appear in the
Prospectus, or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives, and have compared
certain of such amounts, percentages and financial information with the
accounting records of the Company and have found them to be in agreement.

I-3

ANNEX III

CYTOKINETICS, INCORPORATED

LOCK-UP AGREEMENT

__________________, 2004

Goldman, Sachs & Co.
Credit Suisse First Boston LLC
Pacific Growth Equities, LLC
Lazard Freres & Co. LLC
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY  10004

Re:  Cytokinetics, Incorporated - Lock-Up Agreement

Ladies and Gentlemen:

The undersigned understands that Goldman, Sachs & Co., Credit Suisse First
Boston LLC, Pacific Growth Equities, LLC and Lazard Freres & Co. LLC, as
representatives (the "Representatives"), propose to enter into an underwriting
agreement (the "Underwriting Agreement") on behalf of the several Underwriters
named in Schedule I to such agreement (collectively, the "Underwriters"), with
Cytokinetics, Incorporated, a Delaware corporation (the "Company"), providing
for a public offering of the Common Stock of the Company (the "Shares") pursuant
to a Registration Statement on Form S-1 to be filed with the Securities and
Exchange Commission (the "SEC").

In consideration of the agreement by the Underwriters to offer and sell
the Shares, and of other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the undersigned agrees that, during
the period beginning from the date of the final Prospectus covering the public
offering of the Shares and continuing to and including the date 180 days after
the date of such final Prospectus, the undersigned will not offer, sell,
contract to sell, pledge, grant any option to purchase, make any short sale or
otherwise dispose of any shares of Common Stock of the Company, or any options
or warrants to purchase any shares of Common Stock of the Company, or any
securities convertible into, exchangeable for or that represent the right to
receive shares of Common Stock of the Company, whether now owned or hereinafter
acquired, owned directly by the undersigned (including holding as a custodian)
or with respect to which the undersigned has beneficial ownership within the
rules and regulations of the SEC (collectively the "Undersigned's Shares").

The foregoing restriction is expressly agreed to preclude the undersigned
from engaging in any hedging or other transaction which is designed to or which
reasonably could be expected to lead to or result in a sale or disposition of
the Undersigned's Shares even if such Shares would be disposed of by someone
other than the undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation

III-1

any put or call option) with respect to any of the Undersigned's Shares or with
respect to any security that includes, relates to, or derives any significant
part of its value from such Shares.

Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a bona fide gift or gifts, (ii) to any trust for the
direct or indirect benefit of the undersigned or the immediate family of the
undersigned, (iii) if the undersigned is a corporation, limited liability
company or partnership, to any wholly-owned subsidiary of such entity or
pursuant to a distribution to a shareholder, member or partner, respectively, of
such entity, (iv) by will or intestate succession, (v) that are acquired from
the Company in the public offering or in the public market on or after the date
of the final Prospectus provided that any such transfer does not result in any
public filing or other public disclosure obligation by the undersigned or the
Company or (vi) with the prior written consent of Goldman, Sachs & Co. on behalf
of the Underwriters. For purposes of this Lock-Up Agreement, "immediate family"
shall mean any relationship by blood, marriage or adoption, not more remote than
first cousin. Notwithstanding the foregoing, it shall be a condition to any
transfer contemplated by clause (i), (ii), (iii) or (iv) above that the
transferee execute an agreement stating that the transferee is receiving and
holding such capital stock subject to the provisions of this Agreement and there
shall be no further transfer of such capital stock except in accordance with
this Agreement, and provided further that any such transfer shall not involve a
disposition for value. The undersigned now has, and, except as contemplated by
clause (i), (ii), (iii), (iv) and (v) above, for the duration of this Lock-Up
Agreement will have, good and marketable title to the Undersigned's Shares, free
and clear of all liens, encumbrances, and claims whatsoever. The undersigned
also agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of the Undersigned's
Shares except in compliance with the foregoing restrictions.

The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.

Very truly yours,

----------------------------------------
Exact Name of Shareholder

----------------------------------------
Authorized Signature

----------------------------------------
Title

III-2

Exhibit 4.3

LOAN AND SECURITY AGREEMENT

THIS AGREEMENT (the "Agreement"), dated as of September 25, 1998 (the
"Closing Date") is entered into by and between Cytokinetics, Incorporated, a
Delaware corporation having a principal place of business at 280 East Grand
Avenue, South San Francisco, CA 94080 (the "Borrower") and Comdisco, Inc., a
Delaware corporation having a principal place of business at 6111 North River
Road, Rosemont, Illinois 60018 (the "Lender"). In consideration of the mutual
agreements contained herein, the parties hereto agree as follows:

WHEREAS, Borrower has requested Lender to make available to Borrower a
loan in the aggregate principal amount of up to ONE MILLION FIVE HUNDRED
THOUSAND and 00/100 DOLLARS ($1,500,000.00) (as the same may from time to time
be amended, modified, supplemented or revised, the "Loan"), which shall be
available in minimum installments of TWO HUNDRED FIFTY THOUSAND and 00/100
DOLLARS ($250,000) each (the "Advance") on various dates prior to September 25,
1999 ("Advance Date(s)"), which would be evidenced by Secured Promissory Note(s)
executed by Borrower substantially in the form of EXHIBIT A hereto (as the same
may from time to time be amended, modified, supplemented or restated the
"Note(s)");

NOW, THEREFORE, it is agreed:

SECTION 1. THE LOAN

1.1      Subject to the terms and conditions set forth herein, Lender
shall lend to Borrower the aggregate original principal amount of ONE MILLION
FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($1,500,000) together with interest at
the rate of eight and one quarter percent (8.25%) per annum due and payable in
monthly installments as set forth in the Note

1.2      Upon the occurrence of and during an Event of Default (as
defined herein), interest shall thereafter be calculated at a rate of five
percent (5%) in excess of the rate that would otherwise be applicable ("Default
Rate"). All such interest shall be due and payable in arrears, on the first day
of the following month.

1.3      Notwithstanding any provision in this Agreement, the Note, or
any other "Loan Document" (as defined herein), it is not the parties' intent to
contract for, charge or receive interest at a rate that is greater than the
maximum rate permissible by law which a court of competent jurisdiction shall
deem applicable hereto (which under the laws of the State of Illinois shall be
deemed to be the laws relating to permissible rates of interest on commercial
loans) (the "Maximum Rate"). If the Borrower actually pays Lender an amount of
interest, chargeable on the total aggregate principal Secured Obligations of
Borrower under this Agreement and the Note (as said rate is calculated over a
period of time that is the longer of (i) the time from the date of this
Agreement through the maturity time as set forth on the Note, or (ii) the entire
period of time that any principal is outstanding on the Note), which amount of
interest exceeds interest calculated at the Maximum Rate on said principal
chargeable over said period of time, then such excess interest actually paid by
Borrower shall be applied first, to the payment of principal outstanding on the
Note; second, after all principal is repaid, to the payment of Lender's out of
pocket costs, expenses, and professional fees which are owed by Borrower to
Lender under this Agreement or the Loan Documents; and third, after all
principal, costs, expenses, and professional fees owed by Borrower to Lender are
repaid, the excess (if any) shall be refunded to Borrower.

-1-

1.4      In the event any interest is not paid when due hereunder,
delinquent interest shall be added to principal and shall bear interest on
interest, compounded at the rate set forth in Section 1.1

1.5      Upon and during the continuation of an Event of Default
hereunder (as defined herein), all Secured Obligations, including principal,
interest, compounded interest, and reasonable professional fees, shall bear
interest at a rate per annum equal to the Default Rate.

1.6      Borrower shall have the option to prepay the Note, in whole or
in part, at any time after the date hereof by paying the principal amount
together with all accrued and unpaid interest with respect to such principal
amount, as of the date of such prepayment and the Balloon Payment as described
in the Note together with a prepayment premium equal to the difference, if any,
between (x) the amount being prepaid and (y) the present value, discounted at
the Treasury Rate, of each installment of principal and interest being prepaid
discounted to the date of prepayment. If the amount in (x) is greater than the
amount in (y), no prepayment premium shall be due. The "Treasury Rate" shall
mean the then prevailing yield on US Treasury Constant Maturities for the most
recent business day, as quoted in the Federal Reserve Statistical Release H15,
as of the date of prepayment for an obligation of comparable maturity to the
maturity date of the Note.

SECTION 2. SECURITY INTEREST

As security for the payment of all indebtedness ("Indebtedness") of the
Borrower to the Lender hereunder and under the Note, as the same may be renewed,
extended for any period or rearranged, and the performance by the Borrower of
its other obligations hereunder (the Indebtedness and such other obligations
being hereinafter sometimes collectively referred to as the "Secured
Obligations"), the Borrower hereby assigns to the Lender, and grants to the
Lender a first priority security interest in, all the Borrower's right, title,
and interest in and to the following property ("Collateral"): (i) the equipment
and other property (the "Equipment") described in Exhibit B attached hereto; and
(ii) all proceeds, products, replacements, additions to, substitutions for and
accessions to any and all Equipment including, without limitation, the proceeds
applicable to the insurance referred to in Section 4 hereof.

Equipment shall consist of computers, workstations, peripherals,
instrumentation, electronic test equipment, office furniture, certain types of
microscopy equipment and other items of equipment approved by Lender. Up to 20%
of the Loan may be used for software and tenant improvements.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF BORROWER

The Borrower represents, warrants and agrees that:

3.1      it has good title in and to the Equipment, free of all liens,
security interests, encumbrances and claims whatsoever, except for the interest
of the Lender therein;

3.2      it has the full power and authority to, and does hereby grant
and convey to the Lender, a valid first priority perfected security interest in
the Collateral as security for the Secured Obligations, free of all liens,
security interests, encumbrances and claims, and shall execute such

-2-

Uniform Commercial Code ("UCC") financing statements in connection herewith as
the Lender may reasonably request. No other lien, security interest, adverse
claim or encumbrance has been created by Borrower or is known by Borrower to
exist with respect to any Collateral;

3.3      it is a corporation duly organized, legally existing and in
good standing under the laws of the State of Delaware, and is duly qualified as
a foreign corporation in all jurisdictions where the failure to so qualify would
have a material adverse effect on the Collateral or the business of the Borrower
taken as a whole;

3.4      the execution, delivery and performance of the Note, this
Agreement, the Warrant Agreement dated September 25, 1998 pursuant to which
Borrower granted to Lender the right to purchase the number of shares
of preferred stock as set forth therein ("Warrant Agreement"), and all financing
statements, certificates and other documents required to be delivered or
executed in connection herewith (collectively, the "Loan Documents") have been
duly authorized by all necessary corporate action of Borrower, the individual or
individuals executing the Loan Documents were duly authorized to do so, the
Equipment is personal property and as used by the Borrower will not be or become
fixtures under applicable law, and the Loan Documents constitute legal, valid
and binding obligations of the Borrower, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization
or other similar laws generally affecting the enforcement of the rights of
creditors;

3.5      the Loan Documents do not and will not violate any provisions
of its Certificate of Incorporation, bylaws or any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which the Borrower is
subject, or result in the creation or imposition of any lien, security interest
or other encumbrance upon the Collateral, other than those created by this
Agreement;

3.6      the execution, delivery and performance of the Loan Documents
do not require the consent or approval of any other person or entity including,
without limitation, any regulatory authority or governmental body of the United
States or any state thereof or any political subdivision of the United States or
any state thereof.

3.7      as of the date hereof no fact or condition exists that would
(or could, with the passage of time, the giving of notice, or both) constitute
an Event of Default under this Agreement or any of the Loan Documents and no
event which has had or could reasonably be expected to have a Material Adverse
Effect has occurred and is continuing. For purposes of this Agreement, "Material
Adverse Effect" means a material adverse effect upon (i) the business,
operations, properties, assets or financial condition of Borrower; or (ii) the
ability of Borrower to perform the Secured Obligations.

SECTION 4. INSURANCE AND RISK OF LOSS

4.1      Risk of loss of, damage to or destruction of the Equipment
shall be borne by the Borrower and effective from the date of this Agreement and
until the payment and performance in full of all Secured Obligations, Borrower
shall at its own expense cause to be carried and maintained all risk casualty
insurance (covering risk of fire, theft and other such risks as the Lender may
require, including standard and extended coverage) with respect to each item of
Equipment in an amount no less than the replacement costs applicable to such
item of Equipment during the term of this Agreement. All policies evidencing
such casualty insurance shall contain a

-3-

standard mortgagee's endorsement and shall provide for at least thirty days
prior written notice by the underwriter or insurance company to the Lender in
the event of cancellation or expiration. Borrower shall provide Lender with
insurance certificates evidencing the foregoing at time of closing.

4.2      If any item of Equipment is lost or rendered unusable as a
result of any physical damage to or destruction of such item of Equipment during
the period from the date hereof to and including the maturity date under the
Note or the date all Secured Obligations hereunder have been fully satisfied,
whichever is later, Borrower shall give to Lender prompt notice thereof.
Borrower shall determine, within fifteen (15) days after the date of occurrence
of such loss, damage or destruction, whether such item of Equipment can be
repaired and restored to the condition in which such item of Equipment was
required to be maintained as of the date immediately preceding such damage. If
Borrower determines that such item of Equipment can be repaired, Borrower, at
its expense, shall cause such item of Equipment to be promptly repaired. If
Borrower determines that such item of I Equipment is lost or cannot be repaired,
Borrower shall promptly notify the Lender and such item of Equipment shall be
deemed to have suffered a "Casualty Loss" for purposes of this Section as of the
date of the occurrence of such loss. Within fifteen (15) days following the
occurrence of any such loss, damage or destruction, Borrower shall notify the
Lender of the item(s) of Equipment which has suffered such Casualty Loss ("Loss
Item"), and within thirty (30) days thereafter (the "Settlement Date"), Borrower
shall either (a) replace such item(s) of Equipment with equipment of the same
model, type and feature configuration, in an operating condition and repair no
less than that required hereunder of the damaged or lost equipment immediately
prior to the date of such damage or loss, and having a fair market value no less
than the Casualty Value (as defined herein) applicable to such item of Equipment
as of the date immediately prior to such damage, in which case such replacement
equipment shall for all purposes hereunder become part of the Collateral and
(without limiting the preceding provisions) Borrower shall grant to Lender a
first lien and security interest in respect of such replacement equipment
pursuant to the terms of this Agreement, and Borrower shall provide the Lender
evidence satisfactory to the Lender of Borrower's good and marketable title to
such replacement equipment (free of any liens, security interests or
encumbrances other than those created by this Agreement and Borrower shall be
entitled to receive the amount of any insurance or other recovery received by
Lender up to cost of obtaining the replacement equipment; or (b) so long as no
Event of Default or event which with the giving of notice or passage of time, or
both, would constitute an Event of Default, has occurred and is continuing,
Borrower may provide substitute equipment satisfactory to Lender to become part
of the Collateral and Borrower shall grant to Lender a first lien and security
interest in respect of such substitute equipment pursuant to the terms of this
Agreement, and Borrower shall provide the Lender evidence satisfactory to Lender
of Borrower's good and marketable title to such substitute equipment (free of
any liens, security interests or encumbrances other than created by this
Agreement and Lender shall provide any required endorsements in connection with
any insurance proceeds received by Borrower pursuant to such insurance policies;
or (c) Borrower shall pay Lender the insurance proceeds payable pursuant to such
insurance policies ("Insurance Proceeds") with respect to such Loss Item(s) and
the principal amount of the Note (and interest accrued on the principal amount
so prepayable) shall become due and payable on the Settlement Date to the extent
of the replacement cost for all such Loss Item(s). For purposes of this Section
4.2, Casualty Value shall mean an amount equal to the greater of the fair market
value of the Equipment as of the date of the Casualty Loss or the outstanding
principal and accrued interest on the Loan. Moneys so received shall be applied,
on the date of such receipt, as follows: first, to pay any

-4-

accrued interest on the outstanding principal amount of the Note on such date;
second, to prepay, the outstanding principal amount of the Note (to the extent
of the fair market value attributable to such Loss Item(s)); third, to pay any
other Indebtedness of amounts then due and owing to the Lender hereunder; and
fourth, so long as there has occurred no Event of Default under Section 8 hereof
and no event which with the giving of notice or passage of time or both would
constitute an Event of Default, has occurred and is continuing, Borrower and
Lender hereby agree that the balance of any such Insurance Proceeds shall be
paid promptly to the Borrower.

4.3      Effective upon the date hereof under the Note and while there
are any Secured Obligations outstanding, Borrower shall cause to be carried and
maintained comprehensive general liability insurance with regard to the
Collateral against risks customarily insured against in the Borrower's business.
Such risks shall include, without limitation, the risks of death, bodily injury
and property damage associated with the Collateral. All policies evidencing such
insurance shall provide for at least thirty (30) days prior written notice by
the underwriter or insurance company to the Lender in the event of cancellation
or expiration.

4.4      Borrower shall and does hereby indemnify and hold Lender, its
agents and shareholders harmless from and against any and all claims, costs,
expenses, damages and liabilities (including without limitation such claims,
costs, expenses, damages and liabilities based on liability in tort including
without limitation strict liability in tort) including reasonable attorneys'
fees, arising out of Borrower's ownership, possession, operation, control, use,
maintenance, delivery, or other disposition of the Collateral. Notwithstanding
the foregoing, Borrower shall not be responsible under the terms of this Section
4.4 to a party indemnified hereunder for any claims, costs, expenses, damages
and liabilities occasioned by the negligence or willful misconduct of such
indemnified party.

SECTION 5. COVENANTS OF BORROWER

Borrower covenants and agrees as follows at all times while any of the
Secured Obligations remain outstanding:

5.1      Borrower shall maintain the Equipment in good operating order,
repair, condition and appearance and protect the Equipment from deterioration,
other than normal wear and tear. Borrower shall not use the Equipment or permit
its use for any purpose other than for which it was designed. Borrower's
obligation regarding the maintenance of the Equipment shall include, without
limitation, all maintenance, repair, refurbishment and replacement recommended
or advised either by the manufacturer, or that commonly performed by prudent
business and/or professional practice. Any exceptions or qualifications
expressed in this Agreement relating to normal or ordinary wear and tear shall
not be deemed to limit Borrower's obligations pursuant to the preceding
sentence.

5.2      Borrower shall only relocate any item of the Collateral
provided that: (a) it shall have caused to be filed and/or delivered to the
Lender all UCC financing statements, certificates or other documents or
instruments necessary to continue in effect the first prior perfected security
interest of the Lender in the Collateral, and (b) it shall have given the Lender
no less than fifteen (15) days prior written notice of such relocation.

-5-

5.3      Upon the request of Lender, Borrower shall, during business
hours, make the Equipment available to Lender for inspection at the place where
it is normally located and shall make Borrower's log and maintenance records
pertaining to the Equipment available to the Equipment available to Lender for
inspection. Borrower shall take all action necessary to maintain such logs and
maintenance records in a correct and complete fashion.

5.4      Upon the request of Lender, Borrower shall cause the Equipment
to be plainly, permanently and conspicuously marked, by stenciling or by metal
tag or plate affixed thereto, indicating Lender's security interest in the
Equipment. Borrower shall replace any such stenciling, tag or plate which may be
removed or destroyed or become illegible. Borrower shall keep all Equipment free
from any marking or labeling which might be interpreted as a claim of ownership
adverse to Borrower's.

5.5      Borrower covenants and agrees to pay when due, all taxes, fees
or other charges of any nature whatsoever (together with any related interest or
penalties) now or hereafter imposed or assessed against Borrower, Lender or the
Collateral or upon Borrower's ownership, possession, use, operation or
disposition thereof or upon Borrower's rents, receipts or earnings arising
therefrom. Borrower shall file on or before the due date therefor all personal
property tax returns in respect of the Collateral.

5.6      Borrower shall furnish to Lender the financial statements
listed hereinafter, prepared in accordance with generally accepted accounting
principles consistently applied (the "Financial Statements"):

(a)      as soon as practicable (and in any event within
thirty (30) days) after the end of each month: an internally prepared
income statement, balance sheet, and cash flow statement, (including
the commencement of any material litigation by or against Borrower),
each certified by Borrower's Chief Executive or Financial Officer to be
true and correct;

(b)      as soon as practicable (and in any event within
ninety (90) days) after the end of each fiscal year, audited Financial
Statements, setting forth in comparative form the corresponding figures
for the preceding fiscal year, and accompanied by any audit report and
opinion of the independent certified public accountants selected by
Borrower; and

(c)      promptly any additional information (including but
not limited to tax returns, income statements, balance sheets, and
names of principal creditors) as Lender reasonably believes necessary
to evaluate Borrower's continuing ability to meet financial
obligations.

5.7      Notwithstanding the foregoing, after the effective date of the
initial registration statement covering a public offering of Borrower's
securities, the term "Financial Statements" shall be deemed to refer to only
those statements required by the Securities and Exchange Commission, to be
provided no less frequently than quarterly. Borrower will from time to time
execute, deliver and file, alone or with Lender, any financing statements,
security agreements or other documents; and take all further action that may be
necessary, or that Lender may reasonably request, to confirm, perfect, preserve
and protect the security interests intended to be granted hereby, and in
addition, and for such purposes only, Borrower hereby authorizes Lender to
execute and deliver on behalf of Borrower and to file such financing statements,
security

-6-

agreement and other documents without the signature of Borrower either in
Lender's name or in the name of Borrower as agent and attorney-in-fact for
Borrower.

5.8      Borrower shall protect and defend Borrower's title as well as
the interest of the Lender against all persons claiming any interest adverse to
Borrower or Lender and shall at all times keep the Collateral free and clear
from any attachment or levy, liens or encumbrances whatsoever (except any placed
thereon by Lender, or any liens arising by operation of law with respect to any
obligations not yet overdue or any other liens consented to in writing by
Lender) and shall give Lender immediate written notice thereof.

SECTION 6. CONDITIONS PRECEDENT TO LOAN

The obligation of Lender to fund the Loan on each Advance Date(s) shall be
subject to satisfaction by Borrower or waiver by Lender, in Lender's sole
discretion, of the following conditions:

6.1      (a) The Advance Date(s) for any installment shall occur on or
before September 25, 1999.

6.2      DOCUMENT DELIVERY. Borrower, on or prior to the Closing Date,
shall have delivered to Lender the following, in form and substance reasonably
satisfactory to Lender:

(a)      executed originals of the Agreement, Note(s), Warrant
Agreement and any documents reasonably required by Lender to effectuate
the liens of Lender, with respect to all Collateral;

(b)      certified copy of resolutions of Borrower's board of
directors evidencing approval of the borrowing and other transactions
evidenced by the Loan Documents;

(c)      certified copies of the Certificate of Incorporation
and the Bylaws of Borrower, as amended through the Closing Date;

(d)      certificate of good standing for Borrower from its
state of incorporation and similar certificates from all other
jurisdictions in which it does business and where the failure to be
qualified would have a Material Adverse Effect;

(e)      such other documents as Lender may reasonably
request.

6.3      ADVANCE REQUEST. Borrower, on or prior to each Advance
Date(s), shall have delivered to Lender the following:

(a)      a minimum of two (2) business days prior to the
Advance Date(s), written notice in the form of an Advance Request, or
as otherwise specified by Lender from time to time, specifying amount
of such Advance and wire transfer instructions;

(b)      such other documents as Lender may reasonably
request.

-7-

6.4      PERFECTION OF SECURITY INTERESTS. Borrower shall have taken or
caused to be taken such actions requested by Lender to grant Lender a first
priority perfected security interest in the Collateral. Such actions shall
include, without limitation, the delivery to Lender of all appropriate financing
statements, executed by Borrower, as to the Collateral granted by Borrower for
all jurisdictions as may be necessary or desirable to perfect the security
interest of Lender in such Collateral

6.5      ABSENCE OF EVENTS OF DEFAULTS. As of the Closing Date or the
Advance Date, no fact or condition exists that would (or would, with the passage
of time, the giving of notice, or both) constitute an Event of Default under
this Agreement or any of the Loan Documents.

6.6      MATERIAL ADVERSE EFFECT. As of the Closing Date or the Advance
Date, no event which has had or could reasonably be expected to have a Material
Adverse Effect has occurred and is continuing.

SECTION 7. ASSIGNMENT BY LENDER

7.1      Borrower acknowledges and understands that Lender may sell and
assign all or a part of its interest hereunder and under the Note and Loan
Documents to any person or entity (an "Assignee"). After such assignment the
term Lender shall mean such Assignee, and such Assignee shall be vested with all
rights, powers and remedies of Lender hereunder with respect to the interest so
assigned; but with respect to any such interest not so transferred, the Lender
shall retain all rights, powers and remedies hereby given. No such assignment by
Lender shall relieve Borrower of any of its obligations hereunder. Borrower
shall acknowledge such assignment or assignments as shall be designated by
written notice given by Lender to Borrower. The Lender agrees that in the event
of any transfer by it of the Note, it will endorse thereon a notation as to the
portion of the principal of the Note which shall have been paid at the time of
such transfer and as to the date to which interest shall have been last paid
thereon.

SECTION 8. DEFAULT

The occurrence of any one or more of the following events (herein
called "Events of Default") shall constitute a default hereunder and under the
Note:

8.1      The Borrower defaults in the payment of any principal or
interest payable under this Agreement, the Note or any of the other Loan
Documents and such default continues for more than five (5) days after the due
date thereof;

8.2      The Borrower defaults in the payment or performance of any
other covenant or obligation of the Borrower hereunder or under the Note or any
other Loan Documents for more than ten (10) days after the Lender has given
notice of such default to the Borrower;

8.3      Any representation or warranty made herein by the Borrower
shall prove to have been false or misleading in any material respect;

8.4      The making of an assignment by Borrower for the benefit of its
creditors or the admission by Borrower in writing of its inability to pay its
debts as they become due, or the insolvency of Borrower, or the filing by
Borrower of a voluntary petition in bankruptcy, or the

-8-

adjudication of Borrower as a bankrupt, or the filing by Borrower of any
petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
present or future statute, law or regulation, or the filing of any answer by
Borrower admitting, or the failure by Borrower to deny, the material allegations
of a petition filed against it for any such relief, or the seeking or consenting
by Borrower to, or acquiescence by Borrower in, the appointment of any trustee,
receiver or liquidator of Borrower or of all or any substantial part of the
properties of Borrower, or the inability of Borrower to pay its debts when due,
or the commission by Borrower of any act of bankruptcy as defined in the Federal
Bankruptcy Act, as amended;

8.5 The failure by Borrower, within sixty (60) days after the
commencement of any proceeding against Borrower seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, to obtain the
dismissal of such proceeding or, within sixty (60) days after the appointment,
without the written consent or acquiescence of Lender, of any trustee, receiver
or liquidator of Borrower or of all or any substantial part of the properties of
Borrower, to vacate such appointment; or 

8.6 The default by Borrower under any other notes or other agreement 
for borrowed money, lease or other agreement between Borrower and Lender.

SECTION 9. REMEDIES

Upon the occurrence hereof of any one or more Events of Default,
Lender, at its option, may declare the Note to be accelerated and immediately
due and payable, (provided, that upon the occurrence of an Event of Default of
the type described in 8.4 or 8.5, the Note and all other Secured Obligations
shall automatically be accelerated and made due and payable without any further
act) whereupon the unpaid principal of and accrued interest on such Note shall
become immediately due and payable, and shall thereafter bear interest at the
Default Rate and calculated in accordance with Section 1.2. Lender may exercise
all rights and remedies with respect to the Collateral granted pursuant hereto
for such Note, or otherwise available to it under applicable law, including the
right to release, hold or otherwise dispose of all or any part of the Collateral
and the right to utilize, process and commingle the Collateral.

Upon the happening and during the continuance of any Event of Default,
Lender may then, or at any time thereafter and from time to time, apply,
collect, sell in one or more sales, lease or otherwise dispose of, any or all of
the Collateral, in its then condition or following any commercially reasonable
preparation or processing, in such order as Lender may elect, and any such sale
may be made either at public or private sale at its place of business or
elsewhere. Borrower agrees that any such public or private sale may occur upon
five (5) calendar day's notice to Borrower. Lender may require Borrower to
assemble the Collateral and make it available to Lender at a place designated by
Lender which is reasonably convenient to Lender and Borrower, The proceeds of
any sale, disposition or other realization upon all or any part of the
collateral shall be distributed by Lender in the following order of priorities:

First, to Lender in an amount sufficient to pay in full Lender's
reasonable costs and professionals' and advisors' fees and expenses;

-9-

Second, to Lender in an amount equal to the then unpaid amount of the
Secured Obligations in such order and priority as Lender may choose In
its sole discretion; and

Finally, upon payment in full of all of the Secured Obligations, to
Borrower or its representatives or as a court of competent jurisdiction
may direct.

The Lender shall return to the Borrower any surplus Collateral remaining after
payment of all Secured Obligations.

SECTION 10. MISCELLANEOUS

10.1     Borrower shall remain liable to Lender for any unpaid Secured
Obligations, advances, costs, charges and expenses, together with interest
thereon and shall pay the same immediately to Lender at Lender's offices.

10.2     The powers conferred upon Lender by this Agreement are solely
to protect its interest in the Collateral and shall not impose any duty upon
Lender to exercise any such powers.

10.3     This is a continuing Agreement and the grant of a security
interest hereunder shall remain in full force and effect and all the rights,
powers and remedies of Lender hereunder shall continue to exist until the
Secured Obligations are paid in full as the same become due and payable. When
Borrower has paid in full all Secured Obligations, Lender will execute a written
termination statement, reassigning to Borrower, without recourse, the Collateral
and all rights conveyed hereby and return possession (if Lender has possession)
of the Collateral to Borrower. The rights, powers and remedies of Lender
hereunder shall be in addition to all rights, powers and remedies given by
statute or rule of law and are cumulative. The exercise of any one or more of
the rights, powers and remedies provided herein shall not be construed as a
waiver of any other rights, powers and remedies of Lender. Furthermore,
regardless of whether or not the UCC is in effect in the jurisdiction where such
rights, powers and remedies are asserted, Lender shall have the rights, powers
and remedies of a secured party under the UCC.

10.4     Upon payment in full of all Secured Obligations, the Lender
shall cancel the Note, this Agreement and all UCC financing statements, if any,
and shall promptly deliver all such canceled documents to the Borrower.

10.5     GOVERNING LAW. This Agreement, the Note and the other Loan
Documents have been negotiated and delivered to Lender in the State of Illinois
and shall not become effective until accepted by Lender in the State of
Illinois. Payment to Lender by Borrower of the Secured Obligations is due in the
State of Illinois. This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of Illinois excluding conflict
of laws principles that would cause the application of laws of any other
jurisdiction.

10.6     CONSENT TO JURISDICTION AND VENUE. All judicial proceedings
arising in or under or related to this Agreement, the Note or any of the other
Loan Documents may be brought in any state or federal court of competent
jurisdiction located in the State of Illinois. By execution and delivery of this
Agreement, each party hereto generally and unconditionally: (a) consents to
personal jurisdiction in Cook County, State of Illinois; (b) waives any
objection as to jurisdiction or venue in the aforesaid courts; and (d)
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement, the Note and the other Loan Documents. Service of

-10-

process on any party hereto in any action arising out of or relating to this
Agreement shall be effective if given in accordance with the requirements for
notice set forth in Section 10.8 below and shall be deemed effective and
received as set forth in Section 10.8 below. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of either party to bring proceedings in the courts of any other
jurisdiction.

10.7     Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent and duration of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

10.8     Any notice required or given hereunder shall be deemed
properly given upon the earlier of: (i) the first business day after
transmission by facsimile or hand delivery or deposit with an overnight express
service or overnight mail delivery service; or (ii) or three (3) days after
mailed, postage prepaid, in each case, addressed to the designated recipient at
its address set forth herein or such other address as such party may advise the
other party by notice given in accordance with this provision.

10.9     Lender and Borrower acknowledge that there are no agreements
or understandings, written or oral, between Lender and Borrower with respect to
the Loan, other than as set forth herein, in the Note and the other Loan
Documents and that this Agreement, the Note and the other Loan Documents contain
the entire agreement between Lender and Borrower with respect thereto. None of
the terms of this Agreement, the Note and the other Loan Documents may be
amended except by an instrument executed by each of the parties hereto.

10.10    No omission, or delay, by Lender at any time to enforce any
right or remedy reserved to it, or to require performance of any of the terms,
covenants or provisions hereof by Borrower at any time designated, shall be a
waiver of any such right or remedy to which Lender is entitled, nor shall it in
any way affect the right of Lender to enforce such provisions thereafter.

10.11    All agreements, representations and warranties contained in
this Agreement or the Note, or in any Loan Documents delivered pursuant hereto
or in connection herewith shall be for the benefit of Lender and any Assignee
and shall survive the execution and delivery of this Agreement or the Note and
the expiration or other termination of this Agreement or the Note.

10.12    This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.

10.13    This Agreement shall be binding upon, and shall inure to the
benefit of, Borrower and its permitted assigns (if any). Borrower shall not
assign its obligations under this Agreement, the Note or any of the other Loan
Documents without Lender's express written consent and any such attempted
assignment shall be void and of no effect. Any assignment by Borrower in
connection with a "Merger" (as defined below) shall be subject to Lender's prior
consent. Any consent granted by Lender shall be conditioned upon such surviving
entity or transferee assuming Borrower's Secured Obligations hereunder pursuant
to assignment documents reasonably acceptable to Lender. If Lender reasonably
withholds its consent to such assignment in

-11-

connection with a Merger, the outstanding principal and accrued and unpaid
interest shall be prepaid in whole without a prepayment premium.

For purposes of this Agreement, a "Merger" shall mean any consolidation
or merger of the Borrower with or into any other corporation or entity, any sale
or conveyance of an or substantially all of the assets or stock of the Borrower
by or to any other person or entity in which Borrower is not the surviving
entity.

IN WITNESS WHEREOF, the Borrower and the Lender have duly executed and
delivered this Agreement as of the day and year first above written.

BORROWER: CYTOKINETICS, INCORPORATED.

By:    /s/ Jon C. Richards
------------------------------
Title: Chief Financial Officer
Date:  10-1-98

ACCEPTED IN ROSEMONT, ILLINOIS:

LENDER: COMDISCO, INC.

By: /s/ JAMES P. LABE
------------------------------
Title: PRESIDENT
COMDISCO VENTURES DIVISION

Date:  SEP 30 1998

-12-

EXHIBIT 4.4

Amendment No. One to Loan and Security Agreement

This Amendment Agreement No. One ("Amendment") to the Loan and Security
Agreement dated as of September 25, 1998 is entered into this 1st day of
February, 1999 by and between Cytokinetics, inc., a Delaware corporation, with
its chief executive offices and principal place of business at 280 East Grand
Avenue Suite 2, South San Francisco, CA 94080 ("Borrower") and Comdisco, Inc., a
Delaware corporation, with its chief executive offices and principal place of
business at 6111 North River Road, Rosemont, IL 60018 ("Lender").

RECITALS

WHEREAS, pursuant to the terms and conditions set forth in the Loan and
Security Agreement dated as of September 25, 1998 between Borrower and Lender
(hereinafter, "Loan Agreement"), the parties have entered into that certain
Secured Promissory Note dated February 3, 1999 herewith (the "Note(s)") whereby
for value received, Borrower promises to pay certain payments to Lender in the
principal amount of Six Hundred Sixty Two Thousand Six Hundred Ninety four and
81/100 Dollars ($662,694.81); 

WHEREAS, in connection with the issuance of the Note, Lender and
Borrower wish to amend the Loan Agreement to include the Exhibit B as required
under the Loan Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, Borrower and Lender hereby agree as follows:

1.       Except as expressly set forth herein, all terms used herein shall have
the meanings set forth in the Loan Agreement.

2.       Borrower and Lender agree that the Exhibit B attached hereto shall be
incorporated and made a part of the Loan Agreement and the equipment described
thereon shall be "Equipment" as set forth in the Loan Agreement.

3.       Except as specifically amended hereby, the terms and conditions of the
Loan Agreement are hereby reaffirmed and remain in full force and effect, and
from and after the date hereof the "Agreement" shall mean the "Agreement" as
amended by this Amendment.

4.       This Amendment may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

1

IN WITNESS WHEREOF, Borrower and Lender have duly executed and delivered this
Amendment as of the day and year first above written.

BORROWER                                CYTOKINETICS, INC.

Signature:  /s/ Jon C. Richards
----------------------------

Print Name: Jon C. Richards

Title:      Chief Financial Officer

ACCEPTED IN ROSEMONT, ILLINOIS

LENDER                                  COMDISCO, INC.

Signature:  /s/ Jill Hanses
----------------------------
Print Name: Jill Hanses

Title:  SRVP

2

EXHIBIT B

Cytokinetics, Inc.

---------------------------------------------------------------------------------------------------------------------------
DATE
REF#     VENDOR     REC/INV    PO#          INVOICE #                DESCRIPTION                   SERIAL #          COST
---------------------------------------------------------------------------------------------------------------------------
(brief)
---------------------------------------------------------------------------------------------------------------------------

Furniture
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              Desk-director 3x24 corner, 4x24 ret  N/A               1,165.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              Desk-director locking pedestal       N/A               1,165.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-shared                         N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-adm                            N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
8   Corp Int      8-Sep              1085-1              desks-adm                            N/A               1,100.00
---------------------------------------------------------------------------------------------------------------------------
253   Item         20-Oct   CS10198    87449 CA            Work Station                         No S/N              778.11
---------------------------------------------------------------------------------------------------------------------------
254   Item         20-Oct   CS10198    87449 CA            Work Station                         No S/N              778.11
---------------------------------------------------------------------------------------------------------------------------
23,686.22
---------------------------------------------------------------------------------------------------------------------------
LAB EQ:
---------------------------------------------------------------------------------------------------------------------------
1   VWR          28-Aug   CY185                13218620  Freezer, gen upright 20.9cft (-20)   U17H391576VH        895.00
---------------------------------------------------------------------------------------------------------------------------
2   VWR           5-Aug   CY108                  277640  Generator PT DA 21 1 2/2EC           H2840271366211F   1,016.00
---------------------------------------------------------------------------------------------------------------------------
2   VWR          10-Aug   CY164                10480030  Nanopure infinity UV/UF 120V         899980816921      4,033.00
---------------------------------------------------------------------------------------------------------------------------
2   VWR          11-AUQ   CY110                58752390  Freezer uprt auto/DF 23.3cft (-80)   U10H39050UH       4,190.55
---------------------------------------------------------------------------------------------------------------------------
2   VWR          11-Aug   CY209                  292020  Radiation SRVY w/Probet              9825-319            625.00
---------------------------------------------------------------------------------------------------------------------------
2   VWR          13-Aug   CY108                11293240  Polytron, PTMR2100 Homogenizer       324474            1,196.00
---------------------------------------------------------------------------------------------------------------------------
3   VWR          29-Jul   061798C              57664663  Dual slab gelkit 220MM               NO S/N              643.80
---------------------------------------------------------------------------------------------------------------------------
4   VWR          17-Jul   CY110                58832690  Oven, Hybridiser, techne HB-1D       826905-8          2,931.75
---------------------------------------------------------------------------------------------------------------------------
5   VWR           9-Jul   CY110                58752380  Incubator, CSA model 1 545           1103097           1,450.52
---------------------------------------------------------------------------------------------------------------------------
5   VWR           9-Jul   CY110                58752380  Incubator, WTR JKT model 3015        600298            2,397.95
---------------------------------------------------------------------------------------------------------------------------
5   VWR           8-Jul   CY108                  192070  Generator PT-DA2107/2EC              H284027136613G      888.00
---------------------------------------------------------------------------------------------------------------------------
5   Beckman       9-Jul   CY110                58752400  Afgra 6R rfrg bnch cntrifuge         ALR98G01          6,556.00
---------------------------------------------------------------------------------------------------------------------------
5   VWR           9-Jul   CY110                58752400  GH-3.8 Horiz rotor w/4 ALM           98U 20801         2,133.50
---------------------------------------------------------------------------------------------------------------------------
5   VWR           9-Jul   CY110                58752400  Carrier assy, mtcroplus              Consumable          977.50
---------------------------------------------------------------------------------------------------------------------------
14   PE Bio        4-Jul   CY107                90172820  Analyzer, general 100/120V (system)  100000668        55,000.00
---------------------------------------------------------------------------------------------------------------------------
16   Tech Ins     22-Jul   CY138                  102160  TMS mainbody W/B INO w/ lenses.eye   To be returned    3,127.59
---------------------------------------------------------------------------------------------------------------------------
20   Stratgen     21-Jul   CY153                  670159  Stratalinker 2400, 120V              9823647           1,435.50
---------------------------------------------------------------------------------------------------------------------------
23   MJ Research  11-Aug   980615                  50435  DNA engine chassis                   EN007984          5,495.00
---------------------------------------------------------------------------------------------------------------------------
24   MJ Research  11-Aug   980615                  50435  Dual Alpha PTC 200/225               ALO18393          2,495.00
---------------------------------------------------------------------------------------------------------------------------

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

REF#     VENDOR          TOTAL     CK#                        % FUNDED   TOTAL FUNDED
-------------------------------------------------------------------------------------

Furniture
------------------------------------------------------------------------------------
8   Corp Int       1,165.00  2196/2077                       80%       $   932.00
------------------------------------------------------------------------------------
8   Corp Int       1,165.00  2196/2077                       80%       $   932.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   830.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $    88000
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880,00
------------------------------------------------------------------------------------
8   Corp int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
8   Corp Int       1,100.00  2196/2077                       80%       $   880.00
------------------------------------------------------------------------------------
253   Item             778.11  VISA          778.11  accrue   100%       $   778.11
------------------------------------------------------------------------------------
254   Item             778.11  VISA          778.11  accrue   100%       $   778.11
------------------------------------------------------------------------------------
23,686.22                        ok                  $19,260.22
------------------------------------------------------------------------------------
LAB EQ:
------------------------------------------------------------------------------------
1   VWR              895.00       2187     895.00            80%       $   716,00
------------------------------------------------------------------------------------
2   VWR            1,016.00       2186                       80%       $   812.80
------------------------------------------------------------------------------------
2   VWR            4,033.00       2186                       80%       $ 3,226.40
------------------------------------------------------------------------------------
2   VWR            4,190.55       2186                       80%       $ 3,352.44
------------------------------------------------------------------------------------
2   VWR              625.00       2186                       80%       $   500.00
------------------------------------------------------------------------------------
2   VWR            1,196.00       2186  11,060.55            80%       $   956.80
------------------------------------------------------------------------------------
3   VWR              643.80       2110     643.80            80%       $   515.04
------------------------------------------------------------------------------------
4   VWR            2,931.75       2072   2,931.75            80%       $ 2,345.40
------------------------------------------------------------------------------------
5   VWR            1,450.52       2056                       70%       $ 1,015.36
------------------------------------------------------------------------------------
5   VWR            2,397.95       2056                       70%       $ 1,678.57
------------------------------------------------------------------------------------
5   VWR              888.00       2056                       70%       $   621.60
------------------------------------------------------------------------------------
5   Beckman        6,556.00       2056                       70%       $ 4,589.20
------------------------------------------------------------------------------------
5   VWR            2,133.50       2056                       70%       $ 1,493.45
------------------------------------------------------------------------------------
5   VWR              977.50       2056  14,403.47            70%       $   684.25
------------------------------------------------------------------------------------
14   PE Bio        55,000.00       2087  55,000.00            70%       $38,500.00
------------------------------------------------------------------------------------
16   Tech Ins       3,127.59       2098   3.127.59            80%       $ 2,502.07
------------------------------------------------------------------------------------
20   Stratgen       1,435.50       2130   1,435.50            80%       $ 1,148.40
------------------------------------------------------------------------------------
23   MJ Research    5,495.00       2174                       80%       $ 4,396.00
------------------------------------------------------------------------------------
24   MJ Research    2,495.00       2174                       80%       $ 1,996.00
------------------------------------------------------------------------------------

1/29/99

1 of 6

Cytokinetics, Inc.

DATE
REF #     VENDOR     REC/INV    PO#          INVOICE #                  DESCRIPTION                         SERIAL #          COST
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
26  MJ Research    11-Aug   980615                 50435  Minicycler 16W Hot Bonnet                   MC008706            2,995.00
------------------------------------------------------------------------------------------------------------------------------------
29  Savant         31-Jul   Cy125                 155171  Gel pump w/charcoal filter                  GEP140-9G310051-1   2,085.00
------------------------------------------------------------------------------------------------------------------------------------
32  Cryosafe        2-Sep   Cy239                    578  Liquid Nitrogen auto till liquid tank       562007PS9809        5,495.00
------------------------------------------------------------------------------------------------------------------------------------
33  Cryosafe        2-Sep   Cy239                    578  Complete invt sys                           562007P89S09        1,100.00
------------------------------------------------------------------------------------------------------------------------------------
37  Savant         11-Sep   CY260                 156820  DNA speedvac & rotor                        110-813470196-1G    4,072.50
------------------------------------------------------------------------------------------------------------------------------------
39  Molecular Dev  15-Sep   Shumate  C. Shumate exp rept  Spectramax 340, softmax pro                 MO1115 (LO2022)    12,800.00
------------------------------------------------------------------------------------------------------------------------------------
200  BioRad         15-Sep   91498                1430358  Ultramark Microplate Reader                 10006              19,995.00
------------------------------------------------------------------------------------------------------------------------------------
201  BioRad         31-Jul   CY173                1402499  Econo Pump Model EP-1                       700-BR08532         1,315.37
------------------------------------------------------------------------------------------------------------------------------------
202  Beckman         6-Oct   CY313    352838FT01           Rotor Assy/w bottle cap, PP & AY            98U1947             4,482.28
------------------------------------------------------------------------------------------------------------------------------------
203  Beckman         8-Oct   CY313    352838FT02           J2-HS Centrifuge 208V 60HZ                  CJA98K01           11,631.90
------------------------------------------------------------------------------------------------------------------------------------
204  Beckman        10-Sep   CY244    349358FT01           Multimek 96 Pipettor                        304181APS          46,350.00
------------------------------------------------------------------------------------------------------------------------------------
205  Beckman        10-Sep   CY244    349358FT01           Multimek Pro Software                       304181APS           5,000.00
------------------------------------------------------------------------------------------------------------------------------------
206  Beckman        10-Sep   CY244    349358FT01           Disposable Tip Wash System                  304181APS           6,000.00
------------------------------------------------------------------------------------------------------------------------------------
207  Beckman         2-Oct   CY266    348803FT00A          SW55TI Swinging Bucket Titanium Rotor       98U2605             8,160.00
------------------------------------------------------------------------------------------------------------------------------------
208  Beckman         2-Oct   CY266    348803FT00A          DU 640 UV/VIS Scanning Spcetrophotometer    4323214             7,140.00
------------------------------------------------------------------------------------------------------------------------------------
209  Beckman         2-Oct   CY266    348803FT00A          Transport                                   4323214               659.60
------------------------------------------------------------------------------------------------------------------------------------
210  Beckman         2-Oct   CY266    348803FT00A          Micro Auto 6 Cell Holder unheated           4323214               673.20
------------------------------------------------------------------------------------------------------------------------------------
211  Beckman         2-Oct   CY266    348803FT00A          External Storage Device                     4323214               584.80
------------------------------------------------------------------------------------------------------------------------------------
212  Beckman         2-Oct   CY266    348803FT00A          UV Silica Cuvette (set4)                    4323214               530.40
------------------------------------------------------------------------------------------------------------------------------------
213  Beckman         2-Oct   CY266    348803FT00A          Optima TLX Ultracentrifuge                  CTX98G04           21,938.07
------------------------------------------------------------------------------------------------------------------------------------
214  Beckman         2-Oct   CY266    348803FT00A          TLA 110 Fixed Angle Titanium Rotor Pkg      98U314              4,726.00
------------------------------------------------------------------------------------------------------------------------------------
215  Beckman         2-Oct   CY266    348803FT00A          TLA 100 Fixed Angle Titanium Rotor Pkg      98U1338             3,066.80
------------------------------------------------------------------------------------------------------------------------------------
216  Beckman         2-Oct   CY266    348803FT00A          Avanti J-25 Centrifuge for 50/60 HX         JHX98K02           14,756.00
------------------------------------------------------------------------------------------------------------------------------------
217  Beckman         2-Oct   CY266    348803FT00A          JA 25.50 Fixed Angle Rotor Assy             JHX98K02            2,352.80
------------------------------------------------------------------------------------------------------------------------------------
218  Beckman         2-Oct   CY266    348803FT00A          JLA-16 Rotor w/single locking lid           98U752              3,284.00
------------------------------------------------------------------------------------------------------------------------------------
219  Beckman         2-Oct   CY266    348803FT00A          Optima LE 80 K preparative Untracentrifuge  COL9840            27,404.00
------------------------------------------------------------------------------------------------------------------------------------
220  Beckman         2-Oct   CY266    348803FT00A          Type 19 Fixed angle Alum. Rotor Assy        98E3701             5,508.00
------------------------------------------------------------------------------------------------------------------------------------
221  Beckrnan        2-Oct   CY266    348803FT00A          Type 45TI Fixed angle titanium Rotor Assy   98U3423             7,344.00
------------------------------------------------------------------------------------------------------------------------------------
222  Beckman         2-Oct   CY266    348803FT00A          Type 70.1 Fixed angle Titan. Rotor Assy     98U3968             7,208.00
------------------------------------------------------------------------------------------------------------------------------------
223  ComDisco        8-Oct                          12910  New Brunswick Orbital Shaker G-25           190524971           3,360.00
------------------------------------------------------------------------------------------------------------------------------------
224  ComDisco        8-Oct                          12910  New Brunswick Orbital Shaker G-25           181188              3,360.00
------------------------------------------------------------------------------------------------------------------------------------
225  CCS Packard    14-Sep   9149802              3090407  Jun-Air Compressor w/air hose               405282              1,550.00
------------------------------------------------------------------------------------------------------------------------------------
226  Forma Scient   18-Sep   CY243                2735850  Lab Glassware Dryer                         18937-514           7,428.00
------------------------------------------------------------------------------------------------------------------------------------
227  Forma Scient   16-Sep   CY263                2738190  Bio Safe Cab TT 6Ft SLD                     19497-69            5,090.00
------------------------------------------------------------------------------------------------------------------------------------
230  MicroSource    22-Sep   CY294                  94728  MicroSource Plates "Killer' Plate           N/A                 1,100.00
------------------------------------------------------------------------------------------------------------------------------------
231  VWR            22-Sep   CY261               13582370  55702-497 REF,Chr,VWR49C,FS,MST,115VT       12076807            2,996.94
------------------------------------------------------------------------------------------------------------------------------------
232  VWR            18-Sep   CY252               13463890  Scotsman 325 Ice Flaker                     051918-03N          2,675.00
------------------------------------------------------------------------------------------------------------------------------------
233  VWR            17-Sep   CY185               13124400  Revco/Lindberg 24.4 CuFt Upright (-80)      80508h-381550-SH    8,398.00
------------------------------------------------------------------------------------------------------------------------------------
234  VWR            29-Sep   CY314                 432300  Bath.GP. Microcntl CSA 5.5L1 1 5VT          698060478             576.90
------------------------------------------------------------------------------------------------------------------------------------
235  VWR             5-Oct   CY318               15794230  Storage Mat Applicator                      No SIN                904.76
------------------------------------------------------------------------------------------------------------------------------------
236  VWR             5-Oct   CY317               15769580  Elect Pip 8CH                               N72553                786.05
------------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Micro centrfg, epp 5417C 115V               3929                1,905.00
------------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Micro centrfg, epp 5417C 115V               9165                1,905.00
------------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Micro centrfg, epp 5417C 115V               8991                1,905.00
------------------------------------------------------------------------------------------------------------------------------------

REF#      VENDOR          TOTAL     CK#                      % FUNDED  TOTAL FUNDED
-----------------------------------------------------------------------------------

-----------------------------------------------------------------------------------
26  MJ Research       2,995.00   2174   10,985.00             80%    $   2,396.00
-----------------------------------------------------------------------------------
29  Savant            2,085.00   2180    2,085.00             80%    $   1,668.00
-----------------------------------------------------------------------------------
32  Cryosafe          5,495.00   2213              accrue     80%    $   4,396.00
-----------------------------------------------------------------------------------
33  Cryosafe          1,100.00   2213    6,595.00  accrue     80%    $     880.00
-----------------------------------------------------------------------------------
37  Savant            4,072.50   2238    4,072.50            100%    $   4,072.50
-----------------------------------------------------------------------------------
39  Molecular Dev    12,800.00   2252   12,800.00            100%    $  12,800.00
-----------------------------------------------------------------------------------
200  BioRad           19,995.00   2273                        100%    $  19,995.00
-----------------------------------------------------------------------------------
201  BioRad            1,315.37   2273   21,310.37             80%    $   1,052.30
-----------------------------------------------------------------------------------
202  Beckman           4,482.28   2274                        100%    $   4,482.28
-----------------------------------------------------------------------------------
203  Beckman          11,631.90   2274                        100%    $  11,631.90
-----------------------------------------------------------------------------------
204  Beckman          46,350.00   2274                         80%    $  37,080.00
-----------------------------------------------------------------------------------
205  Beckman           5,000.00   2274                         80%    $   4,000,00
-----------------------------------------------------------------------------------
206  Beckman           6,000.00   2274   73,464.18             80%    $   4,800.00
-----------------------------------------------------------------------------------
207  Beckman           8,160.00   2275                        100%    $   8,160.00
-----------------------------------------------------------------------------------
208  Beckman           7,140.00   2275                        100%    $   7,140.00
-----------------------------------------------------------------------------------
209  Beckman             659.60   2275                        100%    $     659.60
-----------------------------------------------------------------------------------
210  Beckman             673.20   2275                        100%    $     673.20
-----------------------------------------------------------------------------------
211  Beckman             584.80   2275                        100%    $     584.80
-----------------------------------------------------------------------------------
212  Beckman             530.40   2275                        100%    $     530.40
-----------------------------------------------------------------------------------
213  Beckman          21,938.07   2275                        100%    $  21,938.07
-----------------------------------------------------------------------------------
214  Beckman           4,726.00   2275                        100%    $   4,726.00
-----------------------------------------------------------------------------------
215  Beckman           3,066.80   2275                        100%    $   3,066.80
-----------------------------------------------------------------------------------
216  Beckman          14,756.00   2275                        100%    $  14,756.00
-----------------------------------------------------------------------------------
217  Beckman           2,352.80   2275                        100%    $   2,352.80
-----------------------------------------------------------------------------------
218  Beckman           3,284.00   2275                        100%    $   3,284.00
-----------------------------------------------------------------------------------
219  Beckman          27,404.00   2275                        100%    $  27,404.00
-----------------------------------------------------------------------------------
220  Beckman           5,508.00   2275                        100%    $   5,508.00
-----------------------------------------------------------------------------------
221  Beckrnan          7,344.00   2275                        100%    $   7,344.00
-----------------------------------------------------------------------------------
222  Beckman           7,203.00   2275  115,335.67            100%    $   7,208.00
-----------------------------------------------------------------------------------
223  ComDisco          3,360.00   2279                        100%    $   3,360.00
-----------------------------------------------------------------------------------
224  ComDisco          3,360.00   2279    6,720.00            100%    $   3,360.00
-----------------------------------------------------------------------------------
225  CCS Packard       1,550.00   2282    1,550.00            100%    $   1,550.00
-----------------------------------------------------------------------------------
226  Forma Scient      7,428,00   2292                        100%    $   7,428.00
-----------------------------------------------------------------------------------
227  Forma Scient      5,090.00   2292   12,518.00            100%    $   5,090.00
-----------------------------------------------------------------------------------
230  MicroSource       1,100.00   2300    1,100.00  accru     100%    $   1,100.00
-----------------------------------------------------------------------------------
231  VWR               2,996.94   2324                        100%    $   2,996.94
-----------------------------------------------------------------------------------
232  VWR               2,675.00   2324                        100%    $   2,675.00
-----------------------------------------------------------------------------------
233  VWR               8,398.00   2324                        100%    $   8,398.00
-----------------------------------------------------------------------------------
234  VWR                 576.90   2324                        100%    $     576.90
-----------------------------------------------------------------------------------
235  VWR                 904.76   2324                        100%    $     904.76
-----------------------------------------------------------------------------------
236  VWR                 786.05   2324   16,337.65            100%    $     786.05
-----------------------------------------------------------------------------------
7  VWR               1,905.00   2015                         70%    $   1,333.50
-----------------------------------------------------------------------------------
7  VWR               1,905.00   2015                         70%    $   1,333.50
-----------------------------------------------------------------------------------
7  VWR               1,905.00   2015                         70%    $   1,333.50
-----------------------------------------------------------------------------------

2 of 6

Cytokinetics, Inc.

DATE
REF #     VENDOR     REC/INV    PO#          INVOICE #                  DESCRIPTION                             SERIAL #
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Micro centrfg, epp 5417C 115V              8992
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Micrcent refrig, w/o rotor 115V            540703929
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Platform, rocking VWR100                   8906011
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Platform, rocking VWR100                   980601A
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Platform, rocking VWR100                   980601F
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Vortex mixer, multi tube                   1071
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  Balance, analyt premier                    116040045
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664630  PH meter, 430 meter w/kit 120V             3889
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             1-Jul   061798C             57664640  Lauda circ, E 106T, 115V/60HZ              W09037
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             1-Jul   061798C             57664640  Lauda circ, E 106T, 115V/60HZ              W09035
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            26-Jun   061798C             57664660  Dual slab gelkit 220MM                     No S/N
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            26-Jun   061798C             57664661  Transillum, dual, Bnch TP VWR115VT         060898-006
----------------------------------------------------------------------------------------------------------------------------------
7  VWR            25-Jun   061798C             57664670  Balance, PRF, LVL, Delta, PR5002DRT        1117151544
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             8-Jul   061798C             57664632  Shakr orbit micp roc CNT 110V              960
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             8-Jul   061798C             57664632  Shakr orbit micp roc CNT 110V              958
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             8-Jul   061798C             57664632  Shakr orbit micp roc CNT 110V              963
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             8-Jul   061798C             57664633  Finnpette digitl 12ch                      F501984510050
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             2-Jul   061798C             57664631  Finnpette dig.12ch 50-300UL                FS9064
----------------------------------------------------------------------------------------------------------------------------------
7  VWR             9-Jul   061798C             57664651  Ultrason cell distr 1/2 IN/450             C080306G
----------------------------------------------------------------------------------------------------------------------------------
83  BioRad         22-Jui   CY134                1396445  Uno Column                                 347BR2689
----------------------------------------------------------------------------------------------------------------------------------
84  BioRad         22-Jul   CY134                1396445  Auto Steam Select Valve                    347BR2689
----------------------------------------------------------------------------------------------------------------------------------
85  BioRad         22-Jul   CY134                1396445  Auto Steam Select Valve                    347BR2689
----------------------------------------------------------------------------------------------------------------------------------
93  BioRad         22-Jul   CY134                1396445  Select Valve                               347BR2689
----------------------------------------------------------------------------------------------------------------------------------
94  BioRad         22-Jul   CY134                1396445  Select Valve                               347BR2689
----------------------------------------------------------------------------------------------------------------------------------
86  BioRad         23-Jul   CY134                1396830  Auto Biologic System                       347BR2689
----------------------------------------------------------------------------------------------------------------------------------
87  BioRad         23-Jul   CY134                1396830  Biologic Dynaloop kit                      347BR2689
----------------------------------------------------------------------------------------------------------------------------------
88  BioRad         31-Jul   CY173                1402499  Econo Pump, model EP-1, 110V               700BR08532
----------------------------------------------------------------------------------------------------------------------------------
81  Life Tech      28-Jul   CY165                 743380  EDAS 120 system                            EKB74902512
----------------------------------------------------------------------------------------------------------------------------------
80  BioRad         12-Aug   CY134                1409267  Dynaloop 90ML replacement loop             347BR2689
----------------------------------------------------------------------------------------------------------------------------------
82  Microfluids    19-Aug   CY201                   3793  M110S Large Pump Assy                      98058
----------------------------------------------------------------------------------------------------------------------------------
89  PEBio          14-Sep                       90194114  TF, Kit BDT PR-100                         No S/N
----------------------------------------------------------------------------------------------------------------------------------
90  PEBio          14-Sep                       90196900  10MMD/250MML Glass Column                  No S/N
----------------------------------------------------------------------------------------------------------------------------------
245  Beckman        29-Oct   CY313     352838FT03          JLA-16 Rotor w/single locking lid          98U752
----------------------------------------------------------------------------------------------------------------------------------
246  CCS Packard     6-Oct   CY253                3100462  Platestak, scanner, deck                   1347
----------------------------------------------------------------------------------------------------------------------------------
247  CCS Packard     6-Oct   Cs100698             3100458  500ML Birdfeeder                           N/A
----------------------------------------------------------------------------------------------------------------------------------
249  MXR             8-Oct   CY266                 369682  Konica SRX-101 Processor                   105210881
----------------------------------------------------------------------------------------------------------------------------------
WXR            29-Oct                         370525  SRX-101 Film Processor                     105210881
----------------------------------------------------------------------------------------------------------------------------------
250  Therm-X        26-Oct   CY347                  54128  Watlow Mini Benchtop controller/couple     P/N Mini TR-00-000 (No S/N)
----------------------------------------------------------------------------------------------------------------------------------
251  PE Bio          4-Jul   CY107               90172820  Genetic Analyzer 100/120V 310              100000668
----------------------------------------------------------------------------------------------------------------------------------
252  Univ. Imaging  23-Oct   CY269                   6623  Hamamtsu C4742-95 12 Bit Interline Camera  270465
with 2x2 or 4x4 binning
----------------------------------------------------------------------------------------------------------------------------------
252  Univ. Imaging  23-Oct   CY269                   6623  Acquisition Option for Hamamatsu Camera    270465
----------------------------------------------------------------------------------------------------------------------------------

REF#      VENDOR       COST       TOTAL       CK#                         % FUNDED  TOTAL FUNDED
------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------
7  VWR             1,905.00   1,905.00       2015                         70%    $   1,333.50
------------------------------------------------------------------------------------------------
7  VWR             5,033.00   5,033.00       2015                         70%    $   3,523.10
------------------------------------------------------------------------------------------------
7  VWR               567.00     567.00       2015                         70%    $     396.90
------------------------------------------------------------------------------------------------
7  VWR               567.00     567.00       2015                         70%    $     396.90
------------------------------------------------------------------------------------------------
7  VWR               567.00     567.00       2015                         70%    $     396.90
------------------------------------------------------------------------------------------------
7  VWR             1,081.00   1,081.00       2015                         70%    $     756.70
------------------------------------------------------------------------------------------------
7  VWR             5,466.00   5,466.00       2015                         70%    $   3,826.20
------------------------------------------------------------------------------------------------
7  VWR               567.88     567.88       2015                         70%    $     397.52
------------------------------------------------------------------------------------------------
7  VWR             1,186.25   1,186.25       2015                         70%    $     830.38
------------------------------------------------------------------------------------------------
7  VWR             1,186.25   1,186.25       2015                         70%    $     830.38
------------------------------------------------------------------------------------------------
7  VWR               643.80     643.80       2015                         70%    $     450.66
------------------------------------------------------------------------------------------------
7  VWR             1,108.51   1,108.51       2015                         70%    $     775.96
------------------------------------------------------------------------------------------------
7  VWR             2,796.00   2,796.00       2015                         70%    $   1,957.20
------------------------------------------------------------------------------------------------
7  VWR               982.55     982.55       2015                         70%    $     687.79
------------------------------------------------------------------------------------------------
7  VWR               982.55     982.55       2015                         70%    $     687.79
------------------------------------------------------------------------------------------------
7  VWR               982.55     982.55       2015                         70%    $     687.79
------------------------------------------------------------------------------------------------
7  VWR               573.18     573.18       2015                         70%    $     401.23
------------------------------------------------------------------------------------------------
7  VWR               573.18     573.18       2015                         70%    $     401.23
------------------------------------------------------------------------------------------------
7  VWR             2,296.00   2,296.00       2015  34,779.70              70%    $   1,607.20
------------------------------------------------------------------------------------------------
83  BioRad            997.50     997.50       2139                         80%    $     798.00
------------------------------------------------------------------------------------------------
84  BioRad            855.00     855.00       2139                         80%    $     684.00
------------------------------------------------------------------------------------------------
85  BioRad            855.00     855.00       2139                         80%    $     684.00
------------------------------------------------------------------------------------------------
93  BioRad            506.25     506.25       2139                         80%    $     405.00
------------------------------------------------------------------------------------------------
94  BioRad            506.25     506.25       2139                         80%    $     405.00
------------------------------------------------------------------------------------------------
86  BioRad         22,311.00  22,311.00       2139                         80%    $  17,848.80
------------------------------------------------------------------------------------------------
87  BioRad            697.50     697.50       2139                         80%    $     558.00
------------------------------------------------------------------------------------------------
88  BioRad          1,350.00   1,350.00  2139/2273  28,078.50              80%    $   1,080.00
------------------------------------------------------------------------------------------------
81  Life Tech       3,141.00   3,141.00       2140   3,141.00              80%    $   2,512.80
------------------------------------------------------------------------------------------------
80  BioRad            645.00     645.00       2155     645.00              80%    $     516.00
------------------------------------------------------------------------------------------------
82  Microfluids    23,800.00  23,800.00       2175  23,800.00              80%    $  19,040.00
------------------------------------------------------------------------------------------------
89  PEBio             675.00     675.00       2201                        100%    $     675.00
------------------------------------------------------------------------------------------------
90  PEBio             575.00     575.00       2201   1,250.00             100%    $     575.00
------------------------------------------------------------------------------------------------
245  Beckman         2,956.44   2,956.44       2353   2,956.44             100%    $   2,956.44
------------------------------------------------------------------------------------------------
246  CCS Packard    23,225.00  23,225.00       2356  23,225.00             100%    $  23,225.00
------------------------------------------------------------------------------------------------
247  CCS Packard     1,100.00   1,100.00  accrued     1,100.00             100%    $   1,100.00
------------------------------------------------------------------------------------------------
249  MXR             3,812.00   3,812.00       2374   3,812.00             100%    $   3,812.00
------------------------------------------------------------------------------------------------
WXR             3,812.00   3,812.00       2301   3,812.00  no invo    100%    $   3,812.00
------------------------------------------------------------------------------------------------
250  Therm-X           658.00     658.00       2389     658.00             100%    $     658.00
------------------------------------------------------------------------------------------------
251  PE Bio         55,000.00  55,000.00       2087  55,000.00              70%    $  38,500.00
------------------------------------------------------------------------------------------------
252  Univ. Imaging  14,900.00  14,900.00       2392                        100%    $  14,900.00
------------------------------------------------------------------------------------------------
252  Univ. Imaging   4,800.00   4,800.00       2392                        100%    $   4,800.00
------------------------------------------------------------------------------------------------

3 of 6

Cytokinetics, Inc.

---------------------------------------------------------------------------------------------------------------------------------
DATE
REF #    VENDOR      REC/INV    PO#    INVOICE #                      DESCRIPTION                        SERIAL #         COST
---------------------------------------------------------------------------------------------------------------------------------

252   Univ. Imaging   23-Oct  CY269         6623  Lamda Light Source with 175 W Ozone Free Bulb      N/A                 3,985.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Liquid Light Guide for Lambda-10C                  N/A                 1,400.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-OCt  CY259         6623  Epi Replacement Adapter for Zeiss Inverted Scope   N/A                   700.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Sutter LS cold Mirror and Adapter                  N/A                   600.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Lambda-10 Ten Position Filter Whieel with Shutter  N/A                 5,650.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Lambda-10 Excitation Adapter for Zeiss AxioVert    N/A                   200.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  2 Axis (X,Y) Motor controler                       9009                4,200.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Prior Motorized Travel Stage for Inv. Scopes       3966                6,350.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Prior Specimen Holder for H 107 Stage              N/A                   350.00
---------------------------------------------------------------------------------------------------------------------------------
252   Univ. Imaging   23-Oct  CY269         6623  Prior 9 pin. RS-232 cable                          N/A                    50.00
---------------------------------------------------------------------------------------------------------------------------------
237   Zymark          16-Sep  CY245       105607  Twister-zymark, 110V/220V & kit ext. landscape     TW9838N0227        10,050.00
finger
---------------------------------------------------------------------------------------------------------------------------------
609,863.67
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE:
---------------------------------------------------------------------------------------------------------------------------------
40   Sabry            8-Apr  catalog  153620042  Dell dimension system                              DY3KP               3,345.00
---------------------------------------------------------------------------------------------------------------------------------
41   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCKX4    1,301.00
---------------------------------------------------------------------------------------------------------------------------------
42   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCRL7    1,301.00
---------------------------------------------------------------------------------------------------------------------------------
43   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCKC7    1,002.00
---------------------------------------------------------------------------------------------------------------------------------
44   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCPG8    1,002.00
---------------------------------------------------------------------------------------------------------------------------------
45   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCKN9    1,002.00
---------------------------------------------------------------------------------------------------------------------------------
46   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCPT4    1,002.00
---------------------------------------------------------------------------------------------------------------------------------
47   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCKV3    1,002.00
---------------------------------------------------------------------------------------------------------------------------------
48   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCPY4    1,002.00
---------------------------------------------------------------------------------------------------------------------------------
49   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCRF6      812.00
---------------------------------------------------------------------------------------------------------------------------------
50   CDW             20-Aug  Malik               IBM Pc 300PL 5/166 2.5GB                           1S656284U23XCRX9      812.00
---------------------------------------------------------------------------------------------------------------------------------
51   Spectrum        27-Aug  Malik        32450  Decaview monit 15" w/cards                         552067822             571.00
---------------------------------------------------------------------------------------------------------------------------------
55   Informax        29-Jun  CY100         4038  Vector NTI5.0                                      BLLIUV-4038         2,195.00
---------------------------------------------------------------------------------------------------------------------------------
56   Informax        29-Jun  CY100         4038  Vector NTI5.0                                      BLLIUV-4038         2,195.00
---------------------------------------------------------------------------------------------------------------------------------
95   Informax         6-Jul  CY100         4038  Align X                                            BLLIUV-4038           795.00
---------------------------------------------------------------------------------------------------------------------------------
96   Informax         6-Jul  CY100         4038  Align X                                            BLLIUV-4038           795.00
---------------------------------------------------------------------------------------------------------------------------------
97   informax         6-Jul  CY100         4038  Align X                                            BLLIUV-4038           795.00
---------------------------------------------------------------------------------------------------------------------------------
98   Informax         6-Jul  CY100         4038  Align X                                            BLLIUV-4038           795.00
---------------------------------------------------------------------------------------------------------------------------------
57   MDL              5-Aug  8059801     141153  ISIS Draw software                                 ID214XE980234         495.00
---------------------------------------------------------------------------------------------------------------------------------
58   MDL              5-Aug  8059801     141153  ISIS Base software                                 IB214XE980100         925.00
---------------------------------------------------------------------------------------------------------------------------------
59   Computown       10-Sep  verbal      358223  IBM Pc 300PL 4.2 GB w/19in monitor                 1S689216U23N2684    2,720.00
---------------------------------------------------------------------------------------------------------------------------------
60   Computown       10-Sep  verbal      358223  IBM Pc 300PL 4.2 GB w/19in monitor                 1S689216U23N2641    2,720.00
---------------------------------------------------------------------------------------------------------------------------------
238   Computown       17-Sep              360244  Procurve Switch 4000M                              SG83160178          2,300.00
---------------------------------------------------------------------------------------------------------------------------------
239   Computown       22-Sep              361793  PC 300PL 4.2GB sys w/19in monitor                  23N1467             2,720.00
---------------------------------------------------------------------------------------------------------------------------------
240   Computown       22-Sep              361793  PC 300PL 4.2GB sys w/19in monitor                  23N1033             2,720.00
---------------------------------------------------------------------------------------------------------------------------------
241   Computown        6-Oct              366561  M Pro P2-4009.1GB                                  23F3332             3,250.00
---------------------------------------------------------------------------------------------------------------------------------
242   Computown        6-Oct  10598       366588  128MB 100MHZ ECC Module                            Memory - No S/N       437.50
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------
REF #    VENDOR         TOTAL    CK #                      % FUNDED  TOTAL FUNDED
---------------------------------------------------------------------------------

252   Univ. Imaging    3,985.00  2392                        100%    $   3,985.00
---------------------------------------------------------------------------------
252   Univ. Imaging    1,400.00  2392                        100%    $   1,400.00
---------------------------------------------------------------------------------
252   Univ. Imaging      700.00  2392                        100%    $     700.00
---------------------------------------------------------------------------------
252   Univ. Imaging      600.00  2392                        100%    $     600.00
---------------------------------------------------------------------------------
252   Univ. Imaging    5,650.00  2392                        100%    $   5,650.00
---------------------------------------------------------------------------------
252   Univ. Imaging      200.00  2392                        100%    $     200.00
---------------------------------------------------------------------------------
252   Univ. Imaging    4,200.00  2392                        100%    $   4,200.00
---------------------------------------------------------------------------------
252   Univ. Imaging    6,350.00  2392                        100%    $   6,350.00
---------------------------------------------------------------------------------
252   Univ. Imaging      350.00  2392                        100%    $     350.00
---------------------------------------------------------------------------------
252   Univ. Imaging       50.00  2392   43,185.00            100%    $      50.00
---------------------------------------------------------------------------------
237   Zymark          10,050.00  2327   10,050.00            100%    $  10,050.00
---------------------------------------------------------------------------------
609,863.67        609,863.67  ok                $ 531,290.91
---------------------------------------------------------------------------------

---------------------------------------------------------------------------------
COMPUTER HARDWARE:            -  
---------------------------------------------------------------------------------
40   Sabry            3,345.00  1045    3,345.00  accrue     65%    $   2,174.25
---------------------------------------------------------------------------------
41   CDW              1,301.00  2143              accrue     80%    $   1,040.80
---------------------------------------------------------------------------------
42   CDW              1,301.00  2143              accrue     80%    $   1,040.80
---------------------------------------------------------------------------------
43   CDW              1,002.00  2143              accrue     80%    $     801.60
---------------------------------------------------------------------------------
44   CDW              1,002.00  2143              accrue     80%    $     801.60
---------------------------------------------------------------------------------
45   CDW              1,002.00  2143              accrue     80%    $     801.60
---------------------------------------------------------------------------------
46   CDW              1,002.00  2143              accrue     30%    $     801.60
---------------------------------------------------------------------------------
47   CDW              1,002.00  2143              accrue     80%    $     801.60
---------------------------------------------------------------------------------
48   CDW              1,002.00  2143              accrue     80%    $     801.60
---------------------------------------------------------------------------------
49   CDW                812.00  2143              accrue     80%    $     649.60
---------------------------------------------------------------------------------
50   CDW                812.00  2143   10,238.00  accrue     80%    $     649.60
---------------------------------------------------------------------------------
51   Spectrum           571.00  2144      571.00             80%    $     456.80
---------------------------------------------------------------------------------
55   Informax         2,195.00  2166                         70%    $   1,536.50
---------------------------------------------------------------------------------
56   Informax         2,195.00  2166                         70%    $   1,536.50
---------------------------------------------------------------------------------
95   Informax           795.00  2166                         70%    $     556.50
---------------------------------------------------------------------------------
96   Informax           795.00  2166                         70%    $     556.50
---------------------------------------------------------------------------------
97   informax           795.00  2166                         70%    $     556.50
---------------------------------------------------------------------------------
98   Informax           795.00  2166    7,570.00             70%    $     556.50
---------------------------------------------------------------------------------
57   MDL                495.00  2173                         80%    $     396.00
---------------------------------------------------------------------------------
58   MDL                925.00  2173    1,420.00             80%    $     740.00
---------------------------------------------------------------------------------
59   Computown        2,720.00  2189                         80%    $   2,176.00
---------------------------------------------------------------------------------
60   Computown        2,720.00  2189    5,440.00             80%    $   2,176.00
---------------------------------------------------------------------------------
238   Computown        2,300.00  2331                        100%    $   2,300.00
---------------------------------------------------------------------------------
239   Computown        2,720.00  2331                        100%    $   2,720.00
---------------------------------------------------------------------------------
240   Computown        2,720.00  2331                        100%    $   2,720.00
---------------------------------------------------------------------------------
241   Computown        3,250.00  2331                        100%    $   3,250.00
---------------------------------------------------------------------------------
242   Computown          437.50  2331                        100%    $     437.50
---------------------------------------------------------------------------------

4 of 6

Cytokinetics, Inc.

DATE
REF #  VENDOR    REC/INV   PO#     INVOICE #                  DESCRIPTION                      SERIAL #         COST       TOTAL
----------------------------------------------------------------------------------------------------------------------------------

243  Computown    6-Oct  10598        366588  128MB 100MHZ ECC Module                     Memory - No S/N       437.50     437.50
----------------------------------------------------------------------------------------------------------------------------------
248  Computown   20-Oct  Verbal       370998  Thinkpad                                    72299               3,050.00   3,050.00
----------------------------------------------------------------------------------------------------------------------------------
Computown   20-Oct  Verbal       370998  Thinkpad                                    71299/1             3,050.00   3,050.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   31-Jul               345499  Server 330 P2-333 #864021                   1S861021Y23AAD88    3,685.00   3,685.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   31-Jul               345499  50 GB Internal AIT tape drive sdx-300       3Y3KP               3,710.00   3,710.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               345499  Win NT server v4.0 #227.01152               BPC814C01665        1,460.00   1,460.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1014    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1047    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1467    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1032    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1049    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1503    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1033    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
100  Computown   21-Jul               342904  IBM PC 300 PL PII-350 #689216U              1S689216U23N1051    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
72,548.00  72,548.00
----------------------------------------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT-OTHER:
----------------------------------------------------------------------------------------------------------------------------------
62  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311698     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
63  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311711     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
64  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311680     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
65  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311690     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
66  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311692     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
67  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311699     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
68  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311708     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
69  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311702     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
70  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311694     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
71  Computown    2-Jul  Sabry      336481-A  GNM0600 computer                            0660H9954A2311681     811.00     811.00
----------------------------------------------------------------------------------------------------------------------------------
Computown    2-Jul  Sabry      336481-A  LaserJet 4000TN 17PPM 8MB 1200X1200DPI PCL6 1SUSNC128841        1,545.00   1,545.00
----------------------------------------------------------------------------------------------------------------------------------
72  Computown    2-Jul  Sabry        340497  IBM Pc 300PL 4.2 GB HD                      1S689216U23N1017    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
73  Computown    2-Jul  Sabry        340497  IBM Pc 300PL 4.2 GB HD                      1S689216U23N2668    2,143.00   2,143.00
----------------------------------------------------------------------------------------------------------------------------------
91  Sears       13-Sep  Vaughan  exp report  Freezer 17 in                               BA83212874            579.99     579.99
----------------------------------------------------------------------------------------------------------------------------------
92  Sears       13-Sep  Vaughan  exp report  Refrig 18 in                                BA3609110             899.98     899.98
----------------------------------------------------------------------------------------------------------------------------------
15,420.97  15,420.97
----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE HARDWARE:
----------------------------------------------------------------------------------------------------------------------------------
74  ACD         14-Jul                       Toshiba DK424 (Model DKSue424A)             G28977             11,277.00  11,277.00
----------------------------------------------------------------------------------------------------------------------------------
Voice Center                                1239496
----------------------------------------------------------------------------------------------------------------------------------
ARCHITECT FEES:
----------------------------------------------------------------------------------------------------------------------------------
75  Dowler      28-May            9804001-2  Architect, blueprints, programming          NO S/N              3,600.98   3,600.98
----------------------------------------------------------------------------------------------------------------------------------
76  Dowler      15-Jul              9804003  Architect, construction documents           NO S/N              1,530.00   1,530.00
----------------------------------------------------------------------------------------------------------------------------------
255  Dowler      19-Oct              9804007  Architect, blueprints                       NO S/N                 50.00      50.00
----------------------------------------------------------------------------------------------------------------------------------
256  Dowler      19-Oct              9804006  Architect, construction documents           NO S/N              1,567.50   1,567.50
----------------------------------------------------------------------------------------------------------------------------------
Dowler       8-Sep              9804005  Architect                                   NO S/N              2,190.00   2,190.00

REF #  VENDOR      CK #                        % FUNDED TOTAL FUNDED
--------------------------------------------------------------------

243  Computown       2331  11,865.00             100%  $     437.50
--------------------------------------------------------------------
248  Computown  accrued     3,050.00             100%  $   3,050.00
--------------------------------------------------------------------
Computown  accrued     3,050.00             100%  $   3,050.00
--------------------------------------------------------------------
100  Computown       2001                         80%  $   2,948.00
--------------------------------------------------------------------
100  Computown       2001                         80%  $   2,968.00
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,168.00
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001                         80%  $   1,714.40
--------------------------------------------------------------------
100  Computown       2001  25,999.00              80%  $   1,714.40
--------------------------------------------------------------------
72,548.00  ok               $  60,372.65
--------------------------------------------------------------------
OFFICE EQUIPMENT-OTHER:
--------------------------------------------------------------------
62  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
63  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
64  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
65  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
66  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
67  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
68  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
69  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
70  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
71  Computown       1033                         70%  $     567.70
--------------------------------------------------------------------
Computown       1033   9,655.00              70%  $   1,081.50
--------------------------------------------------------------------
72  Computown       2058                         70%  $   1,500.10
--------------------------------------------------------------------
73  Computown       2058   4,286.00              70%  $   1,500.10
--------------------------------------------------------------------
91  Sears           2217                        100%  $     579.99
--------------------------------------------------------------------
92  Sears           2217   1,479.97             100%  $     899.98
--------------------------------------------------------------------
15,420.97  ok               $  11,238.67
--------------------------------------------------------------------
TELEPHONE HARDWARE:
--------------------------------------------------------------------
74  ACD        2014/2146  11,277.00  ok          80%  $   9,021.60
--------------------------------------------------------------------

--------------------------------------------------------------------
ARCHITECT FEES:
--------------------------------------------------------------------
75  Dowler          1016   3,600.98              70%  $   2,520.69
--------------------------------------------------------------------
76  Dowler          2099   1,530.00              80%  $   1,224.00
--------------------------------------------------------------------
255  Dowler     accrued        50.00             100%  $      50.00
--------------------------------------------------------------------
256  Dowler     accrued     1,567.50             100%  $   1,567.50
--------------------------------------------------------------------
Dowler          2286   2,190.00  need c      80%  $   1,752.00

5 of 6

Cytokinetics, Inc.

DATE
REF #  VENDOR       REC/INV  PO#  INVOICE #   DESCRIPTION   SERIAL #    COST        TOTAL       CK #
------------------------------------------------------------------------------------------------------------------

77  Dowler       15-Jul          9804004  Architect      NO S/N        38.34        38.34       2100      38.34
------------------------------------------------------------------------------------------------------------------
8,976.82     8,976.82              8,976.82
------------------------------------------------------------------------------------------------------------------
CABLING COSTS:
------------------------------------------------------------------------------------------------------------------
78  Valley Comm  26-Jun           38799A  Voice Cabling  NO S/N    11,363.67    11,363.67       2059  11,363.67
------------------------------------------------------------------------------------------------------------------
78  Valley Comm  26-Jun           38799A  Voice Cabling  NO S/N     9,671.04     9,671.04  accrued     9,671.04
------------------------------------------------------------------------------------------------------------------
21,034.71    21,034.71             21,034.71
------------------------------------------------------------------------------------------------------------------
TENANT IMPROVEMENT COSTS-OTHER
------------------------------------------------------------------------------------------------------------------
79  Cardkey      26-Aug           558778  Security Sys   0385-98G  12,052.00    12,052.00  1036/2158  12,052.00
------------------------------------------------------------------------------------------------------------------
12,052.00    12,052.00             12,052.00
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
91,694.20    91,694.20             91,694.20
------------------------------------------------------------------------------------------------------------------

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

------------------------------------------------------------------------------------------------------------------
TOTAL INV.  774,859.39

REF #  VENDOR                % FUNDED  TOTAL FUNDED
---------------------------------------------------

77  Dowler                     80%  $      30.67
---------------------------------------------------
ok                 $   7,144.86
---------------------------------------------------
CABLING COSTS:
---------------------------------------------------
78  Valley Comm                70%  $   7,954.57
---------------------------------------------------
78  Valley Comm  journal       70%  $   6,769.73
---------------------------------------------------
ok                 $  14,724.30
---------------------------------------------------
TENANT IMPROVEMENT COSTS-OTHER
---------------------------------------------------
79  Cardkey                    80%  $   9,641.60
---------------------------------------------------

-                  $   9,641.60
---------------------------------------------------

---------------------------------------------------
TOTAL HARDWARE     $ 631,184.05
---------------------------------------------------
TOTAL SOFT & TI    $  31,510.76
---------------------------------------------------
TOTAL FUNDED       $ 662,694.81

6 of 6

Exhibit 4.5

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL)
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS.

WARRANT AGREEMENT

TO PURCHASE SHARES OF THE SERIES A PREFERRED STOCK OF

CYTOKINETICS, INC.

DATED AS OF SEPTEMBER 25, 1998 (THE "EFFECTIVE DATE")

WHEREAS, Cytokenetics, Inc., a Delaware corporation (the "Company") has
entered into a Loan And Security Agreement dated as of September 25, 1998, and
related Promissory Note(s) (collectively, the "Loans") with Comdisco, Inc., a
Delaware corporation (the "Warrantholder"); and

WHEREAS, the Company desires to grant to Warrantholder, in
consideration for such Loans, the right to purchase shares of its Series A
Preferred Stock;

NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Loans and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:

1.       GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.

For the first $1,000,000 portion of the Loans, the Company hereby
grants to the Warrantholder, and the Warrantholder is entitled, upon the terms
and subject to the conditions hereinafter set forth, to subscribe to and
purchase, from the Company, 45,000 fully paid and non-assessable shares of the
Company's Series A Preferred Stock ("Preferred Stock") at a purchase price of
$1.00 per share (the "Exercise Price") provided however, that from and after the
effective date of the registration statement for the Company's initial public
offering of its equity securities, the securities purchasable by the
Warrantholder upon the exercise of this Warrant Agreement shall be shares of the
Company's Common Stock ("Common Stock") which shares shall be purchasable by the
Warrantholder in the same number that the Warrantholder would otherwise have
been entitled to purchase had this Warrant Agreement remained exercisable for
shares of the Company's Preferred Stock. From and after the effective date of
the registration statement for the Company's initial public offering of its
equity securities, the Warrantholder shall not have any further right pursuant
to this Warrant Agreement to purchase shares of the Company's Preferred Stock.
The shares of Preferred Stock or Common Stock that are issuable from time to
time upon the exercise of this Warrant Agreement are sometimes referred to
herein as the "Stock.

In the event that the Company requests and the Warrantholder funds any
portion of the additional $250,000 Advances between the first $1,000,000 and up
to $1,500,000 as provided under the Loans, the Company hereby grants to the
Warrantholder, and the Warrantholder is entitled, upon the terms and subject to
the conditions hereinafter set forth, to subscribe for and purchase, from the
Company, for each Advance funded, 11,250 shares of Stock at the Exercise Price.

The number and purchase price of such shares are subject to adjustment
as provided in Section 8 hereof.

2.       TERM OF THE WARRANT AGREEMENT.

Except as otherwise provided for herein, the term of this Warrant
Agreement and the right to purchase Stock as granted herein shall commence on
the Effective Date and shall be exercisable for a period of (i) seven (7) years
or (ii) three (3) years from the effective date of the Company's initial public
offering, whichever is shorter.

- 1 -

3.       EXERCISE OF THE PURCHASE RIGHTS.

The purchase rights set forth in this Warrant Agreement are exercisable
by the Warrantholder, in whole or in part, at any time, or from time to time,
prior to the expiration of the term set forth in Section 2 above, by tendering
to the Company at its principal office a notice of exercise in the form attached
hereto as Exhibit I (the "Notice of Exercise"), duly completed and executed.
Promptly upon receipt of the Notice of Exercise and the payment of the purchase
price in accordance with the terms set forth below, and in no event later than
twenty-one (21) days thereafter, the Company shall issue to the Warrantholder a
certificate for the number of shares of Stock purchased and shall execute the
acknowledgment of exercise in the form attached hereto as Exhibit II (the
"Acknowledgment of Exercise") indicating the number of shares which remain
subject to future purchases, if any.

The Exercise Price may be paid at the Warrantholder's election either
(i) by cash or check, or (ii) by surrender of Warrants ("Net Issuance") as
determined below. If the Warrantholder elects the Net Issuance method, the
Company will issue Stock in accordance with the following formula:

X = Y(A-B)
------
A

Where: X = the number of shares of Stock to be issued to the
Warrantholder.

Y = the number of shares of Stock requested to be exercised
under this Warrant Agreement.

A = the fair market value of one (1) share of Stock.

B = the Exercise Price.

For purposes of the above calculation, current fair market value of
Stock shall mean with respect to each share of Stock:

(i)      if the exercise is in connection with an initial
public offering of the Company's Common Stock, and if the Company's
Registration Statement relating to such public offering has been
declared effective by the SEC, then the fair market value per share
shall be the product of (x) the initial "Price to Public" specified in
the final prospectus with respect to the offering and (y) the number of
shares of Common Stock into which each share of Stock is convertible at
the time of such exercise;

(ii)     if this Warrant is exercised after, and not in
connection with the Company's initial public offering, and:

(a)      if traded on a securities exchange, the fair
market value shall be deemed to be the product of (x) the
average of the closing prices over a twenty-one (21) day
period ending three days before the day the current fair
market value of the securities is being determined and (y) the
number of shares of Common Stock into which each share of
Stock is convertible at the time of such exercise; or

(b)      if actively traded over-the-counter, the
fair market value shall be deemed to be the product of (x) the
average of the closing bid and asked prices quoted on the
NASDAQ system (or similar system) over the twenty-one (21) day
period ending three days before the day the current fair
market value of the securities is being determined and (y) the
number of shares of Common Stock into which each share of
Stock is convertible at the time of such exercise;

(iii)    if at any time the Common Stock is not listed on any
securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the current fair market value of Stock shall
be the product of (x) the highest price per share which the Company
could obtain from a willing buyer (not a current employee or director)
for shares of Common Stock sold by the Company, from authorized but
unissued shares, as determined in good faith by its Board of Directors
and (y) the number of shares of Common Stock into which each shares of
Stock is convertible at the time of such exercise unless the Company
shall become subject to a merger, acquisition or other consolidation
pursuant to which the Company is not the surviving party, in which case
the fair market value of Stock shall be deemed to be the value received
by the holders of the Company's Stock on a common equivalent basis
pursuant to such merger or acquisition.

- 2 -

Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.

4.       RESERVATION OF SHARES.

(a)      Authorization and Reservation of Shares. During the term of
this Warrant Agreement, the Company will at all times have authorized and
reserved a sufficient number of shares of its Stock to provide for the exercise
of the rights to purchase Stock as provided for herein.

(b)      Registration or Listing. If any shares of Stock required to be
reserved hereunder require registration with or approval of any governmental
authority under any Federal or State law (other than any registration under the
Securities Act of 1933, as amended ("1933 Act"), as then in effect, or any
similar Federal statute then enforced, or any state securities law, required by
reason of any transfer involved in such conversion), or listing on any domestic
securities exchange, before such shares may be issued upon conversion, the
Company will, at its expense and as expeditiously as possible, use its best
efforts to cause such shares to be duly registered, listed or approved for
listing on such domestic securities exchange, as the case may be.

5.       NO FRACTIONAL SHARES OR SCRIP.

No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.

6.       NO RIGHTS AS SHAREHOLDER.

This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.

7.       WARRANTHOLDER REGISTRY.

The Company shall maintain a registry showing the name and address of
the registered holder of this Warrant Agreement.

8.       ADJUSTMENT RIGHTS.

The purchase price per share and the number of shares of Stock
purchasable hereunder are subject to adjustment, as follows:

(a)      Merger and Sale of Assets. If at any time there shall be a
capital reorganization of the shares of the Company's stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or into
another corporation whether or not the Company is the surviving corporation, or
the sale of all or substantially all of the Company's properties and assets to
any other person (hereinafter referred to as a "Merger Event"), then, as a part
of such Merger Event, lawful provision shall be made so that the Warrantholder
shall thereafter be entitled to receive, upon exercise of the Warrant, the
number of shares of preferred stock or other securities of the successor
corporation resulting from such Merger Event, equivalent in value to that which
would have been issuable if Warrantholder had exercised this Warrant immediately
prior to the Merger Event. In any such case, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant Agreement with respect to the
rights and interest of the Warrantholder after the Merger Event to the end that
the provisions of this Warrant Agreement (including adjustments of the Exercise
Price and number of shares of Preferred Stock purchasable) shall be applicable
to the greatest extent possible.

(b)      Reclassification of Shares. If the Company at any time shall,
by combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights

- 3 -

under this Warrant Agreement immediately prior to such combination,
reclassification, exchange, subdivision or other change.

(c)      Subdivision or Combination of Shares. If the Company at any
time shall combine or subdivide its Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.

(d)      Stock Dividends. If the Company at any time shall pay a
dividend payable in, or make any other distribution (except any distribution
specifically provided for in the foregoing subsections (a) or (b)) of the
Company's stock, then the Exercise Price shall be adjusted, from and after the
record date of such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction (i) the numerator of which shall be the total number of all shares
of the Company's stock outstanding immediately prior to such dividend or
distribution, and (ii) the denominator of which shall be the total number of all
shares of the Company's stock outstanding immediately after such dividend or
distribution. The Warrantholder shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares of Stock
(calculated to the nearest whole share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Stock issuable upon the exercise hereof immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.

(e)      Antidilution Rights. Additional antidilution rights applicable
to the Preferred Stock purchasable hereunder are as set forth in the Company's
Certificate of Incorporation, as amended through the Effective Date, a true and
complete copy of which is attached hereto as Exhibit _ (the "Charter"). The
Company shall promptly provide the Warrantholder with any restatement,
amendment, modification or waiver of the Charter. The Company shall provide
Warrantholder with prior written notice of any issuance of its stock or other
equity security to occur after the Effective Date of this Warrant, which notice
shall include (a) the price at which such stock or security is to be sold, (b)
the number of shares to be issued, and (c) such other information as necessary
for Warrantholder to determine if a dilutive event has occurred.

(f)      Notice of Adjustments. If: (i) the Company shall declare any
dividend or distribution upon its stock, whether in cash, property, stock or
other securities; (ii) the Company shall offer for subscription prorata to the
holders of any class of its Preferred or other convertible stock any additional
shares of stock of any class or other rights; (iii) there shall be any Merger
Event; (iv) there shall be an initial public offering; or (v) there shall be any
voluntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to the Warrantholder:
(A) at least twenty (20) days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the holders of
Stock shall be entitled thereto) or for determining rights to vote in respect of
such Merger Event, dissolution, liquidation or winding up; (B) in the case of
any such Merger Event, dissolution, liquidation or winding up, at least twenty
(20) days' prior written notice of the date when the same shall take place (and
specifying the date on which the holders of Stock shall be entitled to exchange
their Stock for securities or other property deliverable upon such Merger Event,
dissolution, liquidation or winding up); and (C) in the case of a public
offering, the Company shall give the Warrantholder at least twenty (20) days
written notice prior to the effective date thereof.

Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.

(g)      Timely Notice. Failure to timely provide such notice required
by subsection (f) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder. The notice period shall begin
on the date Warrantholder actually receives a written notice containing all the
information specified above.

9.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.

(a)      Reservation of Stock. The Stock issuable upon exercise of the
Warrantholder's rights has been duly and validly reserved and, when issued in
accordance with the provisions of this Warrant Agreement, will be validly
issued, fully paid and non-assessable, and will be free of any taxes, liens,
charges or encumbrances of any nature whatsoever; provided, however, that the
Stock issuable pursuant to this Warrant Agreement may be subject

- 4 -

to restrictions on transfer under state and/or Federal securities laws. The
Company has made available to the Warrantholder true, correct and complete
copies of its Charter and Bylaws, as amended. The issuance of certificates for
shares of Stock upon exercise of the Warrant Agreement shall be made without
charge to the Warrantholder for any issuance tax in respect thereof, or other
cost incurred by the Company in connection with such exercise and the related
issuance of shares of Stock. The Company shall not be required to pay any tax
which may be payable in respect of any transfer involved and the issuance and
delivery of any certificate in a name other than that of the Warrantholder.

(b)      Due Authority. The execution and delivery by the Company of
this Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Stock, have been duly authorized by all necessary corporate action on
the part of the Company, and the Loans and this Warrant Agreement are not
inconsistent with the Company's Charter or Bylaws, do not contravene any law or
governmental rule, regulation or order applicable to it, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound, and the Loans and this Warrant Agreement constitute legal, valid and
binding agreements of the Company, enforceable in accordance with their
respective terms.

(c)      Consents and Approvals. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, Federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant Agreement, except for the filing of notices
pursuant to Regulation D under the 1933 Act and any filing required by
applicable state securities law, which filings will be effective by the time
required thereby.

(d)      Issued Securities. All issued and outstanding shares of Common
Stock, Preferred Stock or any other securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. All
outstanding shares of Common Stock, Preferred Stock and any other securities
were issued in full compliance with all Federal and state securities laws. In
addition:

(i)      The authorized capital of the Company consists of (A)
10,000,000 shares of Common Stock, of which 1,126,110 shares are issued
and outstanding, and (B) 5,550,000 shares of preferred stock, of which
5,300,000 shares are issued and outstanding and are convertible into
5,550,000 shares of Common Stock at $1.00 per share.

(ii)     The Company has reserved (A) 2,000,000 shares of
Common Stock for issuance under its under its 1997 Stock Option/Stock
Issuance Plan under which 1,503,890 options have been granted. There
are no other options, warrants, conversion privileges or other rights
presently outstanding to purchase or otherwise acquire any authorized
but unissued shares of the Company's capital stock or other securities
of the Company.

(iii)    In accordance with the Company's Articles of
Incorporation, no shareholder of the Company has preemptive rights to
purchase new issuances of the Company's capital stock.

(e)      Insurance. The Company has in full force and effect insurance
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.

(f)      Exempt Transaction. Subject to the accuracy of the
Warrantholder's representations in Section 10 hereof, the issuance of the Stock
upon exercise of this Warrant will constitute a transaction exempt from (i) the
registration requirements of Section 5 of the 1933 Act, in reliance upon Section
4(2) thereof, and (ii) the qualification requirements of the applicable state
securities laws.

(g)      Compliance with Rule 144. At the written request of the
Warrantholder, who proposes to sell Stock issuable upon the exercise of the
Warrant in compliance with Rule 144 promulgated by the Securities and Exchange
Commission, the Company shall furnish to the Warrantholder, within ten days
after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the Securities and Exchange
Commission as set forth in such Rule, as such Rule may be amended from time to
time.

10.      REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.

- 5 -

This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:

(a)      Investment Purpose. The right to acquire Stock issuable upon
exercise of the Warrantholder's rights contained herein will be acquired for
investment and not with a view to the sale or distribution of any part thereof,
and the Warrantholder has no present intention of selling or engaging in any
public distribution of the same except pursuant to a registration or exemption.

(b)      Private Issue. The Warrantholder understands (i) that the
Stock issuable upon exercise of this Warrant is not registered under the 1933
Act or qualified under applicable state securities laws on the ground that the
issuance contemplated by this Warrant Agreement will be exempt from the
registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 10.

(c)      Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of any of its rights to acquire Stock issuable
upon exercise of such rights unless and until (i) it shall have notified the
Company of the proposed disposition, and (ii) if requested by the Company, it
shall have furnished the Company with an opinion of counsel (which counsel may
either be inside or outside counsel to the Warrantholder) satisfactory to the
Company and its counsel to the effect that (A) appropriate action necessary for
compliance with the 1933 Act has been taken, or (B) an exemption from the
registration requirements of the 1933 Act is available. Notwithstanding the
foregoing, the restrictions imposed upon the transferability of any of its
rights to acquire Stock issuable on the exercise of such rights do not apply to
transfers from the beneficial owner of any of the aforementioned securities to
its nominee or from such nominee to its beneficial owner, and shall terminate as
to any particular share of Stock when (1) such security shall have been
effectively registered under the 1933 Act and sold by the holder thereof in
accordance with such registration or (2) such security shall have been sold
without registration in compliance with Rule 144 under the 1933 Act, or (3) a
letter shall have been issued to the Warrantholder at its request by the staff
of the Securities and Exchange Commission or a ruling shall have been issued to
the Warrantholder at its request by such Commission stating that no action shall
be recommended by such staff or taken by such Commission, as the case may be, if
such security is transferred without registration under the 1933 Act in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, the Warrantholder or holder of a share of Stock then
outstanding as to which such restrictions have terminated shall be entitled to
receive from the Company, without expense to such holder, one or more new
certificates for the Warrant or for such shares of Stock not bearing any
restrictive legend.

(d)      Financial Risk. The Warrantholder has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment, and has the ability to bear the economic
risks of its investment.

(e)      Risk of No Registration. The Warrantholder understands that if
the Company does not register with the Securities and Exchange Commission
pursuant to Section 12 of the 1934 Act (the "1934 Act"), or file reports
pursuant to Section 15(d), of the 1934 Act", or if a registration statement
covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the rights to purchase Stock pursuant to this Warrant Agreement, or
(ii) the Stock issuable upon exercise of the right to purchase, it may be
required to hold such securities for an indefinite period. The Warrantholder
also understands that any sale of its rights of the Warrantholder to purchase
Stock which might be made by it in reliance upon Rule 144 under the 1933 Act
may be made only in accordance with the terms and conditions of that Rule.

(f)      Accredited Investor. Warrantholder is an "accredited investor"
within the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.

11.      TRANSFERS.

Subject to the terms and conditions contained in Section 10 hereof,
this Warrant Agreement and all rights hereunder are transferable in whole or in
part by the Warrantholder and any successor transferee, provided, however, in no
event shall the number of transfers of the rights and interests in all of the
Warrants exceed three (3) transfers. The transfer shall be recorded on the books
of the Company upon receipt by the Company of a notice of

- 6 -

transfer in the form attached hereto as Exhibit III (the "Transfer Notice"), at
its principal offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer.

12.      MISCELLANEOUS.

(a)      Effective Date. The provisions of this Warrant Agreement shall
be construed and shall be given effect in all respects as if it had been
executed and delivered by the Company on the date hereof. This Warrant Agreement
shall be binding upon any successors or assigns of the Company.

(b)      Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the Warrantholder relating hereto, the
prevailing party shall be entitled to attorneys' fees and expenses and all costs
of proceedings incurred in enforcing this Warrant Agreement.

(c)      Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State of
Illinois.

(d)      Counterparts. This Warrant Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

(e)      Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery,
facsimile transmission (provided that the original is sent by personal delivery
or mail as hereinafter set forth) or seven (7) days after deposit in the United
States mail, by registered or certified mail, addressed (i) to the Warrantholder
at 6111 North River Road, Rosemont, Illinois 60018, attention: Venture Lease
Administration, cc: Legal Department, attn.: General Counsel, (and/or, if by
facsimile, (847) 518-5465 and (847)518-5088 and (ii) to the Company at 280 East
Grand Avenue, Suite 2, South San Francisco, CA 94080, attention: President
(and/or if by facsimile, (650) 624-3010 or at such other address as any such
party may subsequently designate by written notice to the other party.

(f)      Remedies. In the event of any default hereunder, the
non-defaulting party may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, including but not limited to an action
for damages as a result of any such default, and/or an action for specific
performance for any default where Warrantholder will not have an adequate remedy
at law and where damages will not be readily ascertainable. The Company
expressly agrees that it shall not oppose an application by the Warrantholder or
any other person entitled to the benefit of this Agreement requiring specific
performance of any or all provisions hereof or enjoining the Company from
continuing to commit any such breach of this Agreement.

(g)      No Impairment of Rights. The Company will not, by amendment of
its Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.

(h)      Survival. The representations, warranties, covenants and
conditions of the respective parties contained herein or made pursuant to this
Warrant Agreement shall survive the execution and delivery of this Warrant
Agreement.

(i)      Severability. In the event any one or more of the provisions
of this Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.

(j)      Amendments. Any provision of this Warrant Agreement may be
amended by a written instrument signed by the Company and by the Warrantholder.

- 7 -

IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized as of the
Effective Date.

COMPANY: CYTOKENETICS, INC.

By: /s/ JON C. RICHARDS
---------------------
Title: Chief Financial Officer

WARRANTHOLDER: COMDISCO, INC.

By: /s/ JAMES P. LABE
---------------------
Title: JAMES P. LABE
PRESIDENT COMDISCO VENTURES DIVISION

- 8 -

EXHIBIT I

NOTICE OF EXERCISE

TO:      ________________________

(1)      The undersigned Warrantholder hereby elects to purchase _________
shares of the Series A Preferred Stock of ___________, pursuant to the
terms of the Warrant Agreement dated the ____ day of _________ 19___
(the "Warrant Agreement") between _____________________ and the
Warrantholder, and tenders herewith payment of the purchase price for
such shares in full, together with all applicable transfer taxes, if
any.

(2)      In exercising its rights to purchase the Series A Preferred Stock of
________________, the undersigned hereby confirms and acknowledges the
investment representations and warranties made in Section 10 of the
Warrant Agreement.

(3)      Please issue a certificate or certificates representing said shares of
Series A Preferred Stock in the name of the undersigned or in such
other name as is specified below.

_______________________________
(Name)

_______________________________
(Address)

WARRANTHOLDER: COMDISCO, INC.

By:    _________________________

Title: _________________________

Date:  _________________________

- 9 -

EXHIBIT II

ACKNOWLEDGMENT OF EXERCISE

The undersigned _________________ , hereby acknowledge receipt of the
"Notice of Exercise" from Comdisco, Inc., to purchase _______ shares of the
Series A Preferred Stock of____________ pursuant to the terms of the Warrant
Agreement, and further acknowledges that _______ shares remain
subject to  purchase under the terms of the Warrant Agreement,

COMPANY:

By:    _______________________

Title: _______________________

Date:  _______________________

- 10 -

EXHIBIT III

TRANSFER NOTICE

(TO TRANSFER OR ASSIGN THE FOREGOING WARRANT AGREEMENT EXECUTE THIS FORM AND
SUPPLY REQUIRED INFORMATION. DO NOT USE THIS FORM TO PURCHASE SHARES.)

FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to

___________________________________________________________
(Please Print)

whose address is
___________________________________________________________

___________________________________________________________

Dated: ______________________________

Holder's Signature: _________________

Holder's Address: ___________________

_____________________________________

Signature Guaranteed: _____________________________________

NOTE:    The signature to this Transfer Notice must correspond with the name as
it appears on the face of the Warrant Agreement, without alteration or
enlargement or any change whatever. Officers of corporations and those
acting in a fiduciary or other representative capacity should file
proper evidence of authority to assign the foregoing Warrant Agreement.

- 11 -

Exhibit 4.6

LOAN AND SECURITY AGREEMENT

THIS AGREEMENT (the "Agreement"), dated as of December 16, 1999 (the
"Closing Date") is entered into by and between Cytokinetics, Incorporated, a
Delaware corporation having a principal place of business at 280 East Grand
Avenue, South San Francisco, CA 94080 (the "Borrower") and Comdisco, Inc., a
Delaware corporation having a principal place of business at 6111 North River
Road, Rosemont, Illinois 60018 (the "Lender"). In consideration of the mutual
agreements contained herein, the parties hereto agree as follows:

WHEREAS, Borrower has requested Lender to make available to Borrower a
loan in the aggregate principal amount of up to FIVE MILLION and 00/100 DOLLARS
($5,000,000) (as the same may from time to time be amended, modified,
supplemented or revised, the "Loan"), which shall be available in minimum
installments of TWO HUNDRED FIFTY THOUSAND and 00/100 DOLLARS ($250,000) each
(the "Advance") on various dates prior to December 16, 2000 ("Advance Date(s)"),
which would be evidenced by Secured Promissory Note(s) executed by Borrower
substantially in the form of EXHIBIT A-1 AND A-2 hereto (as the same may from
time to time be amended, modified, supplemented or restated the "Note(s)");

NOW, THEREFORE, it is agreed:

SECTION 1. THE LOAN

1.1      Subject to the terms and conditions set forth herein, Lender
shall lend to Borrower the aggregate original principal amount of FIVE MILLION
AND 00/100 DOLLARS ($5,000,000) in two parts, the first part in the amount of
Two Million Dollars ($2,000,000) ("Part I") and the second part in the amount of
Three Million dollars ($3,000,000) ("Part II') together with interest at the
rate of eight and one quarter percent (8.25%) per annum due and payable in
monthly installments as set forth in the Note.

Proceeds of this Loan may finance computers, workstations, peripherals,
instrumentation, electronic test equipment, office furniture, certain microscopy
equipment and other equipment approved by Lender and evidenced by Secured
Promissory Note(s) executed by Borrower substantially in the form of EXHIBIT A-1
. Up to 20% of the Loan may be used to finance software and tenant improvements
evidenced by Secured Promissory Note(s) executed by Borrower substantially in
the form of EXHIBIT A-2. Lender will not finance custom equipment, installation
costs, delivery costs, rolling stock, special tooling, molds and hand held
items.

1.2      Upon the occurrence of and during an Event of Default (as
defined herein), interest shall thereafter be calculated at a rate of five
percent (5%) in excess of the rate that would otherwise be applicable ("Default
Rate"). All such interest shall be due and payable in arrears, on the first day
of the following month.

1.3      Notwithstanding any provision in this Agreement, the Note, or
any other "Loan Document" (as defined herein), it is not the parties' intent to
contract for, charge or receive interest at a rate that is greater than the
maximum rate permissible by law which a court of competent jurisdiction shall
deem applicable hereto (which under the laws of the State of Illinois shall be
deemed to be the laws relating to permissible rates of interest on commercial
loans) (the "Maximum Rate"). If the Borrower actually pays Lender an amount of
interest, chargeable on the

Loan and Security Agr.                 -1-

total aggregate principal Secured Obligations of Borrower under this Agreement
and the Note (as said rate is calculated over a period of time that is the
longer of (i) the time from the date of this Agreement through the maturity time
as set forth on the Note, or (ii) the entire period of time that any principal
is outstanding on the Note), which amount of interest exceeds interest
calculated at the Maximum Rate on said principal chargeable over said period of
time, then such excess interest actually paid by Borrower shall be applied
first, to the payment of principal outstanding on the Note; second, after all
principal is repaid, to the payment of Lender's out of pocket costs, expenses,
and professional fees which are owed by Borrower to Lender under this Agreement
or the Loan Documents; and third, after all principal, costs, expenses, and
professional fees owed by Borrower to Lender are repaid, the excess (if any)
shall be refunded to Borrower.

1.4      In the event any interest is not paid when due hereunder,
delinquent interest shall be added to principal and shall bear interest on
interest, compounded at the rate set forth in Section 1.1.

1.5      Upon and during the continuation of an Event of Default
hereunder (as defined herein), all Secured Obligations, including principal,
interest, compounded interest, and reasonable professional fees, shall bear
interest at a rate per annum equal to the Default Rate.

1.6      Borrower shall have the option to prepay the Note, in whole or
in part, at any time after the date hereof by paying the principal amount
together with all accrued and unpaid interest with respect to such principal
amount, as of the date of such prepayment and the Balloon Payment as described
in the Note together with a prepayment premium equal to the difference, if any,
between (x) the amount being prepaid and (y) the present value, discounted at
the Treasury Rate, of each installment of principal and interest being prepaid
discounted to the date of prepayment. If the amount in (x) is greater than the
amount in (y), no prepayment premium shall be due. The "Treasury Rate" shall
mean the then prevailing yield on US Treasury Constant Maturities for the most
recent business day, as quoted in the Federal Reserve Statistical Release H15,
as of the date of prepayment for an obligation of comparable maturity to the
maturity date of the Note.

SECTION 2. SECURITY INTEREST

As security for the payment of all indebtedness ("Indebtedness") of the
Borrower to the Lender hereunder and under the Note, as the same may be renewed,
extended for any period or rearranged, and the performance by the Borrower of
its other obligations hereunder (the Indebtedness and such other obligations
being hereinafter sometimes collectively referred to as the "Secured
Obligations"), the Borrower hereby assigns to the Lender, and grants to the
Lender a first priority security interest in, all the Borrower's right, title,
and interest in and to the following property ("Collateral"): (i) the equipment
and other property (the "Equipment") described in Exhibit B attached hereto; and
(ii) all proceeds, products, replacements, additions to, substitutions for and
accessions to any and all Equipment including, without limitation, the proceeds
applicable to the insurance referred to in Section 4 hereof.

Equipment shall consist of computers, workstations, peripherals,
instrumentation, electronic test equipment, office furniture, certain types of
microscopy equipment and other items of equipment approved by Lender. Up to 20%
of the Loan may be used for software and tenant improvements.

Loan and Security Agr.                 -2-

SECTION 3. REPRESENTATIONS AND WARRANTIES OF BORROWER

The Borrower represents, warrants and agrees that:

3.1      it has good title in and to the Equipment, free of all liens,
security interests, encumbrances and claims whatsoever, except for the interest
of the Lender therein;

3.2      it has the full power and authority to, and does hereby grant
and convey to the Lender, a valid first priority perfected security interest in
the Collateral as security for the Secured Obligations, free of all liens,
security interests, encumbrances and claims, and shall execute such Uniform
Commercial Code ("UCC") financing statements in connection herewith as the
Lender may reasonably request. No other lien, security interest, adverse claim
or encumbrance has been created by Borrower or is known by Borrower to exist
with respect to any Collateral;

3.3      it is a corporation duly organized, legally existing and in
good standing under the laws of the State of Delaware, and is duly qualified as
a foreign corporation in all jurisdictions where the failure to so qualify would
have a material adverse effect on the Collateral or the business of the Borrower
taken as a whole;

3.4      the execution, delivery and performance of the Note, this
Agreement, the Warrant Agreement dated December 16, 1999 pursuant to which
Borrower granted to Lender the right to purchase the number of shares of
preferred stock as set forth therein ("Warrant Agreement"), and all financing
statements, certificates and other documents required to be delivered or
executed in connection herewith (collectively, the "Loan Documents") have been
duly authorized by all necessary corporate action of Borrower, the individual or
individuals executing the Loan Documents were duly authorized to do so, the
Equipment is personal property and as used by the Borrower will not be or become
fixtures under applicable law, and the Loan Documents constitute legal, valid
and binding obligations of the Borrower, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization
or other similar laws generally affecting the enforcement of the rights of
creditors;

3.5      the Loan Documents do not and will not violate any provisions
of its Certificate of Incorporation, bylaws or any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which the Borrower is
subject, or result in the creation or imposition of any lien, security interest
or other encumbrance upon the Collateral, other than those created by this
Agreement;

3.6      the execution, delivery and performance of the Loan Documents
do not require the consent or approval of any other person or entity including,
without limitation, any regulatory authority or governmental body of the United
States or any state thereof or any political subdivision of the United States or
any state thereof.

3.7      as of the date hereof no fact or condition exists that would
(or could, with the passage of time, the giving of notice, or both) constitute
an Event of Default under this Agreement or any of the Loan Documents and no
event which has had or could reasonably be expected to have a Material Adverse
Effect has occurred and is continuing. For purposes of this Agreement, "Material
Adverse Effect" means a material adverse effect upon (i) the business,
operations, properties, assets or financial condition of Borrower; or (ii) the
ability of Borrower to perform the Secured Obligations.

Loan and Security Agr.                 -3-

SECTION 4. INSURANCE AND RISK OF LOSS

4.1      Risk of loss of, damage to or destruction of the Equipment
shall be borne by the Borrower and effective from the date of this Agreement and
until the payment and performance in full of all Secured Obligations, Borrower
shall at its own expense cause to be carried and maintained all risk casualty
insurance (covering risk of fire, theft and other such risks as the Lender may
require, including standard and extended coverage) with respect to each item of
Equipment in an amount no less than the replacement costs applicable to such
item of Equipment during the term of this Agreement. All policies evidencing
such casualty insurance shall contain a standard mortgagee's endorsement and
shall provide for at least thirty days prior written notice by the underwriter
or insurance company to the Lender in the event of cancellation or expiration.
Borrower shall provide Lender with insurance certificates evidencing the
foregoing at time of closing.

4.2      If any item of Equipment is lost or rendered unusable as a
result of any physical damage to or destruction of such item of Equipment during
the period from the date hereof to and including the maturity date under the
Note or the date all Secured Obligations hereunder have been fully satisfied,
whichever is later, Borrower shall give to Lender prompt notice thereof.
Borrower shall determine, within fifteen (15) days after the date of occurrence
of such loss, damage or destruction, whether such item of Equipment can be
repaired and restored to the condition in which such item of Equipment was
required to be maintained as of the date immediately preceding such damage. If
Borrower determines that such item of Equipment can be repaired, Borrower, at
its expense, shall cause such item of Equipment to be promptly repaired. If
Borrower determines that such item of I Equipment is lost or cannot be repaired,
Borrower shall promptly notify the Lender and such item of Equipment shall be
deemed to have suffered a "Casualty Loss" for purposes of this Section as of the
date of the occurrence of such loss. Within fifteen (15) days following the
occurrence of any such loss, damage or destruction, Borrower shall notify the
Lender of the item(s) of Equipment which has suffered such Casualty Loss ("Loss
Item"), and within thirty (30) days thereafter (the "Settlement Date"), Borrower
shall either (a) replace such item(s) of Equipment with equipment of the same
model, type and feature configuration, in an operating condition and repair no
less than that required hereunder of the damaged or lost equipment immediately
prior to the date of such damage or loss, and having a fair market value no less
than the Casualty Value (as defined herein) applicable to such item of Equipment
as of the date immediately prior to such damage, in which case such replacement
equipment shall for all purposes hereunder become part of the Collateral and
(without limiting the preceding provisions) Borrower shall grant to Lender a
first lien and security interest in respect of such replacement equipment
pursuant to the terms of this Agreement, and Borrower shall provide the Lender
evidence satisfactory to the Lender of Borrower's good and marketable title to
such replacement equipment (free of any liens, security interests or
encumbrances other than those created by this Agreement and Borrower shall be
entitled to receive the amount of any insurance or other recovery received by
Lender up to cost of obtaining the replacement equipment; or (b) so long as no
Event of Default or event which with the giving of notice or passage of time, or
both, would constitute an Event of Default, has occurred and is continuing,
Borrower may provide substitute equipment satisfactory to Lender to become part
of the Collateral and Borrower shall grant to Lender a first lien and security
interest in respect of such substitute equipment pursuant to the terms of this
Agreement, and Borrower shall provide the Lender evidence satisfactory to Lender
of Borrower's good and marketable title to such substitute equipment (free of
any liens, security interests or

Loan and Security Agr.                 -4-

encumbrances other than created by this Agreement and Lender shall provide any
required endorsements in connection with any insurance proceeds received by
Borrower pursuant to such insurance policies; or (c) Borrower shall pay Lender
the insurance proceeds payable pursuant to such insurance policies ("Insurance
Proceeds")with respect to such Loss Item(s) and the principal amount of the Note
(and interest accrued on the principal amount so prepayable) shall become due
and payable on the Settlement Date to the extent of the replacement cost for all
such Loss Item(s). For purposes of this Section 4.2, Casualty Value shall mean
an amount equal to the greater of the fair market value of the Equipment as of
the date of the Casualty Loss or the outstanding principal and accrued interest
on the Loan. Moneys so received shall be applied, on the date of such receipt,
as follows: first, to pay any accrued interest on the outstanding principal
amount of the Note on such date; second, to prepay, the outstanding principal
amount of the Note (to the extent of the fair market value attributable to such
Loss Item(s)); third, to pay any other Indebtedness of amounts then due and
owing to the Lender hereunder; and fourth, so long as there has occurred no
Event of Default under Section 8 hereof and no event which with the giving of
notice or passage of time or both would constitute an Event of Default, has
occurred and is continuing, Borrower and Lender hereby agree that the balance of
any such Insurance Proceeds shall be paid promptly to the Borrower.

4.3      Effective upon the date hereof under the Note and while there
are any Secured Obligations outstanding, Borrower shall cause to be carried and
maintained comprehensive general liability insurance with regard to the
Collateral against risks customarily insured against in the Borrower's business.
Such risks shall include, without limitation, the risks of death, bodily injury
and property damage associated with the Collateral. All policies evidencing such
insurance shall provide for at least thirty (30) days prior written notice by
the underwriter or insurance company to the Lender in the event of cancellation
or expiration.

4.4      Borrower shall and does hereby indemnify and hold Lender, its
agents and shareholders harmless from and against any and all claims, costs,
expenses, damages and liabilities (including without limitation such claims,
costs, expenses, damages and liabilities based on liability in tort including
without limitation strict liability in tort) including reasonable attorneys'
fees, arising out of Borrower's ownership, possession, operation, control, use,
maintenance, delivery, or other disposition of the Collateral. Notwithstanding
the foregoing, Borrower shall not be responsible under the terms of this Section
4.4 to a party indemnified hereunder for any claims, costs, expenses, damages
and liabilities occasioned by the negligence or willful misconduct of such
indemnified party.

SECTION 5. COVENANTS OF BORROWER

Borrower covenants and agrees as follows at all times while any of the
Secured Obligations remain outstanding:

5.1      Borrower shall maintain the Equipment in good operating order,
repair, condition and appearance and protect the Equipment from deterioration,
other than normal wear and tear. Borrower shall not use the Equipment or permit
its use for any purpose other than for which it was designed. Borrower's
obligation regarding the maintenance of the Equipment shall include, without
limitation, all maintenance, repair, refurbishment and replacement recommended
or advised either by the manufacturer, or that commonly performed by prudent
business and/or professional practice. Any exceptions or qualifications
expressed in this Agreement relating to normal or

Loan and Security Agr.                 -5-

ordinary wear and tear shall not be deemed to limit Borrower's obligations
pursuant to the preceding sentence.

5.2      Borrower shall only relocate any item of the Collateral
provided that: (a) it shall have caused to be filed and/or delivered to the
Lender all UCC financing statements, certificates or other documents or
instruments necessary to continue in effect the first prior perfected security
interest of the Lender in the Collateral, and (b) it shall have given the Lender
no less than fifteen (15) days prior written notice of such relocation.

5.3      Upon the request of Lender, Borrower shall, during business
hours, make the Equipment available to Lender for inspection at the place where
it is normally located and shall make Borrower's log and maintenance records
pertaining to the Equipment available to the Equipment available to Lender for
inspection. Borrower shall take all action necessary to maintain such logs and
maintenance records in a correct and complete fashion.

5.4      Upon the request of Lender, Borrower shall cause the Equipment
to be plainly, permanently and conspicuously marked, by stenciling or by metal
tag or plate affixed thereto, indicating Lender's security interest in the
Equipment. Borrower shall replace any such stenciling, tag or plate which may be
removed or destroyed or become illegible. Borrower shall keep all Equipment free
from any marking or labeling which might be interpreted as a claim of ownership
adverse to Borrower's.

5.5      Borrower covenants and agrees to pay when due, all taxes, fees
or other charges of any nature whatsoever (together with any related interest or
penalties) now or hereafter imposed or assessed against Borrower, Lender or the
Collateral or upon Borrower's ownership, possession, use, operation or
disposition thereof or upon Borrower's rents, receipts or earnings arising
therefrom. Borrower shall file on or before the due date therefor all personal
property tax returns in respect of the Collateral.

5.6      Borrower shall furnish to Lender the financial statements
listed hereinafter, prepared in accordance with generally accepted accounting
principles consistently applied (the "Financial Statements"):

(a)      as soon as practicable (and in any event within
thirty (30) days) after the end of each month: an internally prepared
income statement, balance sheet, and cash flow statement, (including
the commencement of any material litigation by or against Borrower),
each certified by Borrower's Chief Executive or Financial Officer to be
true and correct;

(b)      as soon as practicable (and in any event within
ninety (90) days) after the end of each fiscal year, audited Financial
Statements, setting forth in comparative form the corresponding figures
for the preceding fiscal year, and accompanied by any audit report and
opinion of the independent certified public accountants selected by
Borrower; and

(c)      promptly any additional information (including but
not limited to tax returns, income statements, balance sheets, and
names of principal creditors) as Lender reasonably believes necessary
to evaluate Borrower's continuing ability to meet financial
obligations.

Loan and Security Agr.                 -6-

5.7      Notwithstanding the foregoing, after the effective date of the
initial registration statement covering a public offering of Borrower's
securities, the term "Financial Statements" shall be deemed to refer to only
those statements required by the Securities and Exchange Commission, to be
provided no less frequently than quarterly. Borrower will from time to time
execute, deliver and file, alone or with Lender, any financing statements,
security agreements or other documents; and take all further action that may be
necessary, or that Lender may reasonably request, to confirm, perfect, preserve
and protect the security interests intended to be granted hereby, and in
addition, and for such purposes only, Borrower hereby authorizes Lender to
execute and deliver on behalf of Borrower and to file such financing statements,
security agreement and other documents without the signature of Borrower either
in Lender's name or in the name of Borrower as agent and attorney-in-fact for
Borrower.

5.8      Borrower shall protect and defend Borrower's title as
well as the interest of the Lender against all persons claiming any interest
adverse to Borrower or Lender and shall at all times keep the Collateral free
and clear from any attachment or levy, liens or encumbrances whatsoever (except
any placed thereon by Lender, or any liens arising by operation of law with
respect to any obligations not yet overdue or any other liens consented to in
writing by Lender) and shall give Lender immediate written notice thereof.

SECTION 6. CONDITIONS PRECEDENT TO LOAN

The obligation of Lender to fund the Loan on each Advance Date(s) shall be
subject to satisfaction by Borrower or waiver by Lender, in Lender's sole
discretion, of the following conditions:

6.1      (a) The Advance Date(s) for any installment shall occur on or
before December 16, 2000.

6.2      DOCUMENT DELIVERY. Borrower, on or prior to the Closing Date,
shall have delivered to Lender the following, in form and substance reasonably
satisfactory to Lender:

(a)      executed originals of the Agreement, Note(s), Warrant
Agreement and any documents reasonably required by Lender to effectuate
the liens of Lender, with respect to all Collateral;

(b)      certified copy of resolutions of Borrower's board of
directors evidencing approval of the borrowing and other transactions
evidenced by the Loan Documents;

(c)      certified copies of the Certificate of Incorporation
and the Bylaws of Borrower, as amended through the Closing Date;

(d)      certificate of good standing for Borrower from its
state of incorporation and similar certificates from all other
jurisdictions in which it does business and where the failure to be
qualified would have a Material Adverse Effect;

(e)      such other documents as Lender may reasonably
request.

6.3      ADVANCE REQUEST. Borrower, on or prior to each Advance
Date(s), shall have delivered to Lender the following:

Loan and Security Agr.                 -7-

(a)      a minimum of two (2) business days prior to the
Advance Date(s), written notice in the form of an Advance Request, or
as otherwise specified by Lender from time to time, specifying amount
of such Advance and wire transfer instructions;

(b)      such other documents as Lender may reasonably
request.

6.4      PERFECTION OF SECURITY INTERESTS. Borrower shall have taken or
caused to be taken such actions requested by Lender to grant Lender a first
priority perfected security interest in the Collateral. Such actions shall
include, without limitation, the delivery to Lender of all appropriate financing
statements, executed by Borrower, as to the Collateral granted by Borrower for
all jurisdictions as may be necessary or desirable to perfect the security
interest of Lender in such Collateral

6.5      ABSENCE OF EVENTS OF DEFAULTS. As of the Closing Date or the
Advance Date, no fact or condition exists that would (or would, with the passage
of time, the giving of notice, or both) constitute an Event of Default under
this Agreement or any of the Loan Documents.

6.6      MATERIAL ADVERSE EFFECT. As of the Closing Date or the Advance
Date, no event which has had or could reasonably be expected to have a Material
Adverse Effect has occurred and is continuing.

SECTION 7. ASSIGNMENT BY LENDER

7.1      Borrower acknowledges and understands that Lender may sell and
assign all or a part of its interest hereunder and under the Note and Loan
Documents to any person or entity (an "Assignee"). After such assignment the
term Lender shall mean such Assignee, and such Assignee shall be vested with all
rights, powers and remedies of Lender hereunder with respect to the interest so
assigned; but with respect to any such interest not so transferred, the Lender
shall retain all rights, powers and remedies hereby given. No such assignment by
Lender shall relieve Borrower of any of its obligations hereunder. Borrower
shall acknowledge such assignment or assignments as shall be designated by
written notice given by Lender to Borrower. The Lender agrees that in the event
of any transfer by it of the Note, it will endorse thereon a notation as to the
portion of the principal of the Note which shall have been paid at the time of
such transfer and as to the date to which interest shall have been last paid
thereon.

SECTION 8. DEFAULT

The occurrence of any one or more of the following events (herein
called "Events of Default") shall constitute a default hereunder and under the
Note:

8.1      The Borrower defaults in the payment of any principal or
interest payable under this Agreement, the Note or any of the other Loan
Documents and such default continues for more than five (5) days after the due
date thereof;

Loan and Security Agr.                 -8-

8.2      The Borrower defaults in the payment or performance of any
other covenant or obligation of the Borrower hereunder or under the Note or any
other Loan Documents for more than ten (10) days after the Lender has given
notice of such default to the Borrower;

8.3      Any representation or warranty made herein by the Borrower
shall prove to have been false or misleading in any material respect;

8.4      The making of an assignment by Borrower for the benefit of its
creditors or the admission by Borrower in writing of its inability to pay its
debts as they become due, or the insolvency of Borrower, or the filing by
Borrower of a voluntary petition in bankruptcy, or the adjudication of Borrower
as a bankrupt, or the filing by Borrower of any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law or
regulation, or the filing of any answer by Borrower admitting, or the failure by
Borrower to deny, the material allegations of a petition filed against it for
any such relief, or the seeking or consenting by Borrower to, or acquiescence by
Borrower in, the appointment of any trustee, receiver or liquidator of Borrower
or of all or any substantial part of the properties of Borrower, or the
inability of Borrower to pay its debts when due, or the commission by Borrower
of any act of bankruptcy as defined in the Federal Bankruptcy Act, as amended;

8.5      The failure by Borrower, within sixty (60) days after the
commencement of any proceeding against Borrower seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, to obtain the
dismissal of such proceeding or, within sixty (60) days after the appointment,
without the written consent or acquiescence of Lender, of any trustee, receiver
or liquidator of Borrower or of all or any substantial part of the properties of
Borrower, to vacate such appointment; or

8.6      The default by Borrower under any other notes or other
agreement for borrowed money, lease or other agreement between Borrower and
Lender.

SECTION 9. REMEDIES

Upon the occurrence hereof of any one or more Events of Default,
Lender, at its option, may declare the Note to be accelerated and immediately
due and payable, (provided, that upon the occurrence of an Event of Default of
the type described in 8.4 or 8.5, the Note and all other Secured Obligations
shall automatically be accelerated and made due and payable without any further
act) whereupon the unpaid principal of and accrued interest on such Note shall
become immediately due and payable, and shall thereafter bear interest at the
Default Rate and calculated in accordance with Section 1.2. Lender may exercise
all rights and remedies with respect to the Collateral granted pursuant hereto
for such Note, or otherwise available to it under applicable law, including the
right to release, hold or otherwise dispose of all or any part of the Collateral
and the right to utilize, process and commingle the Collateral.

Upon the happening and during the continuance of any Event of Default,
Lender may then, or at any time thereafter and from time to time, apply,
collect, sell in one or more sales, lease or otherwise dispose of, any or all of
the Collateral, in its then condition or following any commercially reasonable
preparation or processing, in such order as Lender may elect, and any such sale
may be made either at public or private sale at its place of business or
elsewhere.

Loan and Security Agr.                 -9-

Borrower agrees that any such public or private sale may occur upon five (5)
calendar day's notice to Borrower. Lender may require Borrower to assemble the
Collateral and make it available to Lender at a place designated by Lender which
is reasonably convenient to Lender and Borrower. The proceeds of any sale,
disposition or other realization upon all or any part of the collateral shall be
distributed by Lender in the following order of priorities:

First, to Lender in an amount sufficient to pay in full Lender's
reasonable costs and professionals' and advisors' fees and expenses;

Second, to Lender in an amount equal to the then unpaid amount of the
Secured Obligations in such order and priority as Lender may choose in
its sole discretion; and

Finally, upon payment in full of all of the Secured Obligations, to
Borrower or its representatives or as a court of competent jurisdiction
may direct.

The Lender shall return to the Borrower any surplus Collateral remaining after
payment of all Secured Obligations.

SECTION 10. MISCELLANEOUS

10.1     Borrower shall remain liable to Lender for any unpaid Secured
Obligations, advances, costs, charges and expenses, together with interest
thereon and shall pay the same immediately to Lender at Lender's offices.

10.2     The powers conferred upon Lender by this Agreement are solely
to protect its interest in the Collateral and shall not impose any duty upon
Lender to exercise any such powers.

10.3     This is a continuing Agreement and the grant of a security
interest hereunder shall remain in full force and effect and all the rights,
powers and remedies of Lender hereunder shall continue to exist until the
Secured Obligations are paid in full as the same become due and payable. When
Borrower has paid in full all Secured Obligations, Lender will execute a written
termination statement, reassigning to Borrower, without recourse, the Collateral
and all rights conveyed hereby and return possession (if Lender has possession)
of the Collateral to Borrower. The rights, powers and remedies of Lender
hereunder shall be in addition to all rights, powers and remedies given by
statute or rule of law and are cumulative. The exercise of any one or more of
the rights, powers and remedies provided herein shall not be construed as a
waiver of any other rights, powers and remedies of Lender. Furthermore,
regardless of whether or not the UCC is in effect in the jurisdiction where such
rights, powers and remedies are asserted, Lender shall have the rights, powers
and remedies of a secured party under the UCC.

10.4     Upon payment in full of all Secured Obligations, the Lender
shall cancel the Note, this Agreement and all UCC financing statements, if any,
and shall promptly deliver all such canceled documents to the Borrower.

10.5     GOVERNING LAW. This Agreement, the Note and the other Loan
Documents have been negotiated and delivered to Lender in the State of Illinois
and shall not become effective until accepted by Lender in the State of
Illinois. Payment to Lender by Borrower of the Secured Obligations is due in the
State of Illinois. This Agreement shall be governed by, and

Loan and Security Agr.                 -10-

construed and enforced in accordance with the laws of the State of Illinois
excluding conflict of laws principles that would cause the application of laws
of any other jurisdiction.

10.6     CONSENT TO JURISDICTION AND VENUE. All judicial proceedings
arising in or under or related to this Agreement, the Note or any of the other
Loan Documents may be brought in any state or federal court of competent
jurisdiction located in the State of Illinois. By execution and delivery of this
Agreement, each party hereto generally and unconditionally: (a) consents to
personal jurisdiction in Cook County, State of Illinois; (b) waives any
objection as to jurisdiction or venue in the aforesaid courts; and (d)
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement, the Note and the other Loan Documents. Service of process
on any party hereto in any action arising out of or relating to this Agreement
shall be effective if given in accordance with the requirements for notice set
forth in Section 10.8 below and shall be deemed effective and received as set
forth in Section 10.8 below. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of either
party to bring proceedings in the courts of any other jurisdiction.

10.7     Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent and duration of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

10.8     Any notice required or given hereunder shall be deemed
properly given upon the earlier of: (i) the first business day after
transmission by facsimile or hand delivery or deposit with an overnight express
service or overnight mail delivery service; or (ii) or three (3) days after
mailed, postage prepaid, in each case, addressed to the designated recipient at
its address set forth herein or such other address as such party may advise the
other party by notice given in accordance with this provision.

10.9     Lender and Borrower acknowledge that there are no agreements
or understandings, written or oral, between Lender and Borrower with respect to
the Loan, other than as set forth herein, in the Note and the other Loan
Documents and that this Agreement, the Note and the other Loan Documents contain
the entire agreement between Lender and Borrower with respect thereto. None of
the terms of this Agreement, the Note and the other Loan Documents may be
amended except by an instrument executed by each of the parties hereto.

10.10    No omission, or delay, by Lender at any time to enforce any
right or remedy reserved to it, or to require performance of any of the terms,
covenants or provisions hereof by Borrower at any time designated, shall be a
waiver of any such right or remedy to which Lender is entitled, nor shall it in
any way affect the right of Lender to enforce such provisions thereafter.

10.11    All agreements, representations and warranties contained in
this Agreement or the Note, or in any Loan Documents delivered pursuant hereto
or in connection herewith shall be for the benefit of Lender and any Assignee
and shall survive the execution and delivery of this Agreement or the Note and
the expiration or other termination of this Agreement or the Note.

10.12    This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.

Loan and Security Agr.                 -11-

10.13    This Agreement shall be binding upon, and shall inure to the
benefit of, Borrower and its permitted assigns (if any). Borrower shall not
assign its obligations under this Agreement, the Note or any of the other Loan
Documents without Lender's express written consent and any such attempted
assignment shall be void and of no effect. Any assignment by Borrower in
connection with a "Merger" (as defined below) shall be subject to Lender's prior
consent. Any consent granted by Lender shall be conditioned upon such surviving
entity or transferee assuming Borrower's Secured Obligations hereunder pursuant
to assignment documents reasonably acceptable to Lender. If Lender reasonably
withholds its consent to such assignment in connection with a Merger, the
outstanding principal and accrued and unpaid interest shall be prepaid in whole
without a prepayment premium.

For purposes of this Agreement, a "Merger" shall mean any consolidation
or merger of the Borrower with or into any other corporation or entity, any sale
or conveyance of an or substantially all of the assets or stock of the Borrower
by or to any other person or entity in which Borrower is not the surviving
entity.

IN WITNESS WHEREOF, the Borrower and the Lender have duly executed and
delivered this Agreement as of the day and year first above written.

BORROWER: CYTOKINETICS, INCORPORATED.

By: /s/ JAMES SABRY
---------------------
Title: 
Date: _________________

ACCEPTED IN ROSEMONT, ILLINOIS:

LENDER: COMDISCO, INC.

By: /s/ JILL C. HANSES
--------------------
Title: JILL C. HANSES SENIOR VICE
PRESIDENT
Date: DEC 23 1999

Loan and Security Agr.                 -12-

EXHIBIT A-1
SECURED PROMISSORY NOTE

Date: ____________
$______
Due: _____________

FOR VALUE RECEIVED, Cytokinetics, Inc., Inc. a Delaware corporation (the
"Borrower") hereby promises to pay to the order of Comdisco, Inc., a Delaware
corporation (the "Lender") at P.O. Box 91744, Chicago, IL 60693 or such other
place of payment as the holder of this Secured Promissory Note (this "Note") may
specify from time to time in writing, in lawful money of the United States of
America, the principal amount of ____________________________and 00/100 Dollars
($______________) together with interest at eight and one quarter percent
(8.25%) per annum from the date of this Note to maturity of each installment on
the principal hereof remaining from time to time unpaid, such principal and
interest to be paid 48 equal monthly installments of $___________each,
commencing__________________and on the same day of each month thereafter to and
including_____________ and an additional installment in the amount of $____(15%)
("Balloon Payment")* to be paid on___________________, such installments to be
applied first to accrued and unpaid interest and the balance to unpaid
principal. Interest shall be computed on the basis of a year consisting of
twelve months of thirty days each.

This Note is the Note referred to in, and is executed and delivered in
connection with, that certain Loan and Security Agreement of even date herewith
by and between Borrower and Lender (as the same may from time to time be
amended, modified or supplemented in accordance with its terms, the "Loan
Agreement"), and is entitled to the benefit and security of the Loan Agreement
and the other Loan Documents (as defined in the Loan Agreement), to which
reference is made for a statement of all of the terms and conditions thereof.
All terms defined in the Loan Agreement shall have the same definitions when
used herein, unless otherwise defined herein. Attached hereto as Exhibit B is a
list of Collateral which is being financed with the proceeds of the Loan
evidenced by this Note, which Collateral shall be deemed to be listed on Exhibit
B to the Loan Agreement.

The Borrower waives presentment and demand for payment, notice of dishonor,
protest and notice of protest and any other notice as permitted under the UCC or
any applicable law.

This Note has been negotiated and delivered to Lender and is payable in the
State of Illinois, and shall not become effective until accepted by Lender in
the State of Illinois. This Note shall be governed by and construed and enforced
in accordance with, the laws of the State of Illinois, excluding any conflicts
of law rules or principles that would cause the application of the laws of any
other jurisdiction.

BORROWER:                          CYTOKINETICS, INC.
280 East Grand Ave
South San Francisco, CA 94080

Signature: _________________________

Print Name: ________________________

Title: ______________________________

* Borrower may request Lender to finance the Balloon Payment over 12 months at
8%. In that case a new promissory note will be prepared.

-1-

EXHIBIT A-2
SECURED PROMISSORY NOTE

Date: ____________
$______
Due: _____________

FOR VALUE RECEIVED, Cytokinetics, Inc., Inc. a Delaware corporation (the
"Borrower") hereby promises to pay to the order of Comdisco, Inc., a Delaware
corporation (the "Lender") at P.O. Box 91744, Chicago, IL 60693 or such other
place of payment as the holder of this Secured Promissory Note (this "Note") may
specify from time to time in writing, in lawful money of the United States of
America, the principal amount of ____________________________and 00/100 Dollars
($ _______) together with interest at eight and one quarter percent (8.25%) per
annum from the date of this Note to maturity of each installment on the
principal hereof remaining from time to time unpaid, such principal and interest
to be paid 36 equal monthly installments of $__________each,
commencing__________________and on the same day of each month thereafter to and
including____________ and an additional installment in the amount of $____(15%)
("Balloon Payment")* to be paid on _______, such installments to be applied
first to accrued and unpaid interest and the balance to unpaid principal.
Interest shall be computed on the basis of a year consisting of twelve months of
thirty days each.

This Note is the Note referred to in, and is executed and delivered in
connection with, that certain Loan and Security Agreement of even date herewith
by and between Borrower and Lender (as the same may from time to time be
amended, modified or supplemented in accordance with its terms, the "Loan
Agreement"), and is entitled to the benefit and security of the Loan Agreement
and the other Loan Documents (as defined in the Loan Agreement), to which
reference is made for a statement of all of the terms and conditions thereof.
All terms defined in the Loan Agreement shall have the same definitions when
used herein, unless otherwise defined herein. Attached hereto as Exhibit B is a
list of Collateral which is being financed with the proceeds of the Loan
evidenced by this Note, which Collateral shall be deemed to be listed on Exhibit
B to the Loan Agreement.

The Borrower waives presentment and demand for payment, notice of dishonor,
protest and notice of protest and any other notice as permitted under the UCC or
any applicable law.

This Note has been negotiated and delivered to Lender and is payable in the
State of Illinois, and shall not become effective until accepted by Lender in
the State of Illinois. This Note shall be governed by and construed and enforced
in accordance with, the laws of the State of Illinois, excluding any conflicts
of law rules or principles that would cause the application of the laws of any
other jurisdiction.

BORROWER:                          CYTOKINETICS, INC.
280 East Grand Ave
South San Francisco, CA 94080

Signature: _________________________

Print Name: ________________________

Title: _____________________________

* Borrower may request Lender to finance the Balloon Payment over 12 months at
8%. In that case a new promissory note will be prepared.

-1-

EXHIBIT 4.7

Amendment No. 1 to Loan and Security Agreement

This Amendment Agreement No. 1 ("Amendment") to the Loan and Security
Agreement dated as of December 16, 1999 is entered into this 29 Th day of June,
2000 by and between Cytokinetics, Inc., a California corporation, with its chief
executive offices and principal place of business at 280 East Grand Avenue,
Suite 2, South San Francisco, CA 94080 ("Borrower") and Comdisco, Inc., a
Delaware corporation, with its chief executive offices and principal place of
business at 6111 North River Road, Rosemont, IL 60018 ("Lender").

RECITALS

WHEREAS, PURSUANT to the terms and conditions set forth in the Loan and
Security Agreement dated as of December 16, 1999 between Borrower and Lender
(hereinafter, "Loan Agreement"), the parties have entered into that certain
Secured Promissory Note dated June 29, herewith (the "Note(s)") whereby for
value received, Borrower promises to pay certain payments to Lender in the
original principal amount of Six Hundred Twenty Seven Thousand Five Hundred
Thirteen and 27/100 Dollars ($627,513.27);

WHEREAS, IN connection with the issuance of the Note, Lender and
Borrower wish to amend the Loan Agreement to include the Exhibit B as required
under the Loan Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, Borrower and Lender hereby agree as follows:

1.       Except as expressly set forth herein, all terms used herein shall have
the meanings set forth in the Loan Agreement.

2.       Borrower and Lender agree that the Exhibit B attached hereto shall be
incorporated and made a part of the Loan Agreement and the equipment described
thereon shall be "Equipment" as set forth in the Loan Agreement.

3.       Except as specifically amended hereby, the terms and conditions of the
Loan Agreement are hereby reaffirmed and remain in full force and effect, and
from and after the date hereof the "Agreement" shall mean the "Agreement" as
amended by this Amendment.

4.       This Amendment may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

1

IN WITNESS WHEREOF, Borrower and Lender have duly executed and delivered this
Amendment as of the day and year first above written.

BORROWER                                   CYTOKINETICS, INC

Signature: /s/ JAMES SABRY
----------------
Print Name: JAMES SABRY

Title: CEO

ACCEPTED IN ROSEMONT, ILLINOIS

LENDER                                     COMDISCO, INC.

Signature: _________________________

Print Name: ________________________

Title: _____________________________

2

EXHIBIT B

CYTOKINETICS
SCHEDULE OF FIXED ASSETS

INVOICE
DATE               VENDOR                 DESCRIPTION          INVOICE #                 SERIAL NO.                QTY
-----------------   ------------------   --------------------------   ----------   ------------------------------------   ---

COMPUTER HARDWARE

09/03/99          Dell                 Dell PIII 500K GX1/T         272857823                   4UJ1W                    5
09/03/99          Dell                 Dell 6450 PIII/MT             27322227                   4UJ20                    2
09/08/99          The Computer Guys    HP Procurve Switch 4000M       11485      SG92602333,SY1899,SY1699,000AJ14D767
09/21/99          The Computer Guys    HP NetServer E60               11558                  US93300835
09/24/99          Dell                 G810 21" Monitor             280963745      QI93098826,QI93098830,QI93098834      3
09/28/99          The Computer Guys    Shiva Lanrover/E               11592                  PE 13005984                 1
10/05/99          Dell                 Dell 6450 PIII/MT            284567401                   6HVIQ                    1
10/06/99          Dell                 Dell PIII 500K GX1/T         284566569                   6JMA6                    2
10/08/99          Dell                 G810 21" Monitor             284564598                 QI91584578                 1
10/14/99          Dell                 Inspiron 3500 A366GT         280591603                   V3TG3                    1
10/19/00          Dell                 Dell PIII 500K GX1/T         288359367         7BA1L,7BA1S,7BA1X,7BA20,7BA21      5
10/29/99          Dell                 G810 21" Monitor             292634888                    n/a                     1
11/04/99          Dell                 Dell PIII 500K GX1/T         296076011         815TD;815TJ;815TM;815TR;815TY      5
11/08/99          The Computer Guys    HP Laser Jet 4050N             11958                   USQC054318                 1
11/09/99          The Computer Guys    IOMEGA Zip 100MB External      11971                      n/a                     1
11/10/99          The Computer Guys    HP NetServer LH4r Xeon 500     11975                      n/a                     1
11/22/99          The Computer Guys    HP Laser Jet 5000N             12111                      n/a                     1
12/21/99          Dell                 Dell PIII 500K               313855363      BU1R6; BU1R8; BU1R9; BU1RB;BU1D1      5
12/23/99          Dell                 Dimension 500MHZ,PIII        314609751                                            1
12/23/99          Dell                 Dell 500PIII/M               314665654            CODIJ;CODIQ;CODIW;CODIZ         4
01/06/00          The Computer Guys    HP 18.2 Ultra 2 SCSI           12396                      n/a                     5
01/07/00          Dell                 Dell PIII GX1/T+Base W/4MB   319602017        CLHV3;CLHV5;CLFV7;CLHV8;CLHVA       5
01/17/00          Dell                 Dell 500PIII/M               322740937            CZUPL;CZUPP;CZUPS;CZUPV         4

INVOICE
DATE                    VENDOR                   DESCRIPTION                 INVOICE #      SERIAL NO.    QTY
-----------------      ------------------   -------------------------------   ----------------   -----------   ---

Computer Software

09/27/99             The MathWorks        Neural Network - Windows              99030491           n/a        3
10/12/99             The Computer Guys    Microsoft Project98                    11710             n/a        5
11710             n/a        2
11710             n/a        1
11/15/99             Rogue Wave           DBTools.h++Core Library for V          38386             n/a        1
38386             n/a        1
38386             n/a        1
38386             n/a        1
38386             n/a        1
38386             n/a        1
38386             n/a        1
38386             n/a        1
11/29/99             MathSoft             S-PLUS 2000 Professional for        82855-327270         n/a        2
12/28/99             InforMax, Inc.       Adv.Supp. Renewal for 2 Licer        4038 ASR            n/a        1
01/03/00             IDBS                 Activity Base - HTSProject             30200             n/a        1
01/04/00             The Computer Guys    Microsoft MOLP-A                       12379             n/a       25
12379             n/a       25
01/06/00             MDL Inform Systems,  Sculpt for windows 95/98/NT4          01.06.00       OCN00049069    1
[ILLEGIBLE]
01/10/00             MDL Inform Systems,  Sculpt for windows on CD              706917        OCN00554031    1
[ILLEGIBLE]
01/18/00             Applikon             Bioexpert Windows NT Softwa       00042/310550 n/a                  1

INVOICE
DATE                 VENDOR                   DESCRIPTION           INVOICE #                   SERIAL NO.                 QTY
----------      ----------------------   ---------------------------   ----------   ---------------------------------------   ---

EQUIPMENT

08/18/99      Composite Rotor          Centrifuge Sorval 6000rmp     0007224-IN   #7224,#7226
22794E2NTRC8,100000283,S01443,22794E2NT
08/28/99      PE Biosystems            Geneamp 5700 SEQ DET Syst       90451346   RC8
09/10/99      Beckman Coulter          Multimek 96,200UL             413325FT01
09/16/99      Hudson Control Group     Platecrane 200100                   6626   #11139-152
09/21/99      BMG Labtechnologies      POLARstar Galaxy                    1493   4030553
10/07/99      CCS Packard              Standard Deck Plate           04-10-1485
10/12/99      Microsource Discovery    Killer Plates                      94841
10/29/99      Hudson Control Group     Platecrane 200100                   6641   #11139-163
10/25/99      Linc-Quantum             HP-G1948A 1100 API                 71170   US08410901                                 1
10/30/99      Li-Cor                   Global IR2 DNA Sequencer            6202
11/05/99      Comdisco Laboratory      New Brunswick G27 Shaker           15779
11/12/99      Sanyo Sales & Supply     Incubator C02                 9813076-IN   90907519                                   1
[ILLEGIBLE]
11/17/99      MJ Research              PTC-2200                           65847   EN010448,EN010460
11/23/99      MJ Research              ALD-1244                           66140
12/13/99      CCS Packard              Platetrak PTS-120799-03.2     03-12-1713
12/15/99      VWR Scientific           Rotoraps                         2388195
12/16/99      VWR Scientific           Pump,Syring Sage Mod M362        2405107                                              1
12/30/99      Universal Imaging Corp   Barcode Kit                         7769   N781468, N895971                           2
01/02/00      Sigma-Aldrich            Lopap-Pharm (SC011-1 Kit)       92520726                                              1
01/03/00      VWR Scientific           Pump 115V                        2520170   KK081058                                   1
01/13/00      Universal Imaging Corp   HTS SU310                           7816
01/18/00      Bio-Rad                  Ultramark Reader 110-240V         176691
01/19/00      Marsh Biomedical         Plate Estate Storage System       245011   666/659/371                                1
01/27/00      Varian                   Prostar 210 SDM                  1251025

INVOICE
DATE             VENDOR                    DESCRIPTION            INVOICE #       SERIAL NO.      QTY
----------    -------------------   ------------------------------   ----------   ----------------   ---

FURNITURE

09/16/99    Corporate Interiors   Worksurface                         1262            n/a
09/23/99    Corporate Interiors   Regular Herman Shelf/H Herm         1317      A0520.1360, WR72
10/01/99    Corporate Interiors   67"Hx48"W Powered Panel          1296 (Rev)         n/a
10/01/99    Corporate Interiors   RA Stations                         1348            n/a
10/11/99    Corporate Interiors   BC Series Lab Stool w/Pneum         1339            n/a
[ILLEGIBLE]
10/20/99    Corporate Interiors   File Full Height Locking Pedes      1362            n/a
10/20/99    Corporate Interiors   Ergonomic Clickit Arm w/Plata       1350            n/a
[ILLEGIBLE]
10/20/99    Corporate Interiors   60"Herman Miller Tack Board         1340            n/a
10/21/99    Corporate Interiors   42"Four Drawer Locking              1331            n/a
01/03/00    Corporate Interiors   4'x30" Workstation                  1380            n/a

INVOICE
DATE                   VENDOR                       DESCRIPTION               INVOICE #   SERIAL NO.   QTY
------------------   -----------------------   ----------------------------------   ---------   ----------   ---

TENANT IMPROVEMENT

10/13/99           Sprig Electric            Install two 208V L(carat)NEMA circ     36273        n/a
[ILLEGIBLE]
10/13/99           Sprig Electric            Relocate power for equipment           36323        n/a
10/13/99           Sprig Electric            Install furniture whips & pull 2-      36374        n/a
[ILLEGIBLE]
10/13/99           Sprig Electric            Repair flourescent lights              36384        n/a
10/21/99           Sprig Electric            Replace high pressure fixtures         36429        n/a
01/12/00           Peninsula Security Svc    Radionics Readykey                     13815        n/a
[ILLEGIBLE]

Exhibit 4.8

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL)
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS.

WARRANT AGREEMENT

TO PURCHASE SHARES OF THE SERIES B PREFERRED STOCK OF

CYTOKINETICS, INC.

DATED AS OF DECEMBER 16, 1999 (THE "EFFECTIVE DATE")

WHEREAS, Cytokenetics, Inc., a Delaware corporation (the "Company") has
entered into a Loan And Security Agreement dated as of December 16,1999, and
related Promissory Note(s) (collectively, the "Loans") with Comdisco, Inc., a
Delaware corporation (the "Warrantholder"); and

WHEREAS, the Company desires to grant to Warrantholder, in
consideration for such Loans, the right to purchase shares of its Series B
Preferred Stock;

NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Loans and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:

1.       GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.

For the first $1,000,000 portion of the Loans, the Company hereby
grants to the Warrantholder, and the Warrantholder is entitled, upon the terms
and subject to the conditions hereinafter set forth, to subscribe to and
purchase, from the Company, 14,483 fully paid and non-assessable shares of the
Company's Series B Preferred Stock ("Preferred Stock") at a purchase price of
$2.90 per share (the "Exercise Price") provided however, that from and after the
effective date of the registration statement for the Company's initial public
offering of its equity securities, the securities purchasable by the
Warrantholder upon the exercise of this Warrant Agreement shall be shares of the
Company's Common Stock ("Common Stock") which shares shall be purchasable by the
Warrantholder in the same number that the Warrantholder would otherwise have
been entitled to purchase had this Warrant Agreement remained exercisable for
shares of the Company's Preferred Stock. From and after the effective date of
the registration statement for the Company's initial public offering of its
equity securities, the Warrantholder shall not have any further right pursuant
to this Warrant Agreement to purchase shares of the Company's Preferred Stock.
The shares of Preferred Stock or Common Stock that are issuable from time to
time upon the exercise of this Warrant Agreement are sometimes referred to
herein as the "Stock.

In the event that the Company requests and the Warrantholder funds any
portion of the additional Advances between the first $1,000,000 and up to
$2,000,000 as provided under the Loans, the Company hereby grants to the
Warrantholder, and the Warrantholder is entitled, upon the terms and subject to
the conditions hereinafter set forth, to subscribe for and purchase, from the
Company, 14,483 shares of Stock at the Exercise Price.

In the event that the Company requests and the Warrantholder funds any
portion of the additional Advances between the first $2,000,000 and up to
$5,000,000 as provided under the Loans, the Company hereby grants to the
Warrantholder, and the Warrantholder is entitled, upon the terms and subject to
the conditions hereinafter set forth, to subscribe for and purchase, from the
Company, 16,206 shares of Stock at the Exercise Price for each increment of
remaining $1,000,000 funded under the Loan.

For purposes of calculating the number of shares issuable hereunder,
after the first dollar of each $1,000,000 installment is funded, the applicable
number of shares referred to above shall be issuable. The number and purchase
price of such shares are subject to adjustment as provided in Section 8 hereof.

- 1 -

2.       TERM OF THE WARRANT AGREEMENT.

Except as otherwise provided for herein, the term of this Warrant
Agreement and the right to purchase Stock as granted herein shall commence on
the Effective Date and shall be exercisable for a period of (i) seven (7) years
or (ii) three (3) years from the effective date of the Company's initial public
offering, whichever is shorter.

3.       EXERCISE OF THE PURCHASE RIGHTS.

The purchase rights set forth in this Warrant Agreement are exercisable
by the Warrantholder, in whole or in part, at any time, or from time to time,
prior to the expiration of the term set forth in Section 2 above, by tendering
to the Company at its principal office a notice of exercise in the form attached
hereto as Exhibit I (the "Notice of Exercise"), duly completed and executed.
Promptly upon receipt of the Notice of Exercise and the payment of the purchase
price in accordance with the terms set forth below, and in no event later than
twenty-one (21) days thereafter, the Company shall issue to the Warrantholder a
certificate for the number of shares of Stock purchased and shall execute the
acknowledgment of exercise in the form attached hereto as Exhibit II (the
"Acknowledgment of Exercise") indicating the number of shares which remain
subject to future purchases, if any.

The Exercise Price may be paid at the Warrantholder's election either
(i) by cash or check, or (ii) by surrender of Warrants ("Net Issuance") as
determined below. If the Warrantholder elects the Net Issuance method, the
Company will issue Stock in accordance with the following formula:

X = Y(A-B)/A

Where: X = the number of shares of Stock to be issued to the
Warrantholder.

Y =  the number of shares of Stock requested to be exercised
under this Warrant Agreement.

A =  the fair market value of one (1) share of Stock.

B =  the Exercise Price.

For purposes of the above calculation, current fair market value of
Stock shall mean with respect to each share of Stock:

(i)      if the exercise is in connection with an initial
public offering of the Company's Common Stock, and if the Company's
Registration Statement relating to such public offering has been
declared effective by the SEC, then the fair market value per share
shall be the product of (x) the initial "Price to Public" specified in
the final prospectus with respect to the offering and (y) the number of
shares of Common Stock into which each share of Stock is convertible at
the time of such exercise;

(ii)     if this Warrant is exercised after, and not in
connection with the Company's initial public offering, and:

(a)      if traded on a securities exchange, the fair
market value shall be deemed to be the product of (x) the
average of the closing prices over a twenty-one (21) day
period ending three days before the day the current fair
market value of the securities is being determined and (y) the
number of shares of Common Stock into which each share of
Stock is convertible at the time of such exercise; or

(b)      if actively traded over-the-counter, the
fair market value shall be deemed to be the product of (x) the
average of the closing bid and asked prices quoted on the
NASDAQ system (or similar system) over the twenty-one (21) day
period ending three days before the day the current fair
market value of the securities is being determined and (y) the
number of shares of Common Stock into which each share of
Stock is convertible at the time of such exercise;

(iii)    if at any time the Common Stock is not listed on any
securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the current fair market value of Stock shall
be the product

- 2 -

of (x) the highest price per share which the Company could obtain from
a willing buyer (not a current employee or director) for shares of
Common Stock sold by the Company, from authorized but unissued shares,
as determined in good faith by its Board of Directors and (y) the
number of shares of Common Stock into which each shares of Stock is
convertible at the time of such exercise unless the Company shall
become subject to a merger, acquisition or other consolidation pursuant
to which the Company is not the surviving party, in which case the fair
market value of Stock shall be deemed to be the value received by the
holders of the Company's Stock on a common equivalent basis pursuant to
such merger or acquisition.

Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof.

4.       RESERVATION OF SHARES.

(a)      Authorization and Reservation of Shares. During the term of
this Warrant Agreement, the Company will at all times have authorized and
reserved a sufficient number of shares of its Stock to provide for the exercise
of the rights to purchase Stock as provided for herein.

(b)      Registration or Listing. If any shares of Stock required to be
reserved hereunder require registration with or approval of any governmental
authority under any Federal or State law (other than any registration under the
Securities Act of 1933, as amended ("1933 Act"), as then in effect, or any
similar Federal statute then enforced, or any state securities law, required by
reason of any transfer involved in such conversion), or listing on any domestic
securities exchange, before such shares may be issued upon conversion, the
Company will, at its expense and as expeditiously as possible, use its best
efforts to cause such shares to be duly registered, listed or approved for
listing on such domestic securities exchange, as the case may be.

5.       NO FRACTIONAL SHARES OR SCRIP.

No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.

6.       NO RIGHTS AS SHAREHOLDER.

This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.

7.       WARRANTHOLDER REGISTRY.

The Company shall maintain a registry showing the name and address of
the registered holder of this Warrant Agreement.

8.       ADJUSTMENT RIGHTS.

The purchase price per share and the number of shares of Stock
purchasable hereunder are subject to adjustment, as follows:

(a)      Merger and Sale of Assets. If at any time there shall be a
capital reorganization of the shares of the Company's stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or into
another corporation whether or not the Company is the surviving corporation, or
the sale of all or substantially all of the Company's properties and assets to
any other person (hereinafter referred to as a "Merger Event"), then, as a part
of such Merger Event, lawful provision shall be made so that the Warrantholder
shall thereafter be entitled to receive, upon exercise of the Warrant, the
number of shares of preferred stock or other securities of the successor
corporation resulting from such Merger Event, equivalent in value to that which
would have been issuable if Warrantholder had exercised this Warrant immediately
prior to the Merger Event. In any such case, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant Agreement with respect to the
rights and interest of the Warrantholder after the Merger Event to the end that
the provisions of this

- 3 -

Warrant Agreement (including adjustments of the Exercise Price and number of
shares of Preferred Stock purchasable) shall be applicable to the greatest
extent possible.

(b)      Reclassification of Shares. If the Company at any time shall,
by combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights under this Warrant Agreement immediately prior to such
combination, reclassification, exchange, subdivision or other change.

(c)      Subdivision or Combination of Shares. If the Company at any
time shall combine or subdivide its Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.

(d)      Stock Dividends. If the Company at any time shall pay a
dividend payable in, or make any other distribution (except any distribution
specifically provided for in the foregoing subsections (a) or (b)) of the
Company's stock, then the Exercise Price shall be adjusted, from and after the
record date of such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction (i) the numerator of which shall be the total number of all shares
of the Company's stock outstanding immediately prior to such dividend or
distribution, and (ii) the denominator of which shall be the total number of all
shares of the Company's stock outstanding immediately after such dividend or
distribution. The Warrantholder shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares of Stock
(calculated to the nearest whole share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Stock issuable upon the exercise hereof immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.

(e)      Antidilution Rights. Additional antidilution rights applicable
to the Preferred Stock purchasable hereunder are as set forth in the Company's
Certificate of Incorporation, as amended through the Effective Date, a true and
complete copy of which is attached hereto as Exhibit _ (the "Charter"). The
Company shall promptly provide the Warrantholder with any restatement,
amendment, modification or waiver of the Charter. The Company shall provide
Warrantholder with prior written notice of any issuance of its stock or other
equity security to occur after the Effective Date of this Warrant, which notice
shall include (a) the price at which such stock or security is to be sold, (b)
the number of shares to be issued, and (c) such other information as necessary
for Warrantholder to determine if a dilutive event has occurred.

(f)      Notice of Adjustments. If: (i) the Company shall declare any
dividend or distribution upon its stock, whether in cash, property, stock or
other securities; (ii) the Company shall offer for subscription prorata to the
holders of any class of its Preferred or other convertible stock any additional
shares of stock of any class or other rights; (iii) there shall be any Merger
Event; (iv) there shall be an initial public offering; or (v) there shall be any
voluntary dissolution, liquidation or winding up of the Company; then, in
connection with each such event, the Company shall send to the Warrantholder:
(A) at least twenty (20) days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the holders of
Stock shall be entitled thereto) or for determining rights to vote in respect of
such Merger Event, dissolution, liquidation or winding up; (B) in the case of
any such Merger Event, dissolution, liquidation or winding up, at least twenty
(20) days' prior written notice of the date when the same shall take place (and
specifying the date on which the holders of Stock shall be entitled to exchange
their Stock for securities or other property deliverable upon such Merger Event,
dissolution, liquidation or winding up); and (C) in the case of a public
offering, the Company shall give the Warrantholder at least twenty (20) days
written notice prior to the effective date thereof.

Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.

(g)      Timely Notice. Failure to timely provide such notice required
by subsection (f) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained

- 4 -

in any insufficient notice received by Warrantholder. The notice period shall
begin on the date Warrantholder actually receives a written notice containing
all the information specified above.

9.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.

(a)      Reservation of Stock. The Stock issuable upon exercise of the
Warrantholder's rights has been duly and validly reserved and, when issued in
accordance with the provisions of this Warrant Agreement, will be validly
issued, fully paid and non-assessable, and will be free of any taxes, liens,
charges or encumbrances of any nature whatsoever; provided, however, that the
Stock issuable pursuant to this Warrant Agreement may be subject to restrictions
on transfer under state and/or Federal securities laws. The Company has made
available to the Warrantholder true, correct and complete copies of its Charter
and Bylaws, as amended. The issuance of certificates for shares of Stock upon
exercise of the Warrant Agreement shall be made without charge to the
Warrantholder for any issuance tax in respect thereof, or other cost incurred by
the Company in connection with such exercise and the related issuance of shares
of Stock. The Company shall not be required to pay any tax which may be payable
in respect of any transfer involved and the issuance and delivery of any
certificate in a name other than that of the Warrantholder.

(b)      Due Authority. The execution and delivery by the Company of
this Warrant Agreement and the performance of ail obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Stock, have been duly authorized by all necessary corporate action on
the part of the Company, and the Loans and this Warrant Agreement are not
inconsistent with the Company's Charter or Bylaws, do not contravene any law or
governmental rule, regulation or order applicable to it, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound, and the Loans and this Warrant Agreement constitute legal, valid and
binding agreements of the Company, enforceable in accordance with their
respective terms.

(c)      Consents and Approvals. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, Federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant Agreement, except for the filing of notices
pursuant to Regulation D under the 1933 Act and any filing required by
applicable state securities law, which filings will be effective by the time
required thereby.

(d)      Issued Securities. All issued and outstanding shares of Common
Stock, Preferred Stock or any other securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. All
outstanding shares of Common Stock, Preferred Stock and any other securities
were issued in full compliance with all Federal and state securities laws. In
addition:

(i)      The authorized capital of the Company consists of (A)
10,000,000 shares of Common Stock, of which 1,126,110 shares are issued
and outstanding, and (B) 5,550,000 shares of preferred stock, of which
5,300,000 shares are issued and outstanding and are convertible into
5,550,000 shares of Common Stock at $1.00 per share.

(ii)     The Company has reserved (A) 2,000,000 shares of
Common Stock for issuance under its under its 1997 Stock Option/Stock
Issuance Plan under which 1,503,890 options have been granted. There
are no other options, warrants, conversion privileges or other rights
presently outstanding to purchase or otherwise acquire any authorized
but unissued shares of the Company's capital stock or other securities
of the Company.

(iii)    In accordance with the Company's Articles of
Incorporation, no shareholder of the Company has preemptive rights to
purchase new issuances of the Company's capital stock.

(e)      Insurance. The Company has in full force and effect insurance
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.

(f)      Exempt Transaction. Subject to the accuracy of the
Warrantholder's representations in Section 10 hereof, the issuance of the Stock
upon exercise of this Warrant will constitute a transaction exempt from (i) the

- 5 -

registration requirements of Section 5 of the 1933 Act, in reliance upon Section
4(2) thereof, and (ii) the qualification requirements of the applicable state
securities laws.

(g)      Compliance with Rule 144. At the written request of the
Warrantholder, who proposes to sell Stock issuable upon the exercise of the
Warrant in compliance with Rule 144 promulgated by the Securities and Exchange
Commission, the Company shall furnish to the Warrantholder, within ten days
after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the Securities and Exchange
Commission as set forth in such Rule, as such Rule may be amended from time to
time.

10.      REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.

This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:

(a)      Investment Purpose. The right to acquire Stock issuable upon
exercise of the Warrantholder's rights contained herein will be acquired for
investment and not with a view to the sale or distribution of any part thereof,
and the Warrantholder has no present intention of selling or engaging in any
public distribution of the same except pursuant to a registration or exemption.

(b)      Private Issue. The Warrantholder understands (i) that the
Stock issuable upon exercise of this Warrant is not registered under the 1933
Act or qualified under applicable state securities laws on the ground that the
issuance contemplated by this Warrant Agreement will be exempt from the
registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 10.

(c)      Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of any of its rights to acquire Stock issuable
upon exercise of such rights unless and until (i) it shall have notified the
Company of the proposed disposition, and (ii) if requested by the Company, it
shall have furnished the Company with an opinion of counsel (which counsel may
either be inside or outside counsel to the Warrantholder) satisfactory to the
Company and its counsel to the effect that (A) appropriate action necessary for
compliance with the 1933 Act has been taken, or (B) an exemption from the
registration requirements of the 1933 Act is available. Notwithstanding the
foregoing, the restrictions imposed upon the transferability of any of its
rights to acquire Stock issuable on the exercise of such rights do not apply to
transfers from the beneficial owner of any of the aforementioned securities to
its nominee or from such nominee to its beneficial owner, and shall terminate as
to any particular share of Stock when (1) such security shall have been
effectively registered under the 1933 Act and sold by the holder thereof in
accordance with such registration or (2) such security shall have been sold
without registration in compliance with Rule 144 under the 1933 Act, or (3) a
letter shall have been issued to the Warrantholder at its request by the staff
of the Securities and Exchange Commission or a ruling shall have been issued to
the Warrantholder at its request by such Commission stating that no action shall
be recommended by such staff or taken by such Commission, as the case may be, if
such security is transferred without registration under the 1933 Act in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, the Warrantholder or holder of a share of Stock then
outstanding as to which such restrictions have terminated shall be entitled to
receive from the Company, without expense to such holder, one or more new
certificates for the Warrant or for such shares of Stock not bearing any
restrictive legend.

(d)      Financial Risk. The Warrantholder has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment, and has the ability to bear the economic
risks of its investment.

(e)      Risk of No Registration. The Warrantholder understands that if
the Company does not register with the Securities and Exchange Commission
pursuant to Section 12 of the 1934 Act (the "1934 Act"), or file reports
pursuant to Section 15(d), of the 1934 Act", or if a registration statement
covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the rights to purchase Stock pursuant to this Warrant Agreement, or
(ii) the Stock issuable upon exercise of the right to purchase, it may be
required to hold such securities for an indefinite period. The Warrantholder
also understands that any sale of its rights of the Warrantholder to purchase
Stock which might be made by it in reliance upon Rule 144 under the 1933 Act may
be made only in accordance with the terms and conditions of that Rule.

- 6 -

(f)      Accredited Investor. Warrantholder is an "accredited investor"
within the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.

11.      TRANSFERS.

Subject to the terms and conditions contained in Section 10 hereof,
this Warrant Agreement and all rights hereunder are transferable in whole or in
part by the Warrantholder and any successor transferee, provided, however, in no
event shall the number of transfers of the rights and interests in all of the
Warrants exceed three (3) transfers. The transfer shall be recorded on the books
of the Company upon receipt by the Company of a notice of transfer in the form
attached hereto as Exhibit III (the "Transfer Notice"), at its principal offices
and the payment to the Company of all transfer taxes and other governmental
charges imposed on such transfer.

12.      MISCELLANEOUS.

(a)      Effective Date. The provisions of this Warrant Agreement shall
be construed and shall be given effect in all respects as if it had been
executed and delivered by the Company on the date hereof. This Warrant Agreement
shall be binding upon any successors or assigns of the Company.

(b)      Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the Warrantholder relating hereto, the
prevailing party shall be entitled to attorneys' fees and expenses and all costs
of proceedings incurred in enforcing this Warrant Agreement.

(c)      Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State of
Illinois.

(d)      Counterparts. This Warrant Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

(e)      Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery,
facsimile transmission (provided that the original is sent by personal delivery
or mail as hereinafter set forth) or seven (7) days after deposit in the United
States mail, by registered or certified mail, addressed (i) to the Warrantholder
at 6111 North River Road, Rosemont, Illinois 60018, attention: Venture Lease
Administration, cc: Legal Department, attn.: General Counsel, (and/or, if by
facsimile, (847) 518-5465 and (847)518-5088 and (ii) to the Company at 280 East
Grand Avenue, Suite 2, South San Francisco, CA 94080, attention: President
(and/or if by facsimile, (650) 624-3010 or at such other address as any such
party may subsequently designate by written notice to the other party.

(f)      Remedies. In the event of any default hereunder, the
non-defaulting party may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, including but not limited to an action
for damages as a result of any such default, and/or an action for specific
performance for any default where Warrantholder will not have an adequate remedy
at law and where damages will not be readily ascertainable. The Company
expressly agrees that it shall not oppose an application by the Warrantholder or
any other person entitled to the benefit of this Agreement requiring specific
performance of any or all provisions hereof or enjoining the Company from
continuing to commit any such breach of this Agreement.

(g)      No Impairment of Rights. The Company will not, by amendment of
its Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.

(h)      Survival. The representations, warranties, covenants and
conditions of the respective parties contained herein or made pursuant to this
Warrant Agreement shall survive the execution and delivery of this Warrant
Agreement.

(i)      Severability. In the event any one or more of the provisions
of this Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.

- 7 -

(j)      Amendments. Any provision of this Warrant Agreement may be
amended by a written instrument signed by the Company and by the Warrantholder.

IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized as of the
Effective Date.

COMPANY: CYTOKENETICS, INC.

By: /s/ JAMES SABRY
---------------------------

Title:_________________________

WARRANTHOLDER: COMDISCO, INC,

By: /s/ JILL C. HANSES
---------------------------

Title: SENIOR VICE PRESIDENT

- 8 -

EXHIBIT I

NOTICE OF EXERCISE

TO:      _________________________

(1)      The undersigned Warrantholder hereby elects to purchase. ______shares
of the Series A Preferred Stock of _______, pursuant to the terms of
the Warrant Agreement dated the ________ day of _______, 19__ (the
"Warrant Agreement") between _______ and the Warrantholder, and tenders
herewith payment of the purchase price for such shares in full,
together with all applicable transfer taxes, if any.

(2)      In exercising its rights to purchase the Series A Preferred Stock of
____, the undersigned hereby confirms and acknowledges the investment
representations and warranties made in Section 10 of the Warrant
Agreement.

(3)      Please issue a certificate or certificates representing said shares of
Series A Preferred Stock in the name of the undersigned or in such
other name as is specified below.

___________________________________
(Name)

___________________________________
(Address)

WARRANTHOLDER: COMDISCO, INC.

By:    _____________________________

Title: _____________________________

Date:  _____________________________

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EXHIBIT II

ACKNOWLEDGMENT OF EXERCISE

The undersigned ___________, hereby acknowledge receipt of the "Notice
of Exercise" from Comdisco, Inc., to purchase _____ shares of the Series A
Preferred Stock of __________ pursuant to the terms of the Warrant Agreement,
and further acknowledges that ______ shares remain subject to purchase under the
terms of the Warrant Agreement.

COMPANY:

By: _____________________________

Title: __________________________

Date: ___________________________

- 10 -

EXHIBIT III

TRANSFER NOTICE

(TO TRANSFER OR ASSIGN THE FOREGOING WARRANT AGREEMENT EXECUTE THIS FORM AND
SUPPLY REQUIRED INFORMATION. DO NOT USE THIS FORM TO PURCHASE SHARES.)

FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to

__________________________________________________
(Please Print)

whose address is__________________________________

__________________________________________________

Dated: ___________________

Holder's Signature: ______

Holder's Address:   ______

____________________________

Signature Guaranteed: ____________________________

NOTE:    The signature to this Transfer Notice must correspond with the name as
it appears on the face of the Warrant Agreement, without alteration or
enlargement or any change whatever. Officers of corporations and those
acting in a fiduciary or other representative capacity should file
proper evidence of authority to assign the foregoing Warrant Agreement.

- 11 -

Exhibit 4.9

MASTER SECURITY AGREEMENT
dated as of FEBRUARY 2, 2001 ("AGREEMENT")

THIS AGREEMENT is between GENERAL ELECTRIC CAPITAL CORPORATION
(together with its successors and assigns, if any, "SECURED PARTY") and
CYTOKINETICS, INCORPORATED ("DEBTOR"). Secured Party has an office at 401
Merritt 7 2nd Floor, Norwalk, CT 06856. Debtor is a corporation organized and
existing under the laws of the state of Delaware. Debtor's mailing address and
chief place of business is 280 East Grand Avenue, Suite 2, South San Francisco,
CA 9408O.

1.       CREATION OF SECURITY INTEREST.

Debtor grants to Secured Party, its successors and assigns, a security
interest in and against all property listed on any collateral schedule now or in
the future annexed to or made a part of this Agreement ( "COLLATERAL SCHEDULE"),
and in and against all additions, attachments, accessories and accessions to
such property, all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof (all such property is individually and
collectively called the "COLLATERAL"). This security interest is given to secure
the payment and performance of all debts, obligations and liabilities of any
kind whatsoever of Debtor to Secured Party, now existing or arising in the
future, including but not limited to the payment and performance of certain
Promissory Notes from time to time identified on any Collateral Schedule
(collectively "NOTES" and each a "NOTE"), and any renewals, extensions and
modifications of such debts, obligations and liabilities (such Notes, debts,
obligations and liabilities are called the "INDEBTEDNESS"). Notwithstanding
anything to the contrary contained in this Agreement, to the extent that Secured
Party asserts a purchase money security interest in any items of Collateral (
"PMSI COLLATERAL"): (i) the PMSI COLLATERAL shall secure only that portion of
the Indebtedness which has been advanced by Secured Party to enable Debtor to
purchase, or acquire rights in or the use of such PMSI Collateral (the "PMSI
INDEBTEDNESS"), and (ii) no other Collateral shall secure the PMSI Indebtedness.

2.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

Debtor represents, warrants and covenants as of the date of this
Agreement and as of the date of each Collateral Schedule that:

(a) Debtor is, and will remain, duly organized, existing and in good
standing under the laws of the State set forth in the preamble of this
Agreement, has its chief executive offices at the location specified in the
preamble, and is, and will remain, duly qualified and licensed in every
jurisdiction wherever necessary to carry on its business and operations;

(b) Debtor has adequate power and capacity to enter into, and to
perform its obligations under this Agreement, each Note and any other documents
evidencing, or given in connection with, any of the Indebtedness (all of the
foregoing are called the "DEBT DOCUMENTS");

(c) This Agreement and the other Debt Documents have been duly
authorized, executed and delivered by Debtor and constitute legal, valid and
binding agreements enforceable in accordance with their terms, except to the
extent that the enforcement of remedies may be limited under applicable
bankruptcy and insolvency laws;

(d) No approval, consent or withholding of objections is required from
any governmental authority or instrumentality with respect to the entry into, or
performance by Debtor of any of the Debt Documents, except any already obtained;

(e) The entry into, and performance by, Debtor of the Debt Documents
will not (i) violate any of the organizational documents of Debtor or any
judgment, order, law or regulation applicable to Debtor, or (ii) result in any
breach of or constitute a default under any contract to which Debtor is a party,
or result in the creation of any lien, claim or encumbrance on any of Debtor's
property (except for liens in favor of Secured Party) pursuant to any indenture,
mortgage, deed of trust, bank loan, credit agreement, or other agreement or
instrument to which Debtor is a party;

(f) There are no suits or proceedings pending in court or before any
commission, board or other administrative agency against or affecting Debtor
which could, in the aggregate, have a material adverse effect on Debtor, its
business or operations, or its ability to perform its obligations under the Debt
Documents, nor does Debtor have reason to believe that any such suits or
proceedings are threatened;

(g) All financial statements delivered to Secured Party in connection
with the Indebtedness have been prepared in accordance with generally accepted
accounting principles, and since the date of the most recent financial
statement, there has been no material adverse change in Debtors financial
condition;

(h) The Collateral is not, and will not be, used by Debtor for
personal, family or household purposes;

(i) The Collateral is, and will remain, in good condition and repair
and Debtor will not be negligent in its care and use;

(j) Debtor is, and will remain, the sole and lawful owner, and in
possession of the Collateral, and has the sole right and lawful authority to
grant the security interest described in this Agreement; and

(k) The Collateral is, and will remain, free and clear of all liens,
claims and encumbrances of any kind whatsoever, except for (i) liens in favor of
Secured Party, (ii) liens for taxes not yet due or for taxes being contested in
good faith and which do not involve, in the judgment of Secured Party, any risk
of the sale, forfeiture or loss of any of the Collateral, and (iii) inchoate
materialmen's, mechanic's, repairmen's and similar liens arising by operation of
law in the normal course of business for amounts which are not delinquent (all
of such liens are called "PERMITTED LIENS").

3.       COLLATERAL.

(a) Until the declaration of any default, Debtor shall remain in
possession of the Collateral; except that Secured Party shall have the right to
possess (i) any chattel paper or instrument that constitutes a part of the
Collateral, and (ii) any other Collateral in which Secured Party's security
interest may be perfected only by possession. Secured Party may inspect any of
the Collateral during normal business hours after giving Debtor reasonable prior
notice. If Secured Party asks, Debtor will promptly notify Secured Party in
writing of the location of any Collateral.

(b) Debtor shall (i) use the Collateral only in its trade or business,
(ii) maintain all of the Collateral in good operating order and repair, normal
wear and tear excepted, (iii) use and maintain the Collateral only in compliance
with manufacturers recommendations and all applicable laws, and (iv) keep all of
the Collateral free and clear of all liens, claims and encumbrances (except for
Permitted Liens).

(c) Debtor shall not, without the prior written consent of Secured
Party, (i) part with possession of any of the Collateral (except to Secured
Party or for maintenance and repair), (ii) remove any of the Collateral from the
continental United States, or (iii) sell, rent, lease, mortgage, grant a
security interest in or otherwise transfer or encumber (except for Permitted
Liens) any of the Collateral.

(d) Debtor shall pay promptly when due all taxes, license fees,
assessments and public and private charges levied or assessed on any of the
Collateral, on its use, or on this Agreement or any of the other Debt Documents.
At its option, Secured Party may discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on the Collateral and may pay
for the maintenance, insurance and preservation of the Collateral and effect
compliance with the terms of this Agreement or any of the other Debt Documents.
Debtor agrees to reimburse Secured Party, on demand, all costs and expenses
incurred by Secured Party in connection with such payment or performance and
agrees that such reimbursement obligation shall constitute Indebtedness.

(e) Debtor shall, at all times, keep accurate and complete records of
the Collateral, and Secured Party shall have the right to inspect and make
copies of all of Debtor's books and records relating to the Collateral during
normal business hours, after giving Debtor reasonable prior notice.

(f) Debtor agrees and acknowledges that any third person who may at any
time possess all or any portion of the Collateral shall be deemed to hold, and
shall hold, the Collateral as the agent of, and as pledge holder for, Secured
Parry. Secured Party may at any time give notice to any third person described
in the preceding sentence that such third person is holding the Collateral as
the agent of, and as pledge holder for, the Secured Party.

4.       INSURANCE.

(a) Debtor shall at all times bear the entire risk of any loss, theft,
damage to, or destruction of, any of the Collateral from any cause whatsoever.

(b) Debtor agrees to keep the Collateral insured against loss or damage
by fire and extended coverage perils, theft, burglary, and for any or all
Collateral which are vehicles, for risk of loss by collision, and if requested
by Secured Party, against such other risks as Secured Party may reasonably
require. The insurance coverage shall be in an amount no less than the full
replacement value of the Collateral, and deductible amounts, insurers and
policies shall be acceptable to Secured Party. Debtor shall deliver to Secured
Party policies or certificates of insurance evidencing such coverage. Each
policy shall name Secured Party as a loss payee, shall provide for coverage to
Secured Party regardless of the breach by Debtor of any warranty or
representation made therein, shall not be subject to co-insurance, and shall
provide that coverage may not be canceled or altered by the insurer except upon
thirty (30) days prior written notice to Secured Party. Debtor appoints Secured
Party as its attorney-in-fact to make proof of loss, claim for insurance and
adjustments with insurers, and to receive payment of and execute or endorse all
documents, checks or drafts in connection with insurance payments. Secured Party
shall not act as Debtors attorney-in-fact unless Debtor is in default. Proceeds
of insurance shall be applied, at the option of Secured Party, to repair or
replace the Collateral or to reduce any of the Indebtedness.

5.       REPORTS.

(a) Debtor shall promptly notify Secured Party of (i) any change in the
name of Debtor, (ii) any relocation of its chief executive offices, (iii) any
relocation of any of the Collateral, (iv) any of the Collateral being lost,
stolen, missing, destroyed, materially damaged or worn out, or (v) any lien,
claim or encumbrance other than Permitted Liens attaching to or being made
against any of the Collateral.

(b) Debtor will deliver to Secured Party Debtors complete financial
statements, certified by a recognized firm of certified public accountants,
within ninety (90) days of the close of each fiscal year of Debtor. If Secured
Party requests, Debtor will deliver to Secured Party copies of Debtors quarterly
financial reports certified by Debtors chief financial officer, within ninety
(90) days after the close of each of Debtors fiscal quarter. Debtor will deliver
to Secured Party copies of all Forms 10-K and 10-Q, if any, within 30 days after
the dates on which they are filed with the Securities and Exchange Commission.

6.       FURTHER ASSURANCES.

(a) Debtor shall, upon request of Secured Party, furnish to Secured
Party such further information, execute and deliver to Secured Party such
documents and instruments (including, without limitation, Uniform Commercial
Code financing statements) and shall do such other acts and things as Secured
Party may at any time reasonably request relating to the perfection or
protection of the security interest created by this Agreement or for the purpose
of carrying out the intent of this Agreement. Without limiting the foregoing,
Debtor shall cooperate and do all acts deemed necessary or advisable by Secured
Party to continue in Secured Party a perfected first security interest in the
Collateral, and shall obtain and furnish to Secured Party any subordinations,
releases, landlord, lessor, or mortgagee waivers, and similar documents as may
be from time to time requested by, and in form and substance satisfactory to,
Secured Party.

(b) Debtor irrevocably grants to Secured Party the power to sign
Debtor's name and generally to act on behalf of Debtor to execute and file
applications for title, transfers of title, financing statements, notices of
lien and other documents pertaining to any or all of the Collateral; this power
is coupled with Secured Party's interest in the Collateral. Debtor shall, if any
certificate of title be required or permitted by law for any of the Collateral,
obtain and promptly deliver to Secured Party such certificate showing the lien
of this Agreement with respect to the Collateral.

(c) Debtor shall indemnify and defend the Secured Party, its successors
and assigns, and their respective directors, officers and employees, from and
against all claims, actions and suits (including, without limitation, related
attorneys' fees) of any kind whatsoever arising, directly or indirectly, in
connection with any of the Collateral.

7.       DEFAULT AND REMEDIES.

(a) Debtor shall be in default under this Agreement and each of the
other Debt Documents if:

(i) Debtor breaches its obligation to pay when due any
installment or other amount due or coming due under any of the Debt Documents

(ii) Debtor, without the prior written consent of Secured
Party, attempts to or does sell, rent, lease, mortgage, grant a security
interest in, or

otherwise transfer or encumber (except for Permitted Liens) any of the
Collateral;

(iii) Debtor breaches any of its insurance obligations under
Section 4;

(iv) Debtor breaches any of its other obligations under any of
the Debt Documents and fails to cure that breach within thirty (30) days after
written notice from Secured Party;

(v) Any warranty, representation or statement made by Debtor
in any of the Debt Documents or otherwise in connection with any of the
Indebtedness shall be false or misleading in any material respect;

(vi) Any of the Collateral is subjected to attachment,
execution, levy, seizure or confiscation in any legal proceeding or otherwise,
or if any legal or administrative proceeding is commenced against Debtor or any
of the Collateral, which in the good faith judgment of Secured Party subjects
any of the Collateral to a material risk of attachment, execution, levy, seizure
or confiscation and no bond is posted or protective order obtained to negate
such risk;

(vii) Debtor breaches or is in default under any other
agreement between Debtor and Secured Party;

(viii) Debtor or any guarantor or other obligor for any of the
Indebtedness (collectively "GUARANTOR") dissolves, terminates its existence,
becomes insolvent or ceases to do business as a going concern;

(ix) If Debtor or any Guarantor is a natural person, Debtor or
any such Guarantor dies or becomes incompetent;

(x) A receiver is appointed for all or of any part of the
property of Debtor or any Guarantor, or Debtor or any Guarantor makes any
assignment for the benefit of creditors; or

(xi) Debtor or any Guarantor files a petition under any
bankruptcy, insolvency or similar law, or any such petition is filed against
Debtor or any Guarantor and is not dismissed within forty-five (45) days

(b) If Debtor is in default, the Secured Party, at its option, may
declare any or all of the Indebtedness to be immediately due and payable,
without demand or notice to Debtor or any Guarantor. The accelerated obligations
and liabilities shall bear interest (both before and after any judgment) until
paid in full at the lower of eighteen percent (18%) per annum or the maximum
rate not prohibited by applicable law.

(c) After default, Secured Party shall have all of the rights and
remedies of a Secured Party under the Uniform Commercial Code, and under any
other applicable law. Without limiting the foregoing, Secured Party shall have
the right to (i) notify any account debtor of Debtor or any obligor on any
instrument which constitutes part of the Collateral to make payment to the
Secured Party, (ii) with or without legal process, enter any premises where the
Collateral may be and take possession of and remove the Collateral from the
premises or store it on the premises, (iii) sell the Collateral at public or
private sale, in whole or in part, and have the right to bid and purchase at
said sale, or (iv) lease or otherwise dispose of all or part of the Collateral,
applying proceeds from such disposition to the obligations then in default. If
requested by Secured Party, Debtor shall promptly assemble the Collateral and
make it available to Secured Party at a place to be designated by Secured Party
which is reasonably convenient to both parties. Secured Party may also render
any or all of the Collateral unusable at the Debtor's premises and may dispose
of such Collateral on such premises without liability for rent or costs. Any
notice that Secured Party is required to give to Debtor under the Uniform
Commercial Code of the time and place of any public sale or the time after which
any private sale or other intended disposition of the Collateral is to be made
shall be deemed to constitute reasonable notice if such notice is given to the
last known address of Debtor at least five (5) days prior to such action,

(d) Proceeds from any sale or lease or other disposition shall be
applied: first, to all costs of repossession, storage, and disposition including
without limitation attorneys', appraisers', and auctioneers' fees; second, to
discharge the obligations then in default; third, to discharge any other
Indebtedness of Debtor to Secured Party, whether as obligor, endorser,
guarantor, surety or indemnitor; fourth, to expenses incurred in paying or
settling liens and claims against the Collateral; and lastly, to Debtor, if
there exists any surplus. Debtor shall remain fully liable for any deficiency.

(e) Debtor agrees to pay all reasonable attorneys' fees and other costs
incurred by Secured Part)' in connection with the enforcement, assertion,
defense or preservation of Secured Party's rights and remedies under this
Agreement, or if prohibited by law, such lesser sum as may be permitted. Debtor
further agrees that such fees and costs shall constitute Indebtedness.

(f) Secured Party's rights and remedies under this Agreement or
otherwise arising are cumulative and may be exercised singularly or
concurrently. Neither the failure nor any delay on the part of the Secured Party
to exercise any right, power or privilege under this Agreement shall operate as
a waiver, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise of that or any other right,
power or privilege. SECURED PARTY SHALL NOT BE DEEMED TO HAVE WAIVED ANY OF ITS
RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT OR PAPER
SIGNED BY DEBTOR UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY
SECURED PARTY. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion.

(g) DEBTOR AND SECURED PARTY UNCONDITIONALLY WAIVE THEIR RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED
HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY RELATING TO THE SUBJECT
MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP
THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER
DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

8.       MISCELLANEOUS.

(a) This Agreement, any Note and/or any of the other Debt Documents may
be assigned, in whole or in part, by Secured Party without notice to Debtor, and
Debtor agrees not to assert against any such assignee, or assignee's assigns,
any defense, set-off, recoupment claim or counterclaim which Debtor has or may
at any time have against Secured Party for any reason whatsoever. Debtor agrees
that if Debtor receives written notice of an assignment from Secured Party,
Debtor will pay all amounts payable under any assigned Debt Documents to such
assignee or as instructed by Secured Party. Debtor also agrees to

confirm in writing receipt of the notice of assignment as may be reasonably
requested by assignee.

(b) All notices to be given in connection with this Agreement shall be
in writing, shall be addressed to the parties at their respective addresses set
forth in this Agreement (unless and until a different address may be specified
in a written notice to the other party), and shall be deemed given (i) on the
date of receipt if delivered in hand or by facsimile transmission, (ii) on the
next business day after being sent by express mail, and (iii) on the fourth
business day after being sent by regular, registered or certified mail. As used
herein, the term "business day" shall mean and include any day other than
Saturdays, Sundays, or other days on which commercial banks in New York, New
York are required or authorized to be closed.

(c) Secured Party may correct patent errors and fill in all blanks in
this Agreement or in any Collateral Schedule consistent with the agreement of
the parties.

(d) Time is of the essence of this Agreement. This Agreement shall be
binding, jointly and severally, upon all parties described as the "Debtor" and
their respective heirs, executors, representatives, successors and assigns, and
shall inure to the benefit of Secured Party, its successors and assigns.

(e) This Agreement and its Collateral Schedules constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior understandings (whether written, verbal or
implied) with respect to such subject matter. THIS AGREEMENT AND ITS COLLATERAL
SCHEDULES SHALL NOT BE CHANGED OR TERMINATED ORALLY OR BY COURSE OF CONDUCT, BUT
ONLY BY A WRITING SIGNED BY BOTH PARTIES. Section headings contained in this
Agreement have been included for convenience only, and shall not affect the
construction or interpretation of this Agreement.

(f) This Agreement shall continue in full force and effect until all of
the Indebtedness has been indefeasibly paid in full to Secured Party. The
surrender, upon payment or otherwise, of any Note or any of the other documents
evidencing any of the Indebtedness shall not affect the right of Secured Party
to retain the Collateral for such other Indebtedness as may then exist or as it
may be reasonably contemplated will exist in the future. This Agreement shall
automatically be reinstated if Secured Party is ever required to return or
restore the payment of all or any portion of the Indebtedness (all as though
such payment had never been made).

(g) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF CONNECTICUT (WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT.

IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally
bound hereby, have duly executed this Agreement in one or more counterparts,
each of which shall be deemed to be an original, as of the day and year first
aforesaid.

SECURED PARTY:                             DEBTOR:

GENERAL ELECTRIC CAPITAL CORPORATION       CYTOKINETICS, INCORPORATED

By: ________________________________       By: /s/ James Sabry
---------------------------------

Name: THOMAS ANNINO                        Name: 

Title: _____________________________       Title: _____________________________

GECC:

By: /s/ John Edel
----------------------------------

Name: John Edel
--------------------------------

Title: SVP
-------------------------------

EXHIBIT 4.10

CROSS-COLLATERAL AND CROSS-DEFAULT AGREEMENT

General Electric Capital Corporation
401 Merritt 72nd Floor
Norwalk, CT 06856

Gentlemen:

You (and/or your successors or assigns, "you") have entered into or
purchased one or more conditional sale contracts, lease agreements, chattel
mortgages, security agreements, notes and other choses in action (herein
designated "Accounts") arising from the bona fide sale or lease to us, by
various vendors or lessors, of equipment and inventory (herein designated
"Collateral") and/or you have made direct loans to or otherwise extended credit
to us evidenced by Accounts creating security interests in Collateral.

In order to induce you to extend our time of payment on one or more
Accounts and/or to make additional loans to us and/or to purchase additional
Accounts and/or to lease us additional equipment, and in consideration of you so
doing, and for other good and valuable consideration, the receipt of which we
hereby acknowledge, we agree as follows:

All presently existing and hereafter acquired Collateral in which you
have or shall have a security interest shall secure the payment and performance
of all of our liabilities and obligations to you of every kind and character,
whether joint or several, direct or indirect, absolute or contingent, due or to
become due, and whether under presently existing or hereafter created Accounts
or agreements, or otherwise.

We further agree that your security interest in the property covered by
any Account now held or hereafter acquired by you shall not be terminated in
whole or in part until and unless all indebtedness of every kind, due or to
become due, owed by us to you is fully paid and satisfied and the terms of every
Account have been fully performed by us. It is further agreed that you are to
retain your security interest in all property covered by all Accounts held or
acquired by you, as security for payment and performance under each such
Account, notwithstanding the fact that one or more of such Accounts may become
fully paid.

This instrument is intended to create cross-default and cross-security
between and among all the within described Accounts now owned or hereafter
acquired by you.

A default under any Account or agreement shall be deemed to be a
default under all other Accounts and agreements. A default shall result if we
fail to pay any sum when due on any Account or agreement, or if we breach any of
the other terms and conditions thereof, or if we become insolvent, cease to do
business as a going concern, make an assignment for the benefit of creditors, or
if a petition for a receiver or in bankruptcy is filed by or against us, or if
any of our property is seized, attached or levied upon. Upon our default any or
all Accounts and agreements shall, at your option, become immediately due and
payable without notice or demand to us or any other party obligated thereon, and
you shall have and may exercise any and all rights and remedies of a secured
party under the Uniform Commercial Code as enacted in the applicable
jurisdiction and as otherwise granted to you under any Account or other
agreement. We hereby waive, to the maximum extent permitted by law, notices of
default, notices of repossession and sale or other disposition of collateral,
and all other notices, and in the event any such notice cannot be waived, we
agree that if such notice is mailed to us postage prepaid at the address shown
below at least five (5) days prior to the exercise by you of any of your rights
or remedies, such notice shall be deemed to be reasonable and shall fully
satisfy any requirement for giving notice.

All rights granted to you hereunder shall be cumulative and not
alternative, shall be in addition to and shall in no manner impair or affect
your rights and remedies under any existing Account, agreement, statute or rule
of law, and remedies under any existing Account, agreement, statute or rule of
law.

This agreement may not be varied or altered nor its provisions waived
except by your duly executed written agreement. This agreement shall inure to
the benefit of your successors and assigns and shall be binding upon our heirs.
administrators, executors, legal representatives, successors and assigns.

IN WITNESS WHEREOF, this agreement is executed this___ day of___, ___.

CYTOKINETICS, INCORPORATED
(Name of Proprietorship, Partnership or
Corporation, as applicable)

By: /s/ James Sabry
--------------------------------------
(Signature)

Title:____________________________________
(Owner, Partner or Officer, as
applicable)

Address: 280 East Grand Avenue Suite 2,
South San Francisco, CA 94080

Exhibit 4.11

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE FOR SUCH
OFFER, SALE. OR TRANSFER, PLEDGE OR HYPOTHECATION IN THE OPINION OF LEGAL
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

WARRANT

To Purchase Shares of Common Stock of
CYTOKINETICS, INC.

THIS CERTIFIES that, for value received Bristow Investments, L.P., a
California limited partnership (the "Holder"), is entitled, upon the terms and
subject to the conditions hereinafter set forth, at any time after the date
hereof and prior to the Commencement Date (as defined below), to subscribe for
and purchase from Cytokinetics, Inc., a Delaware corporation (the "Company"),
16,000 shares of the Company's Common Stock at an exercise price ("Exercise
Price") of $0.29 per share, subject to adjustment as set forth below.

1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company,
referred to in Section 2 hereof, by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant together with the Assignment
Form annexed hereto properly endorsed.

2. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time after the effective date of the assignment and assumption to and by the
Company of that certain Lease, dated April 13, 1998 (as amended) by and between
MetaXen, LLC and Britannia Pointe Grand Limited Partnership ("BPGLP") and prior
to the date that is five (5) years after the closing date of an underwritten
initial public offering ("IPO") of the Company's Common Stock pursuant to a
registration statement filed with the Securities and Exchange Commission (the
"SEC") under the Act, subject to adjustment as hereinafter provided, by the
surrender of this Warrant and the Notice of Exercise Form annexed hereto duly
executed at the office of the Company, in South San Francisco. California (or
such other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder appearing
on the books of the Company), and upon payment of the Exercise Price for the
shares thereby purchased (i) by cash or check or bank draft payable to the order
of the Company, (ii) by cancellation of indebtedness of the Company payable to
the holder hereof at the time of exercise, or (iii) by delivery of an election
in writing to receive a number of shares of Common Stock equal to the aggregate
number of shares of Common Stock subject to this Warrant (or the portion thereof
being cancelled upon such exercise), less that number of shares of Common Stock
having a fair market value as of such date equal to the aggregate Exercise Price
of the Warrant (or such

portion thereof); whereupon the holder of this Warrant shall be entitled to
receive a certificate for the number of shares so purchased. The Company agrees
that if at the time of the surrender of this Warrant and purchase the holder
hereof shall be entitled to exercise this Warrant, the shares so purchased shall
be and be deemed to be issued to such holder as the record owner of such shares
as of the close of business on the date on which this Warrant shall have been
exercised as aforesaid. For purposes of clause (iii) of the preceding sentence,
the fair market value of one share of the Company's Common Stock shall be
determined as follows: (1) if the Company's Common Stock is listed on a national
stock exchange, on the NASDAQ National Market System or on any other
over-the-counter market, then such fair market value shall be the closing price
per share reported for such class on such national stock exchange or on the
NASDAQ National Market System, or the average of the final "bid" and "asked"
prices reported on such over-the-counter market, as applicable, at the close of
business on the date of calculation as reported in the Wall Street Journal; and
(2) if the Company's Common Stock is not listed on any national stock exchange,
on the NASDAQ National Market System or on any other over-the-counter market,
then the Board of Directors of the Company shall determine such fair market
value as of the date of calculation in its reasonable good faith judgment, and
shall (upon written request by the holder hereof) advise the holder hereof of
such determination prior to any decision by such holder to exercise its purchase
rights under this Warrant.

Certificates for shares purchased hereunder shall be delivered to the
holder hereof within a reasonable time, but not later than ten (10) days, after
the date on which this Warrant shall have been exercised as aforesaid.

If this Warrant is exercised with respect to less than all of the
shares covered hereby, the holder hereof shall be entitled to receive a new
Warrant, in this form, covering the number of shares with respect to which this
Warrant shall not have been exercised.

The Company covenants that all shares of stock which may be issued upon
the exercise of rights represented by this Warrant will, upon exercise of the
rights represented by this Warrant, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).

3. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.

4. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and provided further, that upon any transfer involved in the issuance or
delivery of any

-2-

certificates for shares of Common Stock, the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.

5. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Notwithstanding the foregoing, the Company shall,
upon written request by the holder hereof to the chief financial officer of the
Company from time to time (but not more often than twice in any 12-month period)
provide to such holder copies of the following documents within a reasonable
time after such request (but in all events only to the extent that, and no
sooner than the time that, such documents have been made available to the
Company's shareholders): (i) the Company's most recent audited annual financial
statements or, if audited statements are not available, then the Company's
unaudited annual financial statements as of the end of the Company's most
recently ended fiscal year and (ii) unaudited quarterly financial statements for
each quarter of the Company's fiscal year since the date of the annual financial
statements delivered pursuant to clause (i) above. Notwithstanding the preceding
sentence, during any period in which the Company has outstanding a class of
publicly-traded securities or is for any other reason reporting company under
the Securities Exchange Act of 1934, it shall be sufficient compliance with any
information request from the holder hereof pursuant to such sentence for the
Company to provide copies of its most recent Form 10-K and annual report, any
Form 10-Qs and/or Form 8-Ks filed by the Company with the SEC since the date of
such Form 10- K, and any proxy statements.

6. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the registered holder at the above-mentioned office or
agency of the Company, for a new Warrant of like tenor and dated as of such
exchange.

The Company shall maintain at the above-mentioned office or agency a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at such office or agency of the Company, and the
Company shall be entitled to rely in all respects, prior to written notice to
the contrary, upon such registry.

7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it (such as an affidavit of
the holder hereof) of the loss, theft, destruction or mutilation of this
Warrant, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of
like tenor and dated as of such cancellation, in lieu of this Warrant.

8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a legal holiday.

-3-

9. Adjustment. The number of shares for which this Warrant is
exercisable and the time period for exercise are subject to adjustment from time
to time as follows:

(a) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities to which purchase rights under this Warrant exist
into the same or a different number of securities of any class or classes, this
Warrant shall thereafter be to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change and the Exercise Price shall be proportionately adjusted.

(b) Cash Distributions. No adjustment on account of cash
dividends or interest on the Company's Common Stock or other securities
purchasable hereunder will be made to the Exercise Price.

(c) This warrant shall be deemed rescinded in the event that
the Company's assumption of that certain Lease, dated April 13, 1998 (as
amended) by and between BPGLP and MetaXen, LLC shall not have occurred by
September 30, 2000.

10. Miscellaneous.

(a) Termination Upon Merger, Sale of Assets, etc. If at any
time after the date hereof the Company proposes to merge with or into any other
corporation, effect a consolidation or reorganization with or into any other
entity, or sell or convey all or substantially all of its assets to any other
entity (collectively, a "Merger"), the Company shall give the Holder written
notice ("Merger Notice") of such impending transaction not later than thirty
(30) days prior to the closing of such transaction. The Merger Notice shall
describe the material terms and conditions of the impending transaction,
including the aggregate value of consideration to be received by the Holder for
the shares underlying this Warrant on an as exercised basis, and the Company
shall thereafter give the Holder prompt notice of any material changes to such
terms and conditions.

(i)      If, pursuant to such Merger, the
shareholders of the Company receive solely cash and/or publicly traded
securities in exchange for their shares of stock in the Company, as stated in
the Merger Notice, and this Warrant has not been exercised prior to the closing
of such transaction, this Warrant shall terminate.

(ii)     Notwithstanding anything to the contrary,
if, pursuant to such Merger, the shareholders of the Company receive
non-publicly traded securities in exchange for their shares of stock in the
Company, or if the aggregate value of the consideration consisting of cash
and/or publicly traded securities to be received by the Holder for the
securities underlying this Warrant, as stated in the Merger Notice, does not
equal or exceed the aggregate Exercise Price of such underlying securities, then
this Warrant shall not terminate pursuant to the provisions of Section 10(a)(i)
above, and the Company shall, as a condition precedent to such transaction,
cause effective provisions to be made so that the holder hereof shall have the
right thereafter, by exercising this Warrant (in lieu of the shares of the
common stock of the Company immediately theretofore

-4-

purchasable and receivable upon exercise of this Warrant) to purchase the kind
and amount of shares of stock and other securities and property (including cash)
receivable upon such transaction. Any such provision shall include provisions
for adjustments in respect of such shares of stock and other securities and
property that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section 10(a)(ii) shall similarly apply to successive transactions, unless this
Warrant is first terminated pusuant to the provisions of Section 10(a)(i) above.

(b) Issue Date. The provisions of this Warrant shall be
construed and shall be given effect in all respect as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws of the State of California and for all purposes shall be
construed in accordance with and governed by the laws of said state.

(c) Restrictions. The holder hereof acknowledges that the
Common Stock acquired upon the exercise of this Warrant shall have restrictions
upon its resale imposed by state and federal securities laws.

(d) Authorized Shares. The Company covenants that during the
period the Warrant is exercisable, it will reserve from its authorized and
Unicode Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant.

(e) No Impairment. The Company will not, by amendment of its
Articles of Incorporation or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder hereof against impairment.

(f) Notices of Record Date. In case:

(i)      the Company shall take a record of the
holders of its Common Stock for the purposes of entitling them to receive any
dividend (other than a cash dividend) or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares or stock of any class or
any other securities or property, or to receive any other right; or

(ii)     of any capital reorganization of the
Company, any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to another
corporation; or

-5-

(iii)    of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company;

then, and in each such case, the Company will mail or cause to be
mailed to the holder of this Warrant a notice specifying, as the case may be,
(i) the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock shall be entitled to exchange their shares
of Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
thirty (30) days prior to the date therein specified.

(g) Attorneys' Fees. In any litigation, arbitration or other
legal proceeding between the Company and the holder hereto relating to or
arising out of this Warrant, the prevailing party shall be entitled to recover
all its fees, costs and expenses incurred in connection with such proceeding,
including (but not limited to) reasonable fees and expenses of attorneys and
accountants and including (but not limited to) all such fees, costs and expenses
incurred in connection with any appeals and/or in connection with the
enforcement of any judgment or award rendered in such proceeding.

-6-

IN WITNESS WHEREOF, Cytokinetics, Inc. has caused this Warrant to be
executed by its officers thereunto duly authorized.

Dated: July 20, 1999

CYTOKINETICS, INC.

By: /s/ James Sabry
-------------------------
Title: CEO & President

-7-

NOTICE OF EXERCISE

To: CYTOKINETICS, INC.

(1)      __________________, the undersigned, hereby elects to purchase
____________________________shares of Common Stock (the "Shares") at an exercise
price of $0.29 per share of Cytokinetics, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the aggregate purchase price
of $____________in full (if exercising pursuant to net exercise provisions,
enter $-0-), together with all applicable transfer taxes, if any:

(choose one)

[ ]      By cash, check or sale draft payable to Cytokinetics,
Inc.; or

[ ]      By cancellation of indebtedness of Cytokinetics,
Inc., payable to the undersigned as of the date
hereof; or

[ ]      By net exercise pursuant to the provisions of Section
2(iii) of the attached warrant (no tender of payment
for the Shares needed).

(2)      Please issue a certificate or certificates representing the
Shares (or the number of shares of Common Stock remaining after application of
the net exercise provisions of Section 2 (iii) of the attached warrant) in the
name of the undersigned or in such other name as is specified below:

_______________________________
(Name)

_______________________________

_______________________________
(Address)

(3)      The undersigned represents that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares.

____________________________________________________________
(Date) (Signature)

-8-

ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

________________________________________
(Please Print)

whose address is _______________________

_______________________
(Please Print)

Dated: _____________________,___________.

Holder's Signature: ____________________

Holder's Address: ______________________

______________________

NOTE: The signature to this Assignment Form must correspond with the
name as it appears on the face of the Warrant, without alteration or enlargement
or any change whatever, and must be guaranteed by a bank or trust company.
Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.

-9-

Exhibit 4.12

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED. SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE FOR SUCH
OFFER, SALE, OR TRANSFER, PLEDGE OR HYPOTHECATION IN THE OPINION OF LEGAL
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

WARRANT

To Purchase Shares of Common Stock of
CYTOKINETICS, INC.

THIS CERTIFIES that, for value received Laurence S. Shuhsan and
Magdalena Shushan, Trustees of the Laurence and Magdalena Shushan Family Trust,
under agreement dated October 8, 1997 (the "Holder"), is entitled, upon the
terms and subject to the conditions hereinafter set forth, at any time after the
date hereof and prior to the Commencement Date (as defined below), to subscribe
for and purchase from Cytokinetics, Inc., a Delaware corporation (the
"Company"), 4,000 shares of the Company's Common Stock at an exercise price
("Exercise Price") of $0.29 per share, subject to adjustment as set forth below.

1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company,
referred to in Section 2 hereof, by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant together with the Assignment
Form annexed hereto properly endorsed.

2. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time after the effective date of the assignment and assumption to and by the
Company of that certain Lease, dated April 13, 1998 (as amended) by and between
MetaXen, LLC and Britannia Pointe Grand Limited Partnership ("BPGLP") and prior
to the date that is five (5) years after the closing date of-an underwritten
initial public offering ("IPO") of the Company's Common Stock pursuant to a
registration statement filed with the Securities and Exchange Commission (the
"SEC") under the Act, subject to adjustment as hereinafter provided, by the
surrender of this Warrant and the Notice of Exercise Form annexed hereto duly
executed at the office of the Company, in South San Francisco, California (or
such other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder appearing
on the books of the Company), and upon payment of the Exercise Price for the
shares thereby purchased (i) by cash or check or bank draft payable to the order
of the Company, (ii) by cancellation of indebtedness of the Company payable to
the holder hereof at the time of exercise, or (iii) by delivery of an election
in writing to receive a number of shares of Common Stock equal to the aggregate
number of shares of Common Stock subject to this Warrant (or the portion thereof
being cancelled upon such exercise), less that number of shares of Common Stock
having a

fair market value as of such date equal to the aggregate Exercise Price of the
Warrant (or such portion thereof); whereupon the holder of this Warrant shall be
entitled to receive a certificate for the number of shares so purchased. The
Company agrees that if at the time of the surrender of this Warrant and purchase
the holder hereof shall be entitled to exercise this Warrant, the shares so
purchased shall be and be deemed to be issued to such holder as the record owner
of such shares as of the close of business on the date on which this Warrant
shall have been exercised as aforesaid. For purposes of clause (iii) of the
preceding sentence, the fair market value of one share of the Company's Common
Stock shall be determined as follows: (1) if the Company's Common Stock is
listed on a national stock exchange, on the NASDAQ National Market System or on
any other over-the-counter market, then such fair market value shall be the
closing price per share reported for such class on such national stock exchange
or on the NASDAQ National Market System, or the average of the final "bid" and
"asked" prices reported on such over-the-counter market, as applicable, at the
close of business on the date of calculation, as reported in the Wall Street
Journal; and (2) if the Company's Common Stock is not listed on any national
stock exchange, on the NASDAQ National Market System or on any other
over-the-counter market, then the Board of Directors of the Company shall
determine such fair market value as of the date of calculation in its reasonable
good faith judgment, and shall (upon written request by the holder hereof)
advise the holder hereof of such determination prior to any decision by such
holder to exercise its purchase rights under this Warrant.

Certificates for shares purchased hereunder shall be delivered to the
holder hereof within a reasonable time, but not later than ten (10) days, after
the date on which this Warrant shall have been exercised as aforesaid.

If this Warrant is exercised with respect to less than all of the
shares covered hereby, the holder hereof shall be entitled to receive a new
Warrant, in this form, covering the number of shares with respect to which this
Warrant shall not have been exercised.

The Company covenants that all shares of stock which may be issued upon
the exercise of rights represented by this Warrant will, upon exercise of the
rights represented by this Warrant, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).

3. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.

4. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and provided further, that upon any transfer involved in the issuance or
delivery of any

-2-

certificates for shares of Common Stock, the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.

5. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Notwithstanding the foregoing, the Company shall,
upon written request by the holder hereof to the chief financial officer of the
Company from time to time (but not more often than twice in any 12-month period)
provide to such holder copies of the following documents within a reasonable
time after such request (but in all events only to the extent that, and no
sooner than the time that, such documents have been made available to the
Company's shareholders): (i) the Company's most recent audited annual financial
statements or, if audited statements are not available, then the Company's
unaudited annual financial statements as of the end of the Company's most
recently ended fiscal year and (ii) unaudited quarterly financial statements for
each quarter of the Company's fiscal year since the date of the annual financial
statements delivered pursuant to clause (i) above. Notwithstanding the preceding
sentence, during any period in which the Company has outstanding a class of
publicly-traded securities or is for any other reason reporting company under
the Securities Exchange Act of 1934, it shall be sufficient compliance with any
information request from the holder hereof pursuant to such sentence for the
Company to provide copies of its most recent Form 10-K and annual report, any
Form 10-Qs and/or Form 8-Ks filed by the Company with the SEC since the date of
such Form 10-K, and any proxy statements.

6. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the registered holder at the above-mentioned office or
agency of the Company, for a new Warrant of like tenor and dated as of such
exchange.

The Company shall maintain at the above-mentioned office or agency a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at such office or agency of the Company, and the
Company shall be entitled to rely in all respects, prior to written notice to
the contrary, upon such registry.

7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it (such as an affidavit of
the holder hereof) of the loss, theft, destruction or mutilation of this
Warrant, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of
like tenor and dated as of such cancellation, in lieu of this Warrant.

8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a legal holiday.

-3-

9. Adjustment. The number of shares for which this Warrant is
exercisable and the time period for exercise are subject to adjustment from time
to time as follows:

(a) Rectification, etc. If the Company at any time shall, by
subdivision, combination or reclassification of securities or otherwise, change
any of the securities to which purchase rights under this Warrant exist into the
same or a different number of securities of any class or classes, this Warrant
shall thereafter be to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities which
were subject to the purchase rights under this Warrant immediately prior to such
subdivision, combination, reclassification or other change and the Exercise
Price shall be proportionately adjusted.

(b) Cash Distributions. No adjustment on account of cash
dividends or interest on the Company's Common Stock or other securities
purchasable hereunder will be made to the Exercise Price.

(c) This warrant shall be deemed rescinded in the event that
the Company's assumption of that certain Lease, dated April 13, 1998 (as
amended) by and between BPGLP and MetaXen, LLC shall not have occurred by
September 30, 2000.

10. Miscellaneous.

(a) Termination Upon Merger, Sale of Assets, etc. If at any
time after the date hereof the Company proposes to merge with or into any other
corporation, effect a consolidation or reorganization with or into any other
entity, or sell or convey all or substantially all of its assets to any other
entity (collectively, a "Merger"), the Company shall give the Holder written
notice ("Merger Notice") of such impending transaction not later than thirty
(30) days prior to the closing of such transaction. The Merger Notice shall
describe the material terms and conditions of the impending transaction,
including the aggregate value of consideration to be received by the Holder for
the shares underlying this Warrant on an as exercised basis, and the Company
shall thereafter give the Holder prompt notice of any material changes to such
terms and conditions.

(i)      If, pursuant to such Merger, the
shareholders of the Company receive solely cash and/or publicly traded
securities in exchange for their shares of stock in the Company, as stated in
the Merger Notice, and this Warrant has not been exercised prior to the closing
of such transaction, this Warrant shall terminate.

(ii)     Notwithstanding anything to the contrary,
if, pursuant to such Merger, the shareholders of the Company receive
non-publicly traded securities in exchange for their shares of stock in the
Company, or if the aggregate value of the consideration consisting of cash
and/or publicly traded securities to be received by the Holder for the
securities underlying this Warrant, as stated in the Merger Notice, does not
equal or exceed the aggregate Exercise Price of such underlying securities, then
this Warrant shall not terminate pursuant to the provisions of Section 10(a)(i)
above, and the Company shall, as a condition precedent to such transaction,
cause effective provisions to be made so that the holder hereof shall have the
right thereafter, by exercising this Warrant (in lieu of the shares of the
common stock of the Company immediately theretofore

-4-

purchasable and receivable upon exercise of this Warrant) to purchase the kind
and amount of shares of stock and other securities and property (including cash)
receivable upon such transaction. Any such provision shall include provisions
for adjustments in respect of such shares of stock and other securities and
property that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section 10(a)(ii) shall similarly apply to successive transactions, unless this
Warrant is first terminated pusuant to the provisions of Section 10(a)(i) above.

(b) Issue Date. The provisions of this Warrant shall be
construed and shall be given effect in all respect as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws of the State of California and for all purposes shall be
construed in accordance with and governed by the laws of said state.

(c) Restrictions. The holder hereof acknowledges that the
Common Stock acquired upon the exercise of this Warrant shall have restrictions
upon its resale imposed by state and federal securities laws.

(d) Authorized Shares. The Company covenants that during the
period the Warrant is exercisable, it will reserve from its authorized and
Unicode Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant.

(e) No Impairment. The Company will not, by amendment of its
Articles of Incorporation or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder hereof against impairment.

(f) Notices of Record Date. In case:

(i)      the Company shall take a record of the
holders of its Common Stock for the purposes of entitling them to receive any
dividend (other than a cash dividend) or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares or stock of any class or
any other securities or property, or to receive any other right; or

(ii)     of any capital reorganization of the
Company, any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to another
corporation; or

-5-

(iii)    of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company;

then, and in each such case, the Company will mail or cause to be
mailed to the holder of this Warrant a notice specifying, as the case may be,
(i) the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock shall be entitled to exchange their shares
of Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
thirty (30) days prior to the date therein specified.

(g) Attorneys' Fees. In any litigation, arbitration or other
legal proceeding between the Company and the holder hereto relating to or
arising out of this Warrant, the prevailing party shall be entitled to recover
all its fees, costs and expenses incurred in connection with such proceeding,
including (but not limited to) reasonable fees and expenses of attorneys and
accountants and including (but not limited to) all such fees, costs and expenses
incurred in connection with any appeals and/or in connection with the
enforcement of any judgment or award rendered in such proceeding.

-6-

IN WITNESS WHEREOF, Cytokinetics, Inc. has caused this Warrant to be
executed by its officers thereunto duly authorized.

Dated: July 20, 1999

CYTOKINETICS, INC.

By: /s/ James Sabry
-----------------------

Title: CEO & President

-7-

NOTICE OF EXERCISE

To: CYTOKINETICS, INC.

(1) ___________, the undersigned, hereby elects to purchase ___________
shares of Common Stock (the "Shares") at an exercise price of $0.29 per share of
Cytokinetics, Inc. pursuant to the terms of the attached Warrant, and tenders
herewith payment of the aggregate purchase price of $______ in full (if
exercising pursuant to net exercise provisions, enter $-0-), together with all
applicable transfer taxes, if any:

(choose one)

[ ]      By cash, check or sale draft payable to Cytokinetics,
Inc.; or

[ ]      By cancellation of indebtedness of Cytokinetics,
Inc., payable to the undersigned as of the date
hereof; or

[ ]      By net exercise pursuant to the provisions of Section
2(iii) of the attached warrant (no tender of payment
for the Shares needed).

(2) Please issue a certificate or certificates representing the Shares
(or the number of shares of Common Stock remaining after application of the net
exercise provisions of Section 2 (iii) of the attached warrant) in the name of
the undersigned or in such other name as is specified below:

___________________________
(Name)

___________________________

___________________________
(Address)

(3) The undersigned represents that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares.

________________________________________
(Date) (Signature)

-8-

ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

_________________________________________
(Please Print)

whose address is  _______________________

_______________________
(Please Print)

Dated: _____________________, ______.

Holder's Signature: _____________________

Holder's Address: _______________________

_______________________

NOTE: The signature to this Assignment Form must correspond with the
name as it appears on the face of the Warrant, without alteration or enlargement
or any change whatever, and must be guaranteed by a bank or trust company.
Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.

-9-

Exhibit 4.13

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE FOR SUCH
OFFER, SALE, OR TRANSFER, PLEDGE OR HYPOTHECATION IN THE OPINION OF LEGAL
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

WARRANT

To Purchase Shares of Common Stock of
CYTOKINETICS, INC.

THIS CERTIFIES that, for value received Slough Estates USA Inc., a
Delaware corporation (the "Holder"), is entitled, upon the terms and subject to
the conditions hereinafter set forth, at any time after the date hereof and
prior to the Commencement Date (as defined below), to subscribe for and purchase
from Cytokinetics, Inc., a Delaware corporation (the "Company"), 180,000 shares
of the Company's Common Stock at an exercise price ("Exercise Price") of $0.29
per share, subject to adjustment as set forth below.

1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company,
referred to in Section 2 hereof, by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant together with the Assignment
Form annexed hereto properly endorsed.

2. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time after the effective date of the assignment and assumption to and by the
Company of that certain Lease, dated April 13, 1998 (as amended) by and between
MetaXen, LLC and Britannia Pointe Grand Limited Partnership ("BPGLP") and prior
to the date that is five (5) years after the closing date of an underwritten
initial public offering ("IPO") of the Company's Common Stock pursuant to a
registration statement filed with the Securities and Exchange Commission (the
"SEC") under the Act, subject to adjustment as hereinafter provided, by the
surrender of this Warrant and the Notice of Exercise Form annexed hereto duly
executed at the office of the Company, in South San Francisco, California (or
such other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder appearing
on the books of the Company), and upon payment of the Exercise Price for the
shares thereby purchased (i) by cash or check or bank draft payable to the order
of the Company, (ii) by cancellation of indebtedness of the Company payable to
the holder hereof at the time of exercise, or (iii) by delivery of an election
in writing to receive a number of shares of Common Stock equal to the aggregate
number of shares of Common Stock subject to this Warrant (or the portion thereof
being cancelled upon such exercise), less that number of shares of Common Stock
having a fair market value as of such date equal to the aggregate Exercise Price
of the Warrant (or such

portion thereof); whereupon the holder of this Warrant shall be entitled to
receive a certificate for the number of shares so purchased. The Company agrees
that if at the time of the surrender of this Warrant and purchase the holder
hereof shall be entitled to exercise this Warrant, the shares so purchased shall
be and be deemed to be issued to such holder as the record owner of such shares
as of the close of business on the date on which this Warrant shall have been
exercised as aforesaid. For purposes of clause (iii) of the preceding sentence,
the fair market value of one share of the Company's Common Stock shall be
determined as follows: (1) if the Company's Common Stock is listed on a national
stock exchange, on the NASDAQ National Market System or on any other
over-the-counter market, then such fair market value shall be the closing price
per share reported for such class on such national stock exchange or on the
NASDAQ National Market System, or the average of the final "bid" and "asked"
prices reported on such over-the-counter market, as applicable, at the close of
business on the date of calculation, as reported in the Wall Street Journal; and
(2) if the Company's Common Stock is not listed on any national stock exchange,
on the NASDAQ National Market System or on any other over-the-counter market,
then the Board of Directors of the Company shall determine such fair market
value as of the date of calculation in its reasonable good faith judgment, and
shall (upon written request by the holder hereof) advise the holder hereof of
such determination prior to any decision by such holder to exercise its purchase
rights under this Warrant.

Certificates for shares purchased hereunder shall be delivered to the
holder hereof within a reasonable time, but not later than ten (10) days, after
the date on which this Warrant shall have been exercised as aforesaid.

If this Warrant is exercised with respect to less than all of the
shares covered hereby, the holder hereof shall be entitled to receive a new
Warrant, in this form, covering the number of shares with respect to which this
Warrant shall not have been exercised.

The Company covenants that all shares of stock which may be issued upon
the exercise of rights represented by this Warrant will, upon exercise of the
rights represented by this Warrant, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).

3. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.

4. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and provided further, that upon any transfer involved in the issuance or
delivery of any

-2-

certificates for shares of Common Stock, the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.

5. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Notwithstanding the foregoing, the Company shall,
upon written request by the holder hereof to the chief financial officer of the
Company from time to time (but not more often than twice in any 12-month period)
provide to such holder copies of the following documents within a reasonable
time after such request (but in all events only to the extent that, and no
sooner than the time that, such documents have been made available to the
Company's shareholders): (i) the Company's most recent audited annual financial
statements or, if audited statements are not available, then the Company's
unaudited annual financial statements as of the end of the Company's most
recently ended fiscal year and (ii) unaudited quarterly financial statements for
each quarter of the Company's fiscal year since the date of the annual financial
statements delivered pursuant to clause (i) above. Notwithstanding the preceding
sentence, during any period in which the Company has outstanding a class of
publicly-traded securities or is for any other reason reporting company under
the Securities Exchange Act of 1934, it shall be sufficient compliance with any
information request from the holder hereof pursuant to such sentence for the
Company to provide copies of its most recent Form 10-K and annual report, any
Form 10-Qs and/or Form 8-Ks filed by the Company with the SEC since the date of
such Form 10-K, and any proxy statements.

6. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the registered holder at the above-mentioned office or
agency of the Company, for a new Warrant of like tenor and dated as of such
exchange.

The Company shall maintain at the above-mentioned office or agency a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at such office or agency of the Company, and the
Company shall be entitled to rely in all respects, prior to written notice to
the contrary, upon such registry.

7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it (such as an affidavit of
the holder hereof) of the loss, theft, destruction or mutilation of this
Warrant, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of
like tenor and dated as of such cancellation, in lieu of this Warrant.

8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a legal holiday.

-3-

9. Adjustment. The number of shares for which this Warrant is
exercisable and the time period for exercise are subject to adjustment from time
to time as follows:

(a) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities to which purchase rights under this Warrant exist
into the same or a different number of securities of any class or classes, this
Warrant shall thereafter be to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change and the Exercise Price shall be proportionately adjusted.

(b) Cash Distributions. No adjustment on account of cash
dividends or interest on the Company's Common Stock or other securities
purchasable hereunder will be made to the Exercise Price.

(c) This warrant shall be deemed rescinded in the event that
the Company's assumption of that certain Lease, dated April 13, 1998 (as
amended) by and between BPGLP and MetaXen, LLC shall not have occurred by
September 30, 2000.

10. Miscellaneous.

(a) Termination Upon Merger, Sale of Assets, etc. If at any
time after the date hereof the Company proposes to merge with or into any other
corporation, effect a consolidation or reorganization with or into any other
entity, or sell or convey all or substantially all of its assets to any other
entity (collectively, a "Merger"), the Company shall give the Holder written
notice ("Merger Notice") of such impending transaction not later than thirty
(30) days prior to the closing of such transaction. The Merger Notice shall
describe the material terms and conditions of the impending transaction,
including the aggregate value of consideration to be received by the Holder for
the shares underlying this Warrant on an as exercised basis, and the Company
shall thereafter give the Holder prompt notice of any material changes to such
terms and conditions.

(i) If, pursuant to such Merger, the shareholders of
the Company receive solely cash and/or publicly traded securities in exchange
for their shares of stock in the Company, as stated in the Merger Notice, and
this Warrant has not been exercised prior to the closing of such transaction,
this Warrant shall terminate.

(ii) Notwithstanding anything to the contrary, if,
pursuant to such Merger, the shareholders of the Company receive non-publicly
traded securities in exchange for their shares of stock in the Company, or if
the aggregate value of the consideration consisting of cash and/or publicly
traded securities to be received by the Holder for the securities underlying
this Warrant, as stated in the Merger Notice, does not equal or exceed the
aggregate Exercise Price of such underlying securities, then this Warrant shall
not terminate pursuant to the provisions of Section 10(a)(i) above, and the
Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the holder hereof shall have the right thereafter,
by exercising this Warrant (in lieu of the shares of the common stock of the
Company immediately theretofore

-4-

purchasable and receivable upon exercise of this Warrant) to purchase the kind
and amount of shares of stock and other securities and property (including cash)
receivable upon such transaction. Any such provision shall include provisions
for adjustments in respect of such shares of stock and other securities and
property that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section 10(a)(ii) shall similarly apply to successive transactions, unless this
Warrant is first terminated pusuant to the provisions of Section 10(a)(i) above.

(b) Issue Date. The provisions of this Warrant shall be
construed and shall be given effect in all respect as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws of the State of California and for all purposes shall be
construed in accordance with and governed by the laws of said state.

(c) Restrictions. The holder hereof acknowledges that the
Common Stock acquired upon the exercise of this Warrant shall have restrictions
upon its resale imposed by state and federal securities laws.

(d) Authorized Shares. The Company covenants that during the
period the Warrant is exercisable, it will reserve from its authorized and
Unicode Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant.

(e) No Impairment. The Company will not, by amendment of its
Articles of Incorporation or any other voluntary action, avoid or seek to avoid
the observance or performance ot any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder hereof against impairment.

(f) Notices of Record Date. In case:

(i) the Company shall take a record of the holders of
its Common Stock for the purposes of entitling them to receive any dividend
(other than a cash dividend) or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares or stock of any class or any other
securities or property, or to receive any other right; or

(ii) of any capital reorganization of the Company,
any reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation; or

-5-

(iii) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company;

then, and in each such case, the Company will mail or cause to be
mailed to the holder of this Warrant a notice specifying, as the case may be,
(i) the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock shall be entitled to exchange their shares
of Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
thirty (30) days prior to the date therein specified.

(g) Attorneys' Fees. In any litigation, arbitration or other
legal proceeding between the Company and the holder hereto relating to or
arising out of this Warrant, the prevailing party shall be entitled to recover
all its fees, costs and expenses incurred in connection with such proceeding,
including (but not limited to) reasonable fees and expenses of attorneys and
accountants and including (but not limited to) all such fees, costs and expenses
incurred in connection with any appeals and/or in connection with the
enforcement of any judgment or award rendered in such proceeding.

-6-

IN WITNESS WHEREOF, Cytokinetics, Inc. has caused this Warrant to be
executed by its officers thereunto duly authorized.

Dated: July 20, 1999

CYTOKINETICS, INC.

By: /s/ James Sabry
----------------------------
Title: CEO & President

-7-

NOTICE OF EXERCISE

To: CYTOKINETICS, INC.

(1) ____________________, the undersigned, hereby elects to
purchase____________________________shares of Common Stock (the "Shares") at an
exercise price of $0.29 per share of Cytokinetics, Inc. pursuant to the terms of
the attached Warrant, and tenders herewith payment of the aggregate purchase
price of $____________in full (if exercising pursuant to net exercise
provisions, enter $-0-), together with all applicable transfer taxes, if any:

(choose one)

[ ]      By cash, check or sale draft payable to Cytokinetics,
Inc.; or

[ ]      By cancellation of indebtedness of Cytokinetics,
Inc., payable to the undersigned as of the date
hereof; or

[ ]      By net exercise pursuant to the provisions of Secton
2(iii) of the attached warrant (no tender of payment
for the Shares needed).

(2) Please issue a certificate or certificates representing the Shares
(or the number of shares of Common Stock remaining after application of the net
exercise provisions of Section 2 (iii) of the attached warrant) in the name of
the undersigned or in such other name as is specified below:

__________________________
(Name)

__________________________

__________________________
(Address)

(3) The undersigned represents that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares.

_________________________________________________________
(Date) (Signature)

-8-

ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

_________________________________________
(Please Print)

whose address is    _____________________

_____________________
(Please Print)

Dated:_____________________,__________.

Holder's Signature:___________________

Holder's Address:  ___________________

___________________  

NOTE: The signature to this Assignment Form must correspond with the
name as it appears on the face of the Warrant, without alteration or enlargement
or any change whatever, and must be guaranteed by a bank or trust company.
Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.

-9-

Exhibit 4.14

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THESE
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 901 OR
REGULATIONS UNDER THE SECURITIES ACT IF APPLICABLE, OR (C) INSIDE THE UNITED
STATES (i) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS OR (ii) IN COMPLIANCE WITH ANOTHER APPLICABLE EXEMPTION UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, SUCH COMPLIANCE, AT THE
OPTION OF THE CORPORATION, TO BE EVIDENCED BY AN OPINION OF COUNSEL, IN FORM
ACCEPTABLE TO THE CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS
WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT.

No. W-_________ SERIES B PREFERRED STOCK PURCHASE WARRANT As of August 30, 1999
CYTOKINETICS, INCORPORATED

THIS CERTIFIES that, for value received, The Magnum Trust (the
"Holder") or its assigns, is entitled to subscribe for and purchase, from
Cytokinetics, Incorporated, a Delaware corporation (the "Company"), shares of
the Company's Series B Preferred Stock, upon the terms and subject to the
conditions set forth herein, at any time on or after the date of this Warrant,
and on or before, but in no case after August 30, 2006.

1.       Exercise Price; Number of Warrant Shares. The purchase price
of one share of Series B Preferred Stock under this Warrant shall be $2.90 per
share, subject to adjustment pursuant to Sections 7 and 8 (such price as it
shall be adjusted, the "Exercise Price"). The number of shares of Series B
Preferred Stock purchasable upon exercise of this Warrant is 100,000, which
shares upon such purchase shall be fully paid and non-assessable (the "Warrant
Shares").

2.       Exercise, of Warrant.

(a)      Exercise Procedure. The purchase rights represented
by this Warrant are exercisable by the Holder or its assignee, in whole or in
part, at any time before August 30, 2006, by the surrender of this Warrant and a
Notice of Exercise in the form attached as Exhibit A duly executed at, the
office of the Company in South San Francisco, California (or such other office
or agency of the Company as it may designate by notice in writing to the Holder
at the address of such holder appearing on the books of the Company), and upon
payment of the Exercise Price of the shares thereby purchased (by cash or by
check or bank draft payable to the order of the Company or by cancellation of
indebtedness of the Company to the holder, if any, at the time of exercise in an
amount equal to the Exercise Price of the shares thereby purchased or pursuant
to the net exercise proceeding set forth in Section 2(b), below); whereupon the
Holder shall be entitled to receive a certificate for the number of shares of
Series B Preferred Stock so purchased. If this Warrant is exercised as to only a
portion of the shares for which it is exercisable, the Company shall, upon such
exercise, deliver to the Holder a new Warrant representing the remaining shares
for which the Warrant shall then be exercisable. This Warrant shall be deemed to
have been exercised

immediately prior to the close of business on the date of delivery of such
Notice of Exercise and payment as provided above, and the person entitled to
receive the shares issuable upon such exercise shall be treated for all purposes
as the holder of such shares of record as of the close of business on such date.
As promptly as practicable on or after such date, the Company shall issue and
deliver to such person a certificate for the number of shares issuable upon such
exercise.

(b)      Net Exercise.

(1)      In lieu of the cash payment set forth in
Section 2(a) above, the Holder shall have the right ("Conversion Right") to
convert this Warrant or any portion thereof (without payment of any kind) into
that number of shares of Series B Preferred Stock equal to (i) the product of
(A) the number of shares of Series B Preferred then issuable upon such whole or
partial exercise of this Warrant and (B) the excess, if any, of (X) the Market
Price Per Share (as determined pursuant to Section 2(b)(3) below) with respect
to the date of conversion over (Y) the Exercise Price in effect on the business
day next preceding the date of conversion, divided by (ii) the Market Price Per
Share with respect to the date of conversion.

(2)      Manner of Conversion. The conversion rights
provided for in this Section 2(b) may be exercised in whole or in pan and at any
time and from time to time while any portion of this Warrant remains
outstanding. In order to exercise its conversion rights under this Section, the
Holder shall surrender to the Company, at its offices, this Warrant certificate
accompanied by a duly completed Notice of Conversion in the form annexed hereto
as Exhibit B. The Warrant (or so much thereof as shall have been surrendered for
conversion) shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Warrant certificate for
conversion in accordance with the foregoing provisions. As promptly as
practicable on or after the conversion date, the Company shall issue and shall
deliver to the Warramholder (i) a certificate or certificates representing the
number of shares of Series B Preferred to which the Warrantholder shall be
entitled as a result of the conversion, and (ii) if the Warrant certificate is
being converted in part only, a new certificate of like tenor and date for the
balance of the unconverted portion of the Warrant certificate.

(3)      Market Price Per Share. As used herein, the
"Market Price Per Share" on any date shall mean the fair market value of each
share of Series B Preferred Stock as determined in good faith by the Board of
Directors of the Company, provided that, after the Company's registration and
sale of shares of its Common Stock pursuant to a public offering, the term
"Market Price Per Share" shall mean the closing price per share of the Company's
Common Stock for the trading day immediately preceding the date of exercise. The
closing price for each such day shall be the last sale price or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
in either case on the principal securities exchange on which the shares of such
Common Stock of the Company are listed or admitted to trading or, if applicable,
the last sale price, or, in case no sale takes place on such day, the average of
the closing bid and asked prices of such Common Stock on NASDAQ or any
comparable system, or if such Common Stock is not reported on NASDAQ, or a
comparable system, the average of the closing bid and asked prices as furnished
by two members of the National Association of Securities Dealers, Inc. selected
from time to time by the Company for that purpose. If such bid and asked prices
are not available, then "Market Price Per

-2-

Share" shall be equal to the fair market value of such Common Stock as
determined in good faith by the Board of Directors of the Company.

3.       Restrictions on Transfer.

(a)      Investment Representation. The Holder agrees that the
Holder will not offer, sell or otherwise dispose of this Warrant or any
securities issued on exercise of this Warrant except under circumstances which
will not result in a violation of the Securities Act. Upon exercise of this
Warrant, the Holder shall confirm in writing, by executing the form attached as
Exhibit C hereto, that the securities purchased thereby are being acquired for
investment solely for the Holder's own account and not as a nominee for any
other Person, and not with a view toward distribution or resale.

(b)      Certificate Legends. This warrant and all securities
issued upon exercise of this Warrant (unless registered under the Securities
Act) shall be stamped or imprinted with a legend in substantially the following
form (in addition to any legends required by applicable state securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF, NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.

(c)      Disposition of Warrant or Shares. With respect to any
offer, sale or other disposition of this Warrant or any securities issued upon
exercise of this Warrant before an initial public offering, the Holder agrees to
give written notice to the Company prior thereto, describing briefly the manner
thereof, together with a written opinion of the Holder's counsel, if reasonably
requested by the Company, to the effect that such offer, sale or other
disposition may be effected without registration under the Securities Act or
qualification under any applicable state securities laws of this Warrant or such
shares, as the case may be, and indicating whether or not under the Securities
Act certificates for this Warrant or such shares, as the case may be, to be sold
or otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to insure compliance with the
Securities Act. Each certificate representing this Warrant or the securities
thus transferred (except a transfer pursuant to Rule 144) shall bear a legend as
to the applicable restrictions on transferability in order to insure compliance
with the Securities Act, unless in the aforesaid reasonably satisfactory opinion
of counsel for the Holder or the security holder, as the case may be, such
legend is not necessary in order to insure compliance with the Securities Act.
The Company may issue stop transfer instructions to its transfer agent in
connection with such restriction.

-3-

4.       No Rights as Shareholder. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company prior to exercise; provided, however, that the Holder shall have
"piggy-back" registration rights equivalent to those given to holders of Series
B Preferred Stock pursuant to that certain First Amended and Restated Investors'
Rights Agreement dated August 30,1999 by and among such holders and the Company,
as the same may be amended from time to time (the "Rights Agreement"), and,
provided further, that the Holder shall be bound by the transfer restrictions
set forth in the Rights Agreement, including, without limitation, the Market
Stand-Off provisions contained therein.

5.       Loss. Theft, Destruction or Mutilation of Warrant.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and in case of loss,
theft or destruction, of indemnity reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company shall
make and deliver a new Warrant of like tenor in lieu of this Warrant.

6.       Saturdays, Sundays, Holidays, etc. If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday or a Sunday or shall be a legal
holiday, then such action may be taken or such right may be exercised on the
next succeeding day not a legal holiday.

7.       Change of Control, Qualified IPO and Anti-Dilution.

(a)      Merger, Sale of Assets, etc. If at any time
after the date hereof the Company proposes to merge with or into any other
corporation, effect a consolidation or acquisition with or into any other
entity, which merger, consolidation or acquisition is of 100% of the voting
securities of the Company (a "Termination Transaction"), the Company shall give
the Holder written notice ("Merger Notice") of such impending transaction not
later than thirty (30) days prior to the closing of such transaction. The Merger
Notice shall describe the material terms and conditions of the impending
transaction, including the price and aggregate value of securities and other
consideration to be received by holders of Series B Preferred stock, by holders
of Common Stock and by the Holder for the shares underlying this Warrant on an
as exercised basis, and the Company shall thereafter give the Holder prompt
notice of any material changes to such terms and conditions. If this Warrant has
not been exercised or converted prior to the closing of a Termination
Transaction that is the subject of such a Merger Notice, this Warrant shall
terminate. Notwithstanding anything to the contrary in this Section 7(a), if,
after the closing of a Termination Transaction, the shareholders of the Company
prior to the closing will hold securities representing more than 50% of the
voting control of the surviving entity, this warrant shall not terminate. In the
event of such a non-terminating transaction, and in the event of a transaction
of the sale or conveyance of all or substantially all of the assets of the
Company, the Company shall, as a condition precedent to such transaction, cause
effective provisions to be made so that the holder hereof shall have the right
thereafter, by exercising this Warrant (in lieu of the shares of the common
stock of the Company immediately theretofore purchasable and receivable upon
exercise of this Warrant) to purchase the kind and amount of shares of stock and
other securities and property (including cash) receivable upon such transaction
by any holders of Series B Preferred Stock or holders of Common Stock, as
applicable. Any such provision shall include provisions for adjustments in
respect of such shares of

-4-

stock and other securities and property that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Warrant. The
foregoing provisions of this Section 7(a) shall similarly apply to successive
transactions, unless this Warrant is first terminated pursuant this Section
7(a).

(b)      Splits and Combinations. If the Company at any time
subdivides any of its outstanding shares of Series B Preferred Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, if the outstanding
shares of Series B Preferred Stock are combined into a smaller number of shares,
the Exercise Price in effect immediately prior to such combination shall be
proportionately increased. Upon any adjustment of the Exercise Price under this
Section 7(b), the number of shares of Series B Preferred Stock issuable upon
exercise of this Warrant shall equal the number of shares determined by dividing
(i) the aggregate Exercise Price payable for the purchase of all shares issuable
upon exercise of this Warrant immediately prior to such adjustment by (ii) the
Exercise Price per share in effect immediately after such adjustment.

(c)      Reclassifications. If the Company changes any of the
securities as to which purchase rights under this Warrant exist into the same or
a different number of securities of any other class or classes, this Warrant
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Exercise
Price therefor shall be appropriately and proportionately adjusted.

(d)      Dividends and Distribution. If the Company declares
a non-cash dividend or other distribution on the Series B Preferred Stock or the
Company's Common Stock or if a dividend or other distribution on the Series B
Preferred Stock or the Company's Common Stock occurs (other than a cash
dividend) then, as part of such dividend or distribution, lawful provision shall
be made so that there shall thereafter be deliverable upon the exercise of this
Warrant or any portion thereof, in addition to the number of shares of Series B
Preferred Stock receivable thereupon and without payment of any additional
consideration, the amount of the dividend or other distribution to which the
holder of the number of shares of Series B Preferred Stock obtained upon
exercise hereof, and the holder of the number of shares of Common Stock into
which such Series B Preferred Stock shall be convertible, would have been
entitled to receive had the exercise occurred as of the record date for such
dividend or distribution.

(e)      Liquidation; Dissolution. If the Company shall
dissolve, liquidate or wind up its affairs, the Holder shall have the right, but
not the obligation, to exercise this Warrant effective as of the date of such
dissolution, liquidation or winding up. If any such dissolution, liquidation or
winding up results in any cash distribution to the Holder in excess of the
aggregate Exercise Price for the shares of Series B Preferred Stock for which
this Warrant is exercised, then the Holder may, at its option, exercise this
Warrant without making payment of such aggregate Exercise Price and, in such
case, the Company shall, upon distribution to the Holder, consider such
aggregate Exercise Price to have been paid in full, and in making such
settlement to the Holder, shall deduct an amount equal to such aggregate
Exercise Price from the amount payable to the Holder.

-5-

(f)      Other Dilutive Events. If any event occurs as to
which the other provisions of this Section 7 are not strictly applicable but the
failure to make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles hereof, then, in each such case, the Company shall appoint a firm of
independent public accountants of recognized national standing (which may be the
Company's regular auditors) which shall give their opinion upon the adjustment,
if any, on a basis consistent with the essential intent and principles
established in this Section 7, necessary to preserve, without dilution, the
purchase rights represented by this Warrant. Upon receipt of such opinion, the
Company shall promptly mail a copy thereof to the Holder and shall make the
adjustments described therein.

(g)      Certificates and Notices.

(i)      Adjustment Certificates. Upon any adjustment
of the Exercise Price and/or the number of shares of securities purchasable upon
exercise of this Warrant, a certificate signed by (A) the Company's President
and Chief Financial Officer, or (B) any independent firm of certified public
accounts of recognized national standing the Company selects at its own expense,
setting forth in reasonable detail the events requiring the adjustment and the
method by which such adjustment was calculated, shall be mailed to the Holder
and shall specify the adjusted Exercise Price and the number of shares of
securities purchasable upon exercise of the Warrant after giving effect to the
adjustment.

(ii)     Extraordinary Corporate Events. If the
Company, after the date hereof, proposes to effect (A) any transaction described
in Section 7(c) hereof, (B) a liquidation, dissolution or winding up of the
Company described in Section 7(f) hereof, (C) a sale of assets transaction
described in Section 7(a) hereof, or (D) any public offering of securities of
the Company or any payment of a dividend or distribution with respect to Series
B Preferred Stock or Common Stock of the Company, then, in each such case, the
Company shall mail to the Holder a notice describing such proposed action and
specifying the date on which the Company's books shall close, or a record shall
be taken, for determining the holders of stock entitled to participate in such
action, or the date on which such reclassification, liquidation, dissolution,
winding up or other action shall take place or commence, as the case may be, and
the date as of which it is expected that holders of stock of record shall be
entitled to receive securities and/or other property deliverable upon such
action, if any such date is to be fixed. Such notice shall be mailed to the
Holder at least thirty (30) days prior to the record date for such action in the
case of any action described in clause (A) or clause (C) above, and in the case
of any action described in clause (B) above, at least fifteen (15) days prior to
the date on which the action described is to take place and at least fifteen
(15) days prior to the record date for determining holders of Series B Preferred
Stock or Common Stock entitled to receive securities and/or other property in
connection with such action.

(h)      No Impairment. The Company shall not, by amendment of
the Articles of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but shall at all times in good faith assist in the carrying out of all
the provisions of this Section 7 and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder against
impairment.

-6-

(i)      Application. Except as otherwise provided herein, all
sections of this Section 7 are intended to operate independently of one another.
If an event occurs that requires the application of more than one section, all
applicable sections shall be given independent effect.

(j)      Authorized Shares. The Company covenants that during
the period the Warrant is outstanding, it shall reserve from its authorized and
unissued Series B Preferred Stock and Common Stock a sufficient number of shares
to provide for the issuance of Series B Preferred Stock upon the exercise of
this Warrant and issuance of Common Stock upon conversion of such Series B
Preferred Stock.

8.       Exercise Price Adjustment. The number of shares of Common
Stock issuable upon conversion of the Warrant Shares and the terms for such
conversion, shall be subject to adjustment from time to time in the manner
governing the Company's Series B Preferred Stock in the Company's Certificate of
Incorporation. The provisions set forth for the Warrant Shares in the Company's
Certificate of Incorporation relating to the above adjustments, as of the date
of this Warrant, shall not be amended, modified or waived without the prior
written consent of the Holder, unless such amendment, modification or waiver is
in accordance with the Company's Certificate of Incorporation and applicable law
and affects the Holder in the same manner as it affects all other shareholders
of Series B Preferred Stock.

9.       Notices. All notices permitted or required hereunder shall be
in writing and shall be delivered by hand, by overnight courier providing
regular nationwide service or by deposit in the United States mail, postage
prepaid, by registered or certified mail, return receipt requested, addressed to
the Company or the Holder, as the case may be, at the address of such party
below:

(i)  if to the Company to:

Cytokinetics, Incorporated
Attn: Robert Blum, Vice President, Business Development
280 East Grand Avenue
South San Francisco, CA 94080

(ii) if to the Holder to:

The Magnum Trust
c/o Peter E.F. Newbald
No. 1 Seaton Place
St. Helier, Jersey JE4 SYJ
Channel Islands

With a copy of any notice to Holder to:

Gregory Tolaram
Hamilton Capital Limited
101 Front Street
Mercury House
Hamilton HM 12, Bermuda

-7-

Notices given by mail shall be deemed to be effective on the earlier of
the date shown on proof of receipt of such mail or, unless the recipient proves
that the notice was received later or not received, five (5) days after the date
of mailing thereof. Other notices shall be deemed given on the date of receipt.
The Company and any Holder may change the address specified above by written
notice to the other party hereto.

10.      Miscellaneous. This Warrant may be amended and any term of
this Warrant may be waived only by a written instrument signed by the Company
and the Warrant holder. This Warrant shall be binding upon any successors or
assigns of the Company. This Warrant shall constitute a contract under the laws
of the State of California and for all purposes shall be construed in accordance
with and governed by the laws of said state applied without reference to
conflict of laws principles except to the extent that the Warrant Shares and
terms relating thereto are governed by Delaware law.

Dated: As of August 30, 1999

CYTOKINETICS, INCORPORATED

/s/ James Sabry
---------------------------------
Name: JAMES SABRY
Title: PRESIDENT AND CEO

-8-

EXHIBIT A

NOTICE OF EXERCISE

TO: CYTOKINETICS, INCORPORATED

(1)      The undersigned hereby elects to purchase _____ shares of
Series B Preferred Stock of Cytokinetics, Incorporated pursuant to the terms of
the attached Warrant, and tenders payment of the purchase price in full,
together with all applicable transfer taxes, if any.

(2)      Please issue a certificate or certificates representing said
shares of Series B Preferred Stock in the name of the undersigned.

(3)      The undersigned represents that the aforesaid shares of Series
B Preferred Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.

(Date)

_________________________________
(Signature)

_________________________________
(Print Name)

EXHIBIT B

NOTICE OF CONVERSION

To: ___________________

(1)      The undersigned Warrant Holder hereby elects to exercise its
conversion rights under Section 2(b) of the Warrant dated as
of_______________________, 1999 between Cytokinetics, Incorporated and such
Holder (the "Warrant") and to acquire________________shares of stock of
Cytokinetics, Incorporated pursuant to such Section 2(b).

(2)      In exercising its rights to convert the Warrant, the
undersigned hereby confirms and acknowledges the investment representations and
warranties made in Section 3(a) of the Warrant.

(3)      Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name as is specified
below.

_________________________________
(name for issuance)

_________________________________
(address)

_________________________________
(address)

WARRANT HOLDER:

_________________________________
(Warrant Holder signature)

Date:____________________________

EXHIBIT C

INVESTMENT REPRESENTATION STATEMENT

STOCKHOLDER       :     ___________________________

COMPANY           :     Cytokinetics, Incorporated

SECURITY          :     Series B Preferred Stock

AMOUNT            :

DATE              :

In connection with the purchase of the above-listed Securities, the undersigned
Stockholder represents to the Company the following:

(a)      Stockholder is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Securities. Stockholder is acquiring these Securities for investment for
Stockholder's own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the Securities
Act of 1933, as amended (the "Securities Act").

(b)      Stockholder acknowledges and understands that the
Securities constitute "restricted securities" under the Securities Act and have
not been registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of Stockholder's investment intent as expressed herein. In this
connection, Stockholder understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be unavailable
if Stockholder's representation was predicated solely upon a present intention
to hold these Securities for the minimum capital gains period specified under
tax statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Stockholder further understands that the Securities must
be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Stockholder
further acknowledges and understands that the Company is under no obligation to
register the Securities except as described in the Amended and Restated Investor
Rights Agreement of even date herewith. Stockholder understands that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company, a legend prohibiting their transfer without the consent of the
Commissioner of Corporations of the State of California and any other legend
required under applicable state securities laws.

(c)      Stockholder is familiar with the provision of Rule
144, promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired,

directly or indirectly from the issuer thereof, in a non-public offering subject
to the satisfaction of certain conditions.

The Securities may be resold in certain limited circumstances
subject to the provisions of Rule 144, which requires the resale to occur not
less than one year after the later of the date the Securities were sold by the
Company or the date the Securities were sold by an affiliate of the Company,
within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of certain conditions of
Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days
thereafter (or such longer period as any market stand-off agreement may require)
the Securities may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including: (1) the resale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934); and, in the case of an affiliate, (2) the availability of certain public
information about the Company, (3) the amount of Securities being sold during
any three month period not exceeding the limitations specified in Rule 144, and
(4) the timely filing of a Form 144, if applicable.

(d)      Stockholder further understands that in the event all
of the applicable requirements of 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 is
not exclusive, the Staff of the Securities and Exchange Commission has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering and otherwise than pursuant to Rule 144 will have
a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their own
risk. Stockholder understands that no assurances can be given that any such
other registration exemption will be available in such event.

Signature of Stockholder;

Date: ________________________

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EXHIBIT 5.1

[WILSON SONSINI GOODRICH & ROSATI LETTERHEAD]

MARCH 11, 2004

Cytokinetics, Incorporated
280 East Grand Avenue
South San Francisco, California 94080

RE:    REGISTRATION STATEMENT ON FORM S-1

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-1 (File No. 333-112261)
filed with the Securities and Exchange Commission on January 27, 2004 (as
amended by Amendment No. 1 thereto filed on March 11, 2004, as such may be
amended or supplemented, the "Registration Statement"), in connection with the
registration under the Securities Act of 1933, as amended, of 6,670,000 shares
of Common Stock (the "Shares") of Cytokinetics, Incorporated (the "Company").
The Shares, which include up to 870,000 shares of Common Stock issuable pursuant
to an over-allotment option granted to the underwriters, are to be sold to the
underwriters as described in such Registration Statement for sale to the public
or issued to the Representatives of the underwriters. As your counsel in
connection with this transaction, we have examined the proceedings proposed to
be taken in connection with said sale and issuance of the Shares.

It is our opinion that the Shares, when issued and sold in the manner described
in the Registration Statement and in accordance with the resolutions adopted by
the Board of Directors of the Company, will be legally and validly issued, fully
paid and nonassessable.

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendments thereto.

Sincerely,

WILSON SONSINI GOODRICH & ROSATI
Professional Corporation

/S/ WILSON SONSINI GOODRICH & ROSATI

EXHIBIT 10.1

CYTOKINETICS, INCORPORATED

INDEMNIFICATION AGREEMENT

This Indemnification Agreement ("AGREEMENT") is made as of this ___ day of
___________, ______, by and between Cytokinetics, Incorporated, a Delaware
corporation (the "COMPANY"), and _____________________ ("INDEMNITEE").

WHEREAS, the Company and Indemnitee recognize the significant cost of
directors' and officers' liability insurance and the general reductions in the
coverage of such insurance;

WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the coverage of liability
insurance has been severely limited; and

WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law.

NOW, THEREFORE, in consideration for Indemnitee's services as an officer or
director of the Company, the Company and Indemnitee hereby agree as follows:

1. INDEMNIFICATION.

(a) THIRD PARTY PROCEEDINGS. The Company shall indemnify Indemnitee if
Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit, proceeding or any alternative
dispute resolution mechanism, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that Indemnitee is or was a director, officer, employee or agent of
the Company, or any subsidiary of the Company, by reason of any action or
inaction on the part of Indemnitee while serving in Indemnitee's capacity as a
director, officer, employee or agent of the Company or by reason of the fact
that Indemnitee is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the Company, which approval shall not be unreasonably withheld)
actually and reasonably incurred by Indemnitee in connection with such action,
suit or proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe Indemnitee's conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that Indemnitee did not act in good faith and in a manner which
Indemnitee reasonably believed to be in or not opposed to the best

interests of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that Indemnitee's conduct was
unlawful.

(b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company shall
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding by or
in the right of the Company or any subsidiary of the Company to procure a
judgment in its favor by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any subsidiary of the
Company, by reason of any action or inaction on the part of Indemnitee while
serving in Indemnitee's capacity as a director, officer, employee or agent of
the Company or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) and, to the fullest extent permitted by
law, amounts paid in settlement in each case to the extent actually and
reasonably incurred by Indemnitee in connection with the defense or settlement
of such action, suit or proceeding if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, except that no indemnification shall be made in
respect of any claim, issue or matter as to which Indemnitee shall have been
finally adjudicated by court order or judgment (for which no further right of
appeal exists) to be liable to the Company in the performance of Indemnitee's
duty to the Company unless and only to the extent that the Court of Chancery of
the State of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
of the State of Delaware or such other court shall deem proper.

(c) MANDATORY PAYMENT OF EXPENSES. To the extent that Indemnitee has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Subsections (a) and (b) of this Section 1, or in
defense of any claim, issue or matter therein, Indemnitee shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
Indemnitee in connection therewith. Without limiting the foregoing, if any
action, suit or proceeding is disposed of, on the merits or otherwise (including
a disposition without prejudice), without (i) the disposition being adverse to
the Indemnitee, (ii) an adjudication that the Indemnitee was liable to the
Company, (iii) a plea of guilty or nolo contendere by the Indemnitee, (iv) an
adjudication that the Indemnitee did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and (v) with respect to any criminal proceeding, an adjudication that
the Indemnitee had reasonable cause to believe his conduct was unlawful, the
Indemnitee shall be considered for the purpose hereof to have been wholly
successful with respect thereto.

2. EXPENSES; INDEMNIFICATION PROCEDURE.

(a) ADVANCEMENT OF EXPENSES. The Company shall advance all expenses
incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil or criminal action, suit or proceeding referenced in
Section 1(a) or (b) hereof (but not amounts actually paid in settlement of any
such action, suit or proceeding). Indemnitee hereby undertakes to repay such
amounts advanced only if, and to the extent that, it shall ultimately be
determined that

-2-

Indemnitee is not entitled to be indemnified by the Company as authorized
hereby. The advances to be made hereunder shall be paid by the Company to
Indemnitee within thirty (30) days following delivery of a written request
therefor by Indemnitee to the Company.

(b) NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as a condition
precedent to his right to be indemnified under this Agreement, give the Company
notice in writing as soon as practicable of any claim made against Indemnitee
for which indemnification will or could be sought under this Agreement. Notice
to the Company shall be directed to the President of the Company at the address
shown on the signature page of this Agreement (or such other address as the
Company shall designate in writing to Indemnitee). Notice shall be deemed
received three business days after the date postmarked if sent by domestic
certified or registered mail, properly addressed, five business days if sent by
airmail to a country outside of North America; otherwise notice shall be deemed
received when such notice shall actually be received by the Company. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.

(c) PROCEDURE. Any indemnification and advances provided for in
Section 1 and this Section 2 shall be made promptly, and in any event no later
than thirty (30) days after receipt of the written request of Indemnitee. If a
claim under this Agreement, under any statute, or under any provision of the
Company's Certificate of Incorporation or Bylaws providing for indemnification,
is not paid in full by the Company within thirty (30) days after a written
request for payment thereof has first been received by the Company, Indemnitee
may, but need not, at any time thereafter bring an action against the Company to
recover the unpaid amount of the claim and, subject to Section 12 of this
Agreement, Indemnitee shall also be entitled to be paid for the expenses
(including attorneys' fees) of bringing such action. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in connection with any action, suit or proceeding in advance of its
final disposition) that Indemnitee has not met the standards of conduct which
make it permissible under applicable law for the Company to indemnify Indemnitee
for the amount claimed but the burden of proving such defense shall be on the
Company and Indemnitee shall be entitled to receive interim payments of expenses
pursuant to Subsection 2(a) unless and until such defense may be finally
adjudicated by court order or judgment from which no further right of appeal
exists. It is the parties' intention that if the Company contests Indemnitee's
right to indemnification, the question of Indemnitee's right to indemnification
shall be for the court to decide, and neither the failure of the Company
(including its Board of Directors, any committee or subgroup of the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination that indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct required by
applicable law, nor an actual determination by the Company (including it Board
of Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has or has not
met the applicable standard of conduct.

(d) NOTICE TO INSURERS. If, at the time of the receipt of a notice of
a claim pursuant to Section 2(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with

-3-

the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such proceeding
in accordance with the terms of such policies.

(e) SELECTION OF COUNSEL. In the event the Company shall be obligated
under Section 2(a) hereof to pay the expenses of any proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the defense
of such proceeding, with counsel approved by Indemnitee, upon the delivery to
Indemnitee of written notice of its election to do so. Notwithstanding the
foregoing, the Company shall not be permitted to settle any action or claim on
behalf of Indemnitee in any manner which would impose any unindemnified
liability or penalty on the Indemnitee or require any acknowledgement of
wrongdoing on the part of the Indemnitee without Indemnitee's written consent,
which consent shall not be unreasonably withheld. The Company agrees that it
will not, without the prior written consent of the Indemnitee, settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim relating to the matters contemplated hereby (if the Indemnitee is a party
thereto or has been threatened to be made or would reasonably be expected to be
made a party thereto) unless such settlement, compromise or consent includes an
unconditional release of the Indemnitee from all liability arising or that may
arise out of such claim. The Indemnitee shall not be liable for any settlement
of any claim effected against the Indemnitee without Indemnitee's written
consent. After delivery of such notice, approval of such counsel by Indemnitee
and the retention of such counsel by the Company, the Company will not be liable
to Indemnitee under this Agreement for any fees of counsel subsequently incurred
by Indemnitee with respect to the same proceeding, provided that (i) Indemnitee
shall have the right to employ his counsel in any such proceeding at
Indemnitee's expense; and (ii) if (A) the employment of counsel by Indemnitee
has been previously authorized by the Company, (B) Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense, or (C) the Company
shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of Indemnitee's counsel shall be at the
expense of the Company. The Company shall not be entitled, without the consent
of the Indemnitee, to assume the defense of any claim brought by or in the right
of the Company or as to which counsel for the Indemnitee shall have reasonably
made the conclusion provided for in clause (ii)(B) above.

3. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.

(a) SCOPE. Notwithstanding any other provision of this Agreement, the
Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Certificate
of Incorporation, the Company's Bylaws or by statute. In the event of any
change, after the date of this Agreement, in any applicable law, statute, or
rule which expands the right of a Delaware corporation to indemnify a member of
its board of directors or an officer, such changes shall be, IPSO FACTO, within
the purview of Indemnitee's rights and Company's obligations, under this
Agreement. In the event of any change in any applicable law, statute or rule
which narrows the right of a Delaware corporation to indemnify a member of its
board of directors or an officer, such changes, to the extent not otherwise
required by such law, statute or rule to be applied

-4-

to this Agreement shall have no effect on this Agreement or the parties' rights
and obligations hereunder.

(b) NONEXCLUSIVITY. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Certificate of Incorporation, its Bylaws, any agreement, any
vote of stockholders or disinterested Directors, the General Corporation Law of
the State of Delaware, or otherwise, both as to action in Indemnitee's official
capacity and as to action in another capacity while holding such office. The
indemnification provided under this Agreement shall continue as to Indemnitee
for any action taken or not taken while serving in an indemnified capacity even
though he may have ceased to serve in such capacity at the time of any action,
suit or other covered proceeding.

4. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of the
expenses, judgments, fines or penalties actually or reasonably incurred by him
in the investigation, defense, appeal or settlement of any civil or criminal
action, suit or proceeding, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion of such
expenses, judgments, fines or penalties to which Indemnitee is entitled.

5. MUTUAL ACKNOWLEDGEMENT. Both the Company and Indemnitee acknowledge that
in certain instances, Federal law or applicable public policy may prohibit the
Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.

6. OFFICER AND DIRECTOR LIABILITY INSURANCE. The Company shall, from time
to time, make the good faith determination whether or not it is practicable for
the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all policies of
director and officer liability insurance, Indemnitee shall be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits
as are accorded to the most favorably insured of the Company's directors, if
Indemnitee is a director; or of the Company's officers, if Indemnitee is not a
director of the Company but is an officer. Notwithstanding the foregoing, the
Company shall have no obligation to obtain or maintain such insurance if the
Company determines in good faith that such insurance is not reasonably
available, if the premium costs for such insurance are disproportionate to the
amount of coverage provided, if the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit, or if Indemnitee
is covered by similar insurance maintained by a subsidiary or parent of the
Company. In the event that the Company determines that it shall eliminate or
reduce the level of insurance coverage described herein applicable at any time
to Indemnitee, the Company shall

-5-

provide Indemnitee with thirty (30) days prior written notice prior to
effectuating such elimination or reduction.

7. SEVERABILITY. Nothing in this Agreement is intended to require or shall
be construed as requiring the Company to do or fail to do any act in violation
of applicable law. The Company's inability, pursuant to court order, to perform
its obligations under this Agreement shall not constitute a breach of this
Agreement. The provisions of this Agreement shall be severable as provided in
this Section 7. If this Agreement or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.

8. EXCEPTIONS. Any other provision herein to the contrary notwithstanding,
the Company shall not be obligated pursuant to the terms of this Agreement:

(a) CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance expenses
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 145 of the Delaware General Corporation Law, but such indemnification or
advancement of expenses may be provided by the Company in specific cases if the
Board of Directors has approved the initiation or bringing of such suit; or

(b) LACK OF GOOD FAITH. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or

(c) INSURED CLAIMS. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by an insurance carrier under a policy of
officers' and directors' liability insurance maintained by the Company.

(d) CLAIMS UNDER SECTION 16(B). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.

9. CONSTRUCTION OF CERTAIN PHRASES.

(a) For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
if Indemnitee is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or

-6-

agent of another corporation, partnership, joint venture, trust or other
enterprise, Indemnitee shall stand in the same position under the provisions of
this Agreement with respect to the resulting or surviving corporation as
Indemnitee would have with respect to such constituent corporation if its
separate existence had continued.

(b) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or beneficiaries;
and if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not
opposed to the best interests of the Company" as referred to in this Agreement.

10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all, substantially
all or a substantial part of the business or assets of the Company. This
Agreement shall inure to the benefit of Indemnitee and Indemnitee's heirs, legal
representatives, executives and administrators. The Company shall require and
cause any successor (whether direct or indirect, and whether by purchase,
merger, consolidation or otherwise) to all, substantially all or a substantial
part of the business or assets of the Company, to assume and agree in writing to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.

12. ATTORNEYS' FEES. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.

13. EFFECTIVENESS OF AGREEMENT. This Agreement shall be effective as of the
date set forth on the first page and may apply to acts or omissions of
Indemnitee which occurred prior to such date if Indemnitee was an officer,
director, employee or other agent of the Company, or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, as the time such act or
omission occurred.

-7-

14. NOTICE. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.

15. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of Delaware.

16. WAIVER OF JURY. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT
MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO FURTHER REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.

17. CHOICE OF LAW. This Agreement shall be governed by and its provisions
construed in accordance with the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware without regard to the conflict of law principles thereof.

18. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company against Indemnitee,
Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; PROVIDED, HOWEVER, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.

19. SUBROGATION. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

20. AMENDMENT AND TERMINATION. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

-8-

The failure of either party to enforce any rights under this Agreement shall not
be construed as a waiver of any rights of such party.

21. INTEGRATION AND ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding between the parties hereto and supersedes and merges all previous
written and oral negotiations, commitments, understandings and agreements
relating to the subject matter hereof between the parties hereto

-9-

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

CYTOKINETICS, INCORPORATED

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SIGNATURE OF AUTHORIZED SIGNATORY

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PRINT NAME AND TITLE

Address:
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AGREED TO AND ACCEPTED:

INDEMNITEE:

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SIGNATURE

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PRINT NAME AND TITLE

Address:
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Exhibit 10.45

CYTOKINETICS, INCORPORATED

COMMON STOCK PURCHASE AGREEMENT

THIS COMMON STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made as of March
___, 2004 by and among Cytokinetics, Incorporated, a Delaware corporation (the
"COMPANY"), and Glaxo Group Limited (the "INVESTOR").

RECITALS

A. Whereas, the Company has authorized the sale and issuance of shares of
its Common Stock (the "Stock") at a per share purchase price (the "PER SHARE
PRICE") equal to the per share purchase price to the public in the Company's
initial public offering of shares of its Common Stock pursuant to a registration
statement on Form S-1, as amended (the "REGISTRATION STATEMENT") filed with the
Securities and Exchange Commission (the "IPO").

B. Whereas, the Company has determined that it is in the best interests of
the Company and its stockholders to allow the Investor to make the investment in
the Company provided for, and on the terms and conditions set forth, in this
Agreement.

C. Whereas, the Investor desires to make such investment on such terms and
conditions.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions herein contained, the Company and the Investor hereby agree as
follows:

SECTION 1

PURCHASE AND SALE OF SHARES

1.1   AUTHORIZATION OF THE STOCK. On or prior to the Closing (as defined
in SECTION 1.4 below), the Company shall have authorized the sale and issuance
of the Stock to the Investor.

1.2   SALE OF THE STOCK. Subject to the terms and conditions hereof, the
Company will issue and sell to the Investor, and the Investor will purchase from
the Company, at the Closing, that number of whole shares of Stock equal to the
quotient obtained by dividing the dollar amount set forth opposite the
Investor's name on the Schedule of Purchasers attached hereto as SCHEDULE A by
the Per Share Price.

1.3   PRE-CLOSING. A pre-closing to the purchase and sale of the Stock
contemplated by this Agreement shall be held at 10:00 a.m. at the offices of
Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, CA 94304-1050
on the date one day prior to the Closing (or such other time and date upon which
the parties may agree). The Company shall provide to the Investor with notice of
the date and time of such pre-closing not later than twenty-four (24) hours
prior to the pre-closing. Notwithstanding the provisions of Section 7.4 below,
such notice may be oral. At the pre-closing the Investor shall transfer to the
Wilson Sonsini Goodrich & Rosati trust account the aggregate purchase price for
the Stock to be purchased by the Investor by check payable to the order of the

Company or by wire transfer pursuant to wire transfer instructions delivered to
the Investor by the Company, which purchase price shall be held in escrow by
Wilson Sonsini Goodrich & Rosati until the Closing.

1.4   CLOSING. The purchase and sale of the Stock shall take place at a
closing (the "CLOSING") to be held at the offices of Wilson Sonsini Goodrich &
Rosati, 650 Page Mill Road, Palo Alto, CA 94304-1050, immediately prior to the
closing of the Company's IPO (the "CLOSING DATE"). At the Closing, the Company
will deliver or cause to be delivered to the Investor a certificate or
certificates representing the Stock that the Investor is purchasing and, 
concurrently, Wilson Sonsini Goodrich & Rosati shall release from escrow and
deliver to the Company by wire transfer the purchase price for such Stock.

SECTION 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants as follows:

2.1   ORGANIZATION AND GOOD STANDING AND QUALIFICATIONS. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as currently conducted and as proposed to be conducted.
The Company is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on its business or properties. True and accurate copies of the
Company's Amended and Restated Certificate of Incorporation (the "RESTATED
CERTIFICATE") and Bylaws, as amended, and each as in effect at the Closing have
been provided to the Investor.

2.2   AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement, the performance of all obligations of the
Company hereunder, and the authorization, issuance, sale and delivery of the
Stock has been taken or will be taken prior to the Closing, and this Agreement
constitutes a valid and legally binding obligation of the Company, enforceable
in accordance with its terms, subject only to: (i) judicial principles limiting
the availability of specific performance, injunctive relief, and other equitable
remedies; and (ii) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect generally relating to or affecting
creditors' rights.

2.3   VALID ISSUANCE OF STOCK. The Stock when issued, sold and delivered
in accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and nonassessable, and will
be free of restrictions on transfer other than restrictions on transfer under
this Agreement and under applicable state and federal securities laws.

2.4   GOVERNMENTAL CONSENTS. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the offer, sale or issuance of the Stock, except for
the following: (i) the filing of the Restated Certificate in the office

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of the Secretary of State of the State of Delaware, which shall be filed by the
Company on or prior to the Closing; (ii) the filing of such notices as may be
required under the Securities Act of 1933, as amended (the "SECURITIES ACT");
and (iii) the compliance with applicable state securities laws, which compliance
will have occurred within the appropriate time periods therefor. Based in part
on the representations of the Investor set forth in Section 3 below, the offer,
sale and issuance of the Stock in conformity with the terms of this Agreement
are exempt from the registration requirements of Section 5 of the Securities Act
and from the registration or qualification requirements of applicable state
securities laws.

2.5   COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
or default of any provision of its Restated Certificate or Bylaws, as amended,
and each in effect on and as of the Closing. The Company is not in violation or
default of any material provision of any instrument, mortgage, deed of trust,
loan, contract, commitment, judgment, decree, order or obligation to which it is
a party or by which it or any of its properties or assets are bound which would
materially adversely affect the financial condition, business, property, assets
or liabilities of the Company or of any provision of any federal, state or, to
its knowledge, local statute, rule or governmental regulation which would
materially adversely affect the financial condition, business, property, assets
or liabilities of the Company. The execution, delivery and performance of and
compliance with this Agreement, and the issuance and sale of the Stock will not
result in any such violation, be in conflict with or constitute, with or without
the passage of time or giving of notice, a default under any such provision,
require any consent or waiver under any such provision (other than any consents
or waivers that have been obtained), or result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of the
Company pursuant to any such provision.

SECTION 3

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

The Investor hereby represents and warrants that:

3.1   EXPERIENCE. The Investor is experienced in evaluating companies such
as the Company, is able to fend for itself in transactions such as the one
contemplated by this Agreement, has such knowledge and experience in financial
and business matters that the Investor is capable of evaluating the merits and
risks of the Investor's prospective investment in the Company, and has the
ability to bear the economic risks of the investment.

3.2   INVESTMENT. The Investor is acquiring the Stock for investment for
the Investor's own account and not with the view to, or for resale in connection
with, any distribution thereof. The Investor understands that the Stock has not
been registered under the Securities Act by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent as expressed herein.
The Investor acknowledges and agrees that the Stock purchased by the Investor,
until disposition of such Stock in accordance with the provisions of this
Agreement, shall remain at all times within the Investor's control. The Investor
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to any
third person with respect to

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any of the Stock. The Investor understands and acknowledges that the offering of
the Stock pursuant to this Agreement will not be registered under the Securities
Act on the ground that the sale provided for in this Agreement and the issuance
of securities hereunder is exempt from the registration requirements of the
Securities Act.

3.3   RULE 144. The Investor acknowledges that the Stock must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. The Investor is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit limited
resale of shares purchased in a private placement subject to the satisfaction of
certain conditions. The Investor covenants that, in the absence of an effective
registration statement covering the stock in question, the Investor will sell,
transfer, or otherwise dispose of the Stock only in a manner consistent with the
Investor's representations and covenants set forth in this Section 3. In
connection therewith, the Investor acknowledges that the Company will make a
notation on its stock books regarding the restrictions on transfers set forth in
this Section 3 and will transfer securities on the books of the Company only to
the extent not inconsistent therewith.

3.4   ACCESS TO INFORMATION. The Investor has received and reviewed
information about the Company and has had an opportunity to discuss the
Company's business, management and financial affairs with its management and to
review the Company's facilities. The Investor has carefully reviewed the
information prepared by the Company in connection with this offering and has
been furnished with all other materials that it considers relevant to its
investment in the Stock. The Investor has had a full opportunity to ask
questions of and receive answers from the Company, or any person or persons
acting on behalf of the Company, concerning the terms and conditions of an
investment in the Stock. The Investor understands that such discussions were
intended to describe the aspects of the Company's business and prospects which
the Company believes to be material, but were not necessarily a thorough or
exhaustive description. No statement or printed material contrary to the
information contained in the information has been made or given to the Investor
by or on behalf of the Company. The Investor is not relying upon, and has not
relied upon, any statement, representation or warranty made by any person,
including without limitation, any of the Company's underwriters, except for the
statements, representations and warranties contained in this Agreement.

3.5   AUTHORIZATION. This Agreement when executed and delivered by the
Investor will constitute a valid and legally binding obligation of
the Investor, enforceable in accordance with its terms, subject to: (i) judicial
principles respecting election of remedies or limiting the availability of
specific performance, injunctive relief, and other equitable remedies; and (ii)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect generally relating to or affecting creditors' rights.

3.6   INVESTOR STATUS. The Investor acknowledges that it is either (i) an
institutional "accredited investor" as defined in Rule 501(a) of Regulation D of
the Securities Act (an "Institutional Accredited Investor") or (ii) a "qualified
institutional buyer" as defined in Rule 144A of the Securities Act, as indicated
on SCHEDULE A hereto, and the Investor shall submit to the Company such further
assurances of such status as may be reasonably requested by the Company.

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3.7   FOREIGN INVESTOR. The Investor hereby represents that it has
satisfied itself as to the full observance of the laws of its jurisdiction in
connection with any invitation to subscribe for the Stock or any use of this
Agreement, including (i) the legal requirements within its jurisdiction for the
purchase of the Stock, (ii) any foreign exchange restrictions applicable to such
purchase, (iii) any governmental or other consents that may need to be obtained,
and (iv) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale, or transfer of the Stock. The
Investor's subscription and payment for and continued beneficial ownership of
the Stock, will not violate any applicable securities or other laws of the
Investor's jurisdiction.

3.8   NO INDUCEMENT. The Investor was not induced by the filing of the
Registration Statement in connection with the Company's IPO to participate in
the offer and sale of the Stock, and the Investor's decision to so participate
was not influenced by the information contained in the Registration Statement.

SECTION 4
CONDITIONS TO INVESTOR'S OBLIGATIONS AT CLOSING

The obligations of the Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, any of
which may be waived in writing by the Investor:

4.1   NO INJUNCTION, ETC. No preliminary or permanent injunction or other
binding order, decree or ruling issued by a court or governmental agency shall
be in effect which shall have the effect of preventing the consummation of the
transactions contemplated by this Agreement.

4.2   REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in SECTION 2 shall be true and correct on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the Closing.

4.3   PERFORMANCE. The Company shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or before each
Closing.

4.4   COMPLIANCE CERTIFICATE. A duly authorized officer of the Company
shall deliver to the Investor at the Closing a certificate stating that the
conditions specified in Sections 4.2 and 4.3 have been fulfilled.

4.5   SECURITIES LAWS. The offer and sale of the Stock to the Investor
pursuant to this Agreement shall be exempt from the registration requirements of
the Securities Act and the registration and/or qualification requirements of all
applicable state securities laws.

4.6   CORPORATE PROCEEDINGS. All corporate and other proceedings required
to carry out the transactions contemplated by this Agreement, and all
instruments and other documents relating to such transactions, shall be
reasonably satisfactory in form and substance to the Investor and its

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counsel, and the Investor shall have been furnished with such instruments and
documents as such counsel shall have reasonably requested.

4.7   INITIAL PUBLIC OFFERING. The Registration Statement prepared in
connection with the Company's IPO shall have been filed with, and declared
effective by, the Securities and Exchange Commission.

4.8   AUTHORIZATIONS. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body that are required in connection
with the lawful issuance and sale of the Stock pursuant to this Agreement shall
have been duly obtained and shall be effective on and as of the Closing.

SECTION 5

CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING

The obligations of the Company to the Investor under this Agreement are
subject to the fulfillment on or before each Closing of each of the following
conditions by the Investor:

5.1   REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Investor contained in Section 3 shall be true and correct on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing.

5.2   SECURITIES LAW COMPLIANCE. The offer and sale of the Stock to the
Investor pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act and the registration and/or qualification
requirements of all applicable state securities laws.

5.3 AUTHORIZATION. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body that are required in connection
with the lawful issuance and sale of the Stock pursuant to this Agreement shall
have been duly obtained and shall be effective on and as of the Closing.

5.4 CORPORATE PROCEEDINGS. All corporate and other proceedings
contemplated at the Closing hereby, and all documents and instruments incident
to these transactions, shall be reasonably satisfactory in substance to the
Company and its counsel.

5.5 LOCK-UP AGREEMENT. The Investor shall have delivered to Goldman, Sachs
& Co. an executed Lock-Up Agreement in the form attached hereto as EXHIBIT A.

5.6 PAYMENT OF PURCHASE PRICE. The Investor shall have delivered to the
Company the purchase price for the Stock as set forth in Section 1.4 hereof.

SECTION 6

INVESTOR COVENANTS

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6.1   RESTRICTIONS ON RESALE OF STOCK.

(a) The Investor agrees that during the Research Term (as such term
is defined in the Collaboration and License Agreement between the parties dated
June 20, 2001, but not to include any extensions of the initial Research Term
(the "Restriction Term")), the Investor shall not offer, sell, contract to sell,
pledge, grant any option to purchase, make any short sale or otherwise dispose
of in any manner, either directly or indirectly ("Sale" or "Sell"), the Stock
purchased pursuant to this Agreement (the "Covenant Shares"), provided that,
nothing in the foregoing sentence shall prevent the Investor from participating
in, and selling the Covenant Shares through, registrations of the Company's
Common Stock ("Common Stock") pursuant to the provisions of Section 1.3 of the
Company's Amended and Restated Investors' Rights Agreement dated March 21, 2003,
as amended.

(b) After the expiration of such Restriction Term the Investor and
the Company agree and acknowledge that it is in their mutual interest that
disposition of the Covenant Shares be accomplished in a manner that does not
disrupt or undermine the trading market for Common Stock (including any undue
adverse reaction to the fact of sale of Covenant Shares by the investor as a
research collaborator of the Company), and the parties will work together to
explore methods of disposition in order to achieve such goal.

(c) Notwithstanding anything to the contrary in this Section 6.1,
after the period that is 180 days after IPO the Investor may sell Covenant
Shares, if (i) the publicly traded fair market value per share of publicly
traded shares of Common Stock, at the time of the sale by the Investor of
Covenant Shares, is greater than two and a half times the per share price (as
adjusted for combination, stock splits, stock dividends, subdivisions or
split-ups) that shares of Common Stock were initially offered to the public in
the IPO (the "IPO Price") and (ii) no sales by the Investor of shares of
Covenant Shares are at a price per share less than two and a half times (as
adjusted for combination, stock splits, stock dividends, subdivisions or
split-ups) the IPO Price. If the Investor intends to sell any Covenant Shares
held by it pursuant to the provisions of this Section 6.1(c), the Investor and
the Company agree and acknowledge that it is in their mutual interest that
disposition of the Covenant Shares be accomplished in a manner that does not
disrupt or undermine the trading market for the Company's Common Stock
(including any undue adverse reaction to the fact of sale of Covenant Shares by
the investor as a research collaborator of the Company), and the parties will
work together to explore methods of disposition in order to achieve such goal.
Investor agrees to execute a lockup agreement covering sales of Covenant Shares
during the 180-day period following the IPO as requested by the underwriters in
the IPO.

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SECTION 7

MISCELLANEOUS

7.1   GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of California as applied to agreements entered into and
performed entirely in the State of California by residents thereof.

7.2   SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Investor and the closing
of the transactions contemplated hereby.

7.3   SUCCESSORS, ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.

7.4   NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be sent by facsimile or mailed by
registered or certified mail, postage prepaid, return receipt requested, or
otherwise delivered by hand or by messenger, addressed (a) if to an Investor, at
such address as the Investor shall have furnished to the Company in writing, or
(b) if to the Company, at the following address:

Cytokinetics, Incorporated
280 E Grand Ave, Suite #2
South San Francisco, CA 94080

or at such other address as the Company shall have furnished to the Investor. If
notice is provided by facsimile, it shall be deemed to be given one (1) business
day after transmission (with receipt of appropriate confirmation). If notice is
provided by U.S. mail, notice shall be deemed to be given four (4) days after
proper deposit in a U.S. mailbox, postage prepaid, and addressed to the parties
at the addresses provided to the Company or such other address as a party may
request by notifying the other in writing. If notice is provided by a messenger
service that guarantees "next business day" delivery, it shall be deemed
effective one (1) business day after deposit with such messenger service.

7.5   EXPENSES. The Company and the Investor shall bear their own expenses
and legal fees incurred on their behalf with respect to this Agreement and the
transactions contemplated hereby.

7.6   FINDER'S FEES. The Company and the Investor shall each indemnify and
hold the other harmless from any liability for any commission or compensation in
the nature of a finder's fee, placement fee or underwriter's discount (including
the costs, expenses and legal fees of defending against such liability) for
which the Company or the Investor, or any of their respective partners,
employees, or representatives, as the case may be, is responsible.

7.7   COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be enforceable against the party actually executing the
counterpart, and all of which together shall constitute one instrument.

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7.8   SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.

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IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the date first set forth above.

CYTOKINETICS, INCORPORATED                GLAXO GROUP LIMITED

By:                                       By:
-----------------------------------    --------------------------------------

Name:                                     Name:
---------------------------------    --------------------------------------

Title:                                    Title:
--------------------------------    --------------------------------------

SIGNATURE PAGE TO CYTOKINETICS, INCORPORATED
COMMON STOCK PURCHASE AGREEMENT

SCHEDULE A

SCHEDULE OF PURCHASERS

Name                      Investment Amount    Type of Investor
----                      -----------------    ---------------------------------

Glaxo Group Limited       $7,000,000.00        Institutional Accredited Investor

EXHIBIT A

LOCK-UP AGREEMENT

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------

We hereby consent to the use in this Amendment No. 1 Registration Statement on 
Form S-1 of our report dated March 10, 2004, except for Note 13 as to which the
date is         , 2004, relating to the financial statements and our report 
dated March 10, 2004 relating to the financial statement schedule of 
Cytokinetics, Incorporated (a development stage enterprise), which appear in 
such Registration Statement. We also consent to the reference to us under the 
heading "Experts" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

San Jose, California
March 11, 2004