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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS

PURSUANT TO SECTIONS 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Mark One)

For the year ended December 31, 2004

OR

For the transition period from              to             

Commission File Number: 000-50564

RENOVIS, INC.

(Exact name of registrant as specified in its charter)

(650) 266-1400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001 per share

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The aggregate market value of the voting and non-voting common equity held by non-affiliates was $128,996,653 computed by reference to the last sales price of $9.16 as reported by the Nasdaq National Market System, as of the last business day of the Registrant’s most recently completed second fiscal quarter, June 30, 2004.

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of March 16, 2005 was 24,704,016.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after registrant’s fiscal year end December 31, 2004 are incorporated by reference into Part III of this report.

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RENOVIS, INC.

FORM 10-K — ANNUAL REPORT

FOR THE YEAR ENDED DECEMBER 31, 2004

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PART I

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K, including the sections entitled “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements.

Forward-looking statements include, but are not limited to, statements about:

Forward-looking statements also include, but are not limited to, expectations of future levels of research and development spending, general and administrative spending, levels of capital expenditures and operating results, sufficiency of our capital resources and our intention to seek revenue from product sales, upfront fees and milestone payments and royalties resulting from the license of our intellectual property. Further, there can be no assurance that the necessary regulatory approvals will be obtained, that we will be able to develop commercially viable products or that any of our programs will be partnered with pharmaceutical partners. 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 annual report and other risks detailed in our reports filed with the Securities and Exchange Commission. 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 report or to conform these statements to actual results.

Item 1. Business

Overview

Renovis is a biopharmaceutical company developing drugs to treat neurological diseases and disorders. The Company was incorporated in Delaware in January 2000. We currently focus our research and development programs in the areas of neuroprotection, pain and neuroinflammatory diseases. Our most advanced product candidate Cerovive^® (NXY-059), is a novel free radical trapping neuroprotectant in development for the treatment of acute ischemic stroke. In May 2003, our exclusive licensee, AstraZeneca AB, commenced two Phase III clinical trials (SAINT I and SAINT II) with Cerovive^® (NXY-059) to determine its effect on disability and neurological recovery in acute ischemic stroke patients. In December 2004, we announced that enrollment has been completed in one of the two Phase III trials (SAINT I). We expect to report top-line results from the SAINT I trial in coordination with AstraZeneca during the second quarter of 2005. AstraZeneca is also conducting a Phase II trial (CHANT) with Cerovive^® (NXY-059) to assess its safety and tolerability in patients

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with acute intracerebral hemorrhage. Patient enrollment in the second Phase III trial (SAINT II) and in the Phase II trial (CHANT) is proceeding consistent with AstraZeneca’s announced plan to seek regulatory approval for Cerovive^® (NXY-059) in 2006. In addition to Cerovive^® (NXY-059), we are independently conducting clinical trials of two novel chemical entities. REN-1654 is an oral drug candidate that we are testing in a Phase II clinical trial in sciatica, a neuropathic pain indication. We are also developing REN-850, an oral drug candidate for multiple sclerosis (MS) and other autoimmune diseases, which entered a Phase I clinical trial in February 2005. In July 2004, we announced our decision to discontinue efforts to commercialize REN-213, an intravenous drug candidate that we were developing for the treatment of acute post-operative pain. In March 2005, we announced our decision to discontinue development of REN-1654 in post-herpetic neuralgia (PHN). In addition to our clinical programs, we are conducting preclinical research and development activities in the areas of neuroprotection and pain to identify future product candidates for clinical development and we are evaluating other opportunities to apply our drug discovery capabilities in new program areas.

Our Product Pipeline

The following table summarizes our product candidates in clinical development and our research programs:

Cerovive^® (NXY-059)

Cerovive^® (NXY-059) is our novel free radical trapping neuroprotectant in development for the treatment of acute ischemic stroke. Stroke is the third leading cause of death in the United States and Western Europe and the most common cause of adult long-term disability in the United States. Cerovive^® (NXY-059) is a neuroprotectant which reduces infarct size and preserves brain function in experimental models of acute ischemic stroke. In May 2003, our exclusive licensee, AstraZeneca, commenced two Phase III clinical trials (SAINT I and SAINT II) with Cerovive^® (NXY-059) to determine its effect on disability and neurological recovery in acute ischemic stroke patients. In August 2004, AstraZeneca initiated a Phase II clinical trial (CHANT) with Cerovive^® (NXY-059) to assess its safety and tolerability in patients with acute intracerebral hemorrhage. In December 2004, we announced that patient enrollment in one of the two Phase III trials (SAINT I) had been completed. We expect to announce top-line results from this trial in coordination with AstraZeneca during the second quarter of 2005. Enrollment of patients in the SAINT II and CHANT trials is proceeding consistent with AstraZeneca’s previously announced plan to seek regulatory approval of Cerovive^® (NXY-059) in 2006. We believe that if Cerovive^® (NXY-059) demonstrates neuroprotective benefits in stroke patients, the drug candidate may also prove useful to treat a range of other brain injuries.

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Market Opportunity

Stroke is an acute medical condition involving the death of brain tissue caused by blockage or rupture of the blood vessels leading to or within the brain. There are two major types of strokes. According to the Foundation for Education and Research in Neurological Emergencies, ischemic strokes account for approximately 85% and hemorrhagic strokes account for approximately 15% of all strokes in the United States. Ischemic strokes are caused by a blockage, called an occlusion, within an artery leading to or within the brain, while hemorrhagic strokes are caused by the sudden rupture or bursting of such an artery. When either kind of stroke occurs, blood flow and the supply of oxygen to an area of the brain are interrupted, leading to death of brain tissue. Although initial damage to brain tissue occurs within the first hour, much of the damage occurs subsequently up to three days after the stroke.

Existing treatment options, called thrombolytics, focus on restoring blood flow in patients with acute ischemic stroke and must be administered no more than three hours after the stroke. For a thrombolytic, such as recombinant tissue plasminogen activator (tPA), to be administered safely, a patient must receive a computerized tomography (CT) scan within three hours of the onset of symptoms to verify that the stroke did not result from bleeding in the brain (a hemorrhagic stroke), a condition that would be worsened by administration of a thrombolytic. In addition, thrombolytics may induce brain hemorrhage in ischemic stroke patients. According to the American Heart Association, only 3% to 5% of stroke patients receive tPA for acute ischemic stroke, which we believe is due to the treatment restrictions associated with thrombolytics.

The only neuroprotectant drug approved for treatment of stroke patients is edaravone, which is approved only in Japan. Edaravone was approved by Japanese regulatory authorities based on positive results from a 252-patient Phase III trial. In its first full year on the market in Japan (2002-2003), edaravone achieved sales in excess of $275 million and was administered to more than 125,000 patients. However, following its approval and introduction to the market, edaravone was associated with infrequent serious adverse events, including deaths, in a number of patients with kidney dysfunction. Given these safety concerns, sales growth in Japan has fallen significantly, and we believe it is unlikely that this drug will be approved in the United States or Europe. Edaravone is a free radical scavenger (see below) that differs from Cerovive^® (NXY-059) in both structure and metabolism. Accordingly, we believe that the safety concerns with edaravone are not predictive of the safety of Cerovive^® (NXY-059).

According to the American Heart Association, the annual cost of stroke-related care in the United States exceeded $53 billion in 2004 and the average lifetime cost of ischemic stroke exceeds $140,000 per patient including inpatient care, rehabilitation and follow-up care. Based on figures reported by Datamonitor, a business information company, more than two million strokes occur each year in the world’s major industrialized countries, and, according to the American Heart Association, 700,000 of such strokes occur in the United States. The leading product for stroke is tPA, which, due to its treatment restrictions, is used to treat only 3% to 5% of stroke patients annually. According to data published by Frost & Sullivan, a marketing, consulting and training company, tPA accounts for approximately $200 million in annual sales. We believe a neuroprotectant drug capable of reducing stroke-related mortality and disability that can be administered safely within six hours after stroke would be used to treat a substantially broader population of stroke victims.

Scientific Overview

Cerovive^® (NXY-059), a novel compound of the nitrone class, is a neuroprotectant that binds to and inactivates (by scavenging or trapping) cell-damaging free radicals. Free radicals are toxic molecules that the body produces in response to tissue injury, in particular after a stroke. As a free radical trapping neuroprotectant, Cerovive^® (NXY-059) acts to neutralize the free radicals and protects brain cells from further damage and death.

An acute ischemic stroke causes the nerve cells (called neurons) in the immediate area, the core infarct, to be cut off from their much-needed supply of blood and oxygen. Without oxygen, these neurons die within

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minutes to hours. When neurons in the core infarct die, they release chemicals that set off a chain reaction called the “stroke cascade”. This chain reaction, which lasts for hours to days, endangers neurons in a much larger area surrounding the core infarct by creating an area of brain tissue for which the blood supply is compromised but not completely cut off. Tissue within this much larger area of the brain, called the penumbra, will also die over hours to days. As additional neurons die, the penumbra expands progressively outward from the initial infarct, and additional neurological damage occurs. As neurons in an area of the brain die, the abilities and function once controlled by those neurons are compromised or lost. This may include functions such as speech, movement and memory. Ultimately, the loss of brain tissue can result in death. A neuroprotectant drug that can halt the stroke cascade at a key step has the potential of preserving brain tissue in the penumbra and limiting the loss of neurological function.

Because the death of neurons and expansion of the penumbra occur over a period of many hours to several days, there are windows of opportunity (clinically called therapeutic windows) for intervening at key steps in the stroke cascade with various neuroprotectant drugs. An early step in this cascade is associated with “glutamate excitotoxicity”, a mechanism that provides a short therapeutic window, typically within the first 60 minutes after a stroke. This early step in the cascade leads to damage to mitochondria, the key structures within the neuron that regulate energy.

In a later stage in the cascade, the damaged mitochondria generate free radicals, which damage both the affected neuron and surrounding neurons, ultimately leading to the death of these neurons hours to days later. This free radical generation provides a longer and therefore more clinically relevant therapeutic window during the first 12 hours after stroke.

During the 1990s, a number of potential neuroprotectant drugs that block glutamate excitotoxicity were tested. In animal models of acute ischemic stroke, many of these drugs were effective in mitigating further damage caused by the stroke cascade when given within 30 minutes, and occasionally up to two hours, after stroke. However, when subsequently tested in human patients up to 12 hours after stroke, they did not demonstrate statistically significant efficacy. Thus, the therapeutic window to block glutamate excitotoxicity, the target of these drugs, was too short (less than two hours) to be clinically useful for a significant number of stroke patients. Moreover, some of these drugs had serious side effects, which required testing in human patients at doses lower than those levels that had demonstrated efficacy in preclinical animal models.

Given the history of clinical trials for stroke drugs that did not demonstrate efficacy, an industry/academic roundtable group was convened in the late 1990s to establish a stringent set of preclinical and clinical criteria designed to guide the successful development of neuroprotectant drugs. This group published the Stroke Therapy Academic Industry Roundtable criteria (the STAIR criteria) in 1999 in order to improve the selection process for a drug to enter pivotal human clinical trials. Based on our research and review of published data, we believe Cerovive^® (NXY-059) is the only stroke drug candidate that has met all of the STAIR criteria.

The Cerovive^® (NXY-059) Solution

Cerovive^® (NXY-059) binds to and inactivates (or traps) free radicals thereby protecting brain cells from damage caused by a stroke, but, unlike a thrombolytic, it does not restore blood flow. It has been shown to reduce infarct size and preserve brain function in animal models of stroke. The functional improvement seen in these models shows the potential to preserve functions such as speech, movement and memory in stroke patients. By trapping free radicals, Cerovive^® (NXY-059) targets a more clinically relevant therapeutic window than many drugs previously tested. Cerovive^® (NXY-059) may also have mechanisms of action that protect neurons beyond its function as a free radical trap. We believe that Cerovive^® (NXY-059) is positioned to be the first neuroprotectant drug marketed for stroke in the United States and Europe.

Cerovive^® (NXY-059) represents the first use of a class of compounds called nitrones to be developed in the clinic for stroke. Cerovive^® (NXY-059) demonstrates neuroprotective efficacy in both transient and permanent

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occlusion ischemic stroke models and hemorrhagic stroke models in rats, in permanent occlusion ischemic stroke models in monkeys and in another stroke model in rabbits. It has been shown to substantially lessen both motor and cognitive disability and to reduce infarct volume in monkeys when administered four hours after the onset of an ischemic stroke.

We believe that Cerovive^® (NXY-059) may have another therapeutic value for stroke patients as well. When blocked arteries are unblocked, either spontaneously or by a thrombolytic drug, a rapid increase in blood flow, called reperfusion, occurs resulting in further brain damage, called reperfusion injury. Much of the reperfusion injury involves a sudden increase in free radicals. Following many ischemic strokes, there is spontaneous unblocking of arteries (thrombolysis). About half of stroke patients spontaneously reperfuse within three to four days. We believe that the continuous intravenous administration of Cerovive^® (NXY-059) for 72 hours will continue to protect the brain of stroke patients against the damage that occurs from the production of free radicals during both spontaneous reperfusion and reperfusion induced by thrombolytic drugs. If Cerovive^® (NXY-059) receives marketing approval, we believe it may be used both as monotherapy as well as in combination with tPA and other thrombolytic (blood flow increasing) therapies that are currently being developed.

Prior Clinical Trials

A total of ten clinical trials have been performed with Cerovive^® (NXY-059), including two trials in subjects with acute ischemic or hemorrhagic stroke (184 subjects exposed to Cerovive^® (NXY-059)), seven in healthy subjects (286 subjects exposed to Cerovive^® (NXY-059)) and one in subjects with kidney impairment (24 subjects exposed to Cerovive^® (NXY-059)). Four double-blinded, placebo controlled trials have been performed in healthy volunteers to explore safety, tolerability, absorption, metabolism, distribution and excretion of Cerovive^® (NXY-059) administered intravenously (i.v.) for eight to 72 hours in increasing doses. The adverse events that occurred were not considered clinically significant and Cerovive^® (NXY-059) was hence judged to be well tolerated in healthy volunteers in these trials.

Two Phase IIa trials were performed to evaluate safety and tolerability of 72-hour infusions of Cerovive^® (NXY-059) in subjects with acute stroke. The first trial enrolled 135 subjects with ischemic stroke and fifteen subjects with hemorrhagic stroke. The second trial enrolled 135 subjects with symptoms of acute ischemic stroke. The study drug was initiated within 24 hours of symptom onset. Cerovive^® (NXY-059) was well tolerated with no concerns raised by the safety evaluation.

These Phase IIa clinical trials were primarily designed to examine the safety of Cerovive^® (NXY-059). In May 2003, AstraZeneca advanced Cerovive^® (NXY-059) into Phase III clinical trials. We believe Cerovive^® (NXY-059) is a strong Phase III product candidate based on the Phase II data, when combined with all of the other clinical safety data, the compelling efficacy shown in preclinical animal models in monkeys and rodents, and our belief, based on our research and review of published data, that Cerovive^® (NXY-059) is the only neuroprotectant drug candidate to have passed the STAIR criteria.

We believe that Cerovive^® (NXY-059) entered Phase III clinical trials with strong preclinical and clinical data on safety and efficacy. Our belief, based on our research and review of published data, is that Cerovive^® (NXY-059) is the only neuroprotectant that has met the STAIR criteria, and is the only drug candidate that has been shown to substantially decrease both motor and cognitive disability in primates when given four hours after stroke.

Current Clinical Trials

In May 2003, AstraZeneca initiated two multi-national, multi-center, randomized, double-blinded Phase III clinical trials to test Cerovive^® (NXY-059) versus a placebo. “Double-blinded” means neither the researcher nor the patient knows whether the patient has received the study drug or the placebo. “Randomized” means that

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patients are randomly assigned to receive the study drug treatment or the placebo. These two Stroke-Acute Ischemic-NXY Treatment trials (SAINT I and SAINT II) are parallel trials designed to include more than 1,500 subjects each. The first trial, SAINT I, was conducted primarily in Europe with participation from study centers located in other regions of the world. In December 2004, AstraZeneca completed enrollment of subjects in the SAINT I trial. We expect to report top-line results from the SAINT I trial in coordination with AstraZeneca during the second quarter of 2005. The second trial, SAINT II, is being conducted primarily in the United States and Canada and is planned to include more than 1,500 subjects at more than 200 sites. Patient recruitment in SAINT II is proceeding consistent with the goal announced by AstraZeneca to seek regulatory approval in 2006.

The Phase III trials are designed to determine the efficacy and evaluate the safety of Cerovive^® (NXY-059) when administered up to six hours after the onset of stroke symptoms. The drug candidate is being administered as a one-hour i.v. loading-dose infusion followed by a 71-hour i.v. maintenance dose. Phase III clinical trials are being conducted with similar study drug exposure and time window for which behavioral efficacy has been shown in primates. The mean time for the start of study drug administration for each trial in acute ischemic stroke, and for all centers within these trials, is four hours after the onset of symptoms. In addition to this time limitation, to be enrolled in the SAINT trials, patients must show symptoms of acute ischemic stroke with limb weakness and have had full functional independence before their stroke. The primary outcome will be measured three months after stroke by examining functional deficit (overall recovery and recovery of motor function) as measured by a standard disability scoring system called the modified Rankin Scale.

The SAINT I and SAINT II clinical trials were designed with several interim analyses. At each interim analysis, an independent data and safety monitoring board (IDMB) reviews patient data to evaluate the safety or efficacy of Cerovive^® (NXY-059). At such time, a decision can be made to either stop or continue the clinical trials. In October 2004, we announced that AstraZeneca would continue the Phase III SAINT trials with Cerovive^® (NXY-059) as planned based on a recommendation from the IDMB following its review of data on safety and stroke outcomes after a three-month follow-up period in 1,000 patients. The purpose of this analysis was to assess whether it would be futile (not meaningful) to continue the SAINT trials when looking at the degree of post-stroke disability experienced by patients who received study drug as compared to patients who received placebo, and to determine if there were safety concerns.

In August 2004, AstraZeneca initiated enrollment in the CHANT (Cerebral Hemorrhagic and NXY-059 Treatment) trial to assess the safety and tolerability of 72 hours i.v. infusion of Cerovive^® (NXY-059) in adult patients with acute intracerebral hemorrhage. This trial is planned to involve 600 subjects in approximately 150 centers in more than 20 countries. Patient recruitment in the CHANT trial is also proceeding consistent with the goal announced by AstraZeneca to seek regulatory approval of Cerovive^® (NXY-059) in 2006.

Commercialization

Renovis has licensed to AstraZeneca the rights to develop, market and sell Cerovive^® (NXY-059) worldwide. Pursuant to a license agreement, AstraZeneca made milestone payments totaling $4.5 million to Renovis in February 2003 when it received FDA approval to commence the Phase III clinical trials. AstraZeneca may be required to make additional milestone payments to Renovis in the future upon regulatory filings and marketing approvals of Cerovive^® (NXY-059) in the United States and other territories. Furthermore, Renovis is entitled to receive mid-teen percentage royalties on worldwide net sales of Cerovive^® (NXY-059). AstraZeneca has announced a goal to request regulatory approval of Cerovive^® (NXY-059) in 2006.

If Cerovive^® (NXY-059) meets its target product profile, we believe that it will be adopted rapidly by physicians in an area with a significant medical need due to the limitations of existing therapies and the severe nature of the disabilities suffered by many stroke patients. As one of the world’s leading pharmaceutical companies, AstraZeneca’s global regulatory, sales and marketing capabilities should allow it to drive rapid product adoption and use throughout the world. In addition, AstraZeneca is well positioned to potentially broaden the clinical uses and tests of the drug candidate in related indications involving brain injury.

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REN-1654

REN-1654 is an oral drug candidate that we are evaluating in a Phase II clinical trial for the treatment of sciatica, a specific type of neuropathic pain. Despite the wide assortment of prescription pain relievers already available, a number of specific types of neuropathic pain, including sciatica, remain inadequately treated. REN-1654 has been shown to decrease inflammatory signaling that we believe plays a significant role in the damage of nerve cells that frequently underlies sciatica and certain other forms of neuropathic pain.

Market Opportunity

Neuropathic pain is a form of pain that results from damage to nerves. The damage may result from a variety of causes, including illness, injury, and exposure to the toxic effects of chemotherapy drugs. Regardless of its original cause, neuropathic pain may persist for months or years after the original nerve damage occurs. We believe that an anti-inflammatory drug for the nervous system could be used following illness or injury to prevent the onset of, or reduce, many forms of neuropathic pain.

Conventional analgesics, or pain relievers, are frequently ineffective in treating sciatica and other forms of neuropathic pain. As a result, drugs originally developed as anti-depressants and anti-convulsants, are frequently prescribed for neuropathic pain. One of these drugs, gabapentin, was originally approved as an anti-convulsant for the treatment of epilepsy and later became approved for treatment of neuropathic pain. Based on figures reported by Pfizer, in 2004, sales of gabapentin exceeded $2.7 billion, a significant portion of which related to use of the drug to treat various forms of neuropathic pain. In September 2004, gabapentin became available to patients in generic form at a significantly reduced cost. However, gabapentin and other drugs currently prescribed for neuropathic pain are not effective in a high proportion of patients and, even where effective, frequently provide only modest pain relief at the expense of adverse side effects. Accordingly, there is a significant need for improved neuropathic pain therapies.

Scientific Overview

Inflammation in the nervous system is a common cause of multiple types of neuropathic pain. REN-1654 reduces inflammation in the nervous system by decreasing the release of tumor necrosis factor a (TNFa), a signaling molecule used by the immune system and certain cells in the nervous system. REN-1654 has also been shown to inhibit the release of other pro-inflammatory signaling molecules, or cytokines. During inflammation, TNFa is thought to play a key role both in directly causing an increase in pain signaling and in damaging nerves by increasing the inflammatory response.

The potential utility of TNFa inhibition as a strategy for treating certain types of neuropathic pain has been demonstrated in human studies. Drugs such as infliximab, which act by inhibiting TNFa, have demonstrated therapeutic potential in pilot studies of patients with sciatica. While cost and route of administration significantly limit the practical utility of these and other similar injectable drugs as treatments for neuropathic pain, they validate TNFa inhibition as a therapeutic strategy for common types of neuropathic pain, such as sciatica, that involve significant nerve inflammation.

The REN-1654 Solution

REN-1654 is an oral, small molecule drug candidate that we believe may be effective as a treatment for certain types of neuropathic pain in which nerve inflammation plays a significant role. REN-1654 penetrates into the nervous system effectively and has a half-life which facilitates once-daily dosing. It has been shown to inhibit the release of TNFa and other pro-inflammatory molecules by certain cell types. By decreasing the amount of TNFa in and around neurons, REN-1654 should reduce the nerve signaling and resulting pain promoted by TNFa and decrease the amount of inflammation which leads to nerve damage. REN-1654 has demonstrated efficacy in preclinical models of neuropathic pain involving inflammation.

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Clinical Trials

In twelve previous safety trials REN-1654 was orally administered in more than 340 subjects, establishing the safety of the drug candidate for further clinical development. We are currently conducting a multi-center, double-blinded, placebo-controlled Phase II clinical trial with REN-1654 to explore its effectiveness for treatment of sciatica, a neuropathic pain indication in which pro-inflammatory cytokines are believed to play a key role in development of the pain. The primary endpoint of this trial is the change in daily categorical pain ratings at baseline compared to the end of a three week treatment period. Patient enrollment is continuing in this trial. We currently plan to enroll 72 patients, all of whom developed leg pain associated with sciatica no more than 12 weeks prior to enrollment. We expect to report data from this study by the end of the third quarter of 2005. In March 2005, we announced our decision to discontinue development of REN-1654 in PHN following our review of results from a Phase II clinical trial that we conducted in this neuropathic pain indication. We do not believe that the results from the Phase II clinical trial with REN-1654 in PHN are predictive of the results that we expect to report from the ongoing Phase II trial with REN-1654 in sciatica patients.

Commercialization

Our current plan is to independently develop REN-1654 through at least Phase II trials. Thereafter, we may seek strategic partners in international markets and potentially the United States. We hold exclusive worldwide rights to patents covering REN-1654. We hold composition-of-matter and method-of-use patents which protect REN-1654 in the United States and other territories.

REN-850

REN-850 is an oral, small molecule drug candidate that we are evaluating in a Phase I clinical trial for the treatment of multiple sclerosis (MS) and potentially other autoimmune diseases. MS and many other autoimmune diseases remain inadequately treated.

Market Opportunity

Autoimmune diseases occur when the cells of the immune system inappropriately attack and damage normal tissues in an otherwise healthy patient. These diseases can involve many different organs and tissues in the body and include well-known and debilitating diseases such as rheumatoid arthritis and Crohn’s Disease, as well as MS. We believe that an oral drug that targets the immune response proximally in these diseases could be used to decrease the severity of the damage to normal tissue caused by the immune system, decrease disability in these patients and perhaps modify the course of the disease.

According to Visiongain, autoimmune diseases affect an estimated 5 to 8 percent of the US population (14 to 22 million people). MS is a chronic and often progressive disease that affects over 300,000 people in the US and strikes more than twice as many women as men. Patients are diagnosed with the disease most often between the ages of 20 and 50, in their peak earning and reproductive years. According to Espicom Business Intelligence, $3.3 billion was spent worldwide on drugs to treat MS during 2003. None of the existing therapeutics can halt the progression of MS, and there is a significant need for additional therapies that have different side effect and dosing profiles or slow the progression of the disease to a greater extent than provided by currently available drugs.

Scientific Overview

Multiple sclerosis is an autoimmune disease in which a patient’s immune system cells attack the myelin sheath surrounding portions of many nerve cells in the brain and spinal cord, leading to progressive disability over time. The immune system cells responsible for the damage, leukocytes, are thought to “traffic” or enter into the nervous system from the bloodstream, crossing into the nervous system in a highly regulated manner that relies upon the actions of multiple proteins, including signaling proteins called chemokines. The subsequent attack on the myelin sheath produces an inflammation that leads to scarring (sclerosis). This scarring eventually leads to loss of nerve function and nerve cell death.

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The REN-850 Solution

REN-850 is an oral, small molecule drug candidate that we believe may be effective as a disease-modifying treatment for MS, and possibly other autoimmune diseases. REN-850 acts by inhibiting leukocyte trafficking and modulates the cell migration driven by multiple chemokine receptors, thus acting proximally in the immune response cascade. Preclinical studies have also shown that oral administration of REN-850 significantly reduces severity of outcomes in multiple in vivo models of MS and rheumatoid arthritis.

Clinical Trials

In February 2005, we initiated a Phase I clinical trial to assess the safety, tolerability and pharmacokinetics of escalating single doses of REN-850 in approximately 45 healthy volunteers. We expect to complete this trial and commence a Phase Ib trial to test the safety, tolerability and pharmacokinetics of escalating multiple doses of REN-850 by the end of 2005.

Commercialization

Our current plan is to independently develop REN-850 through at least Phase I trials. Thereafter, we may seek strategic partners in international markets and potentially the United States. We hold exclusive worldwide rights to issued and pending patents covering pharmaceutical compositions, dosages and methods of use of REN-850 in the United States and other territories.

Research Programs

Our research is focused on developing new drugs to treat neurological diseases and disorders. According to data published by Espicom Business Intelligence, drugs that target central nervous system diseases and disorders represent the second largest sector of the worldwide drug market, accounting for more than $59 billion in worldwide drug sales in 2003. Our research in neurological diseases and disorders is currently focused in the areas of neuroprotection and pain. During 2003 and 2004 we were also conducting research in the area of neuroinflammatory diseases that resulted in the advancement of REN-850 into a Phase I clinical trial for MS and other autoimmune diseases in the first quarter of 2005. Our neurobiology expertise includes capabilities in assay development, screening, lead optimization and target identification and validation. Our medicinal chemistry expertise includes the use of state-of-the-art technologies to turn initial promising compounds generated by our neuroscientists into drug candidates. As part of our strategy for building a sustainable pipeline of product candidates we regularly evaluate opportunities to apply our drug discovery and development capabilities in new program areas and we expect to initiate new research programs in future periods.

Neuroprotection

Conditions in which the nervous system is physically injured (trauma), as well as conditions in which the blood supply is disrupted (stroke or ischemia), often lead to acute neurological damage. In such conditions, free radical generation plays a key role in generating damage to nervous system tissue above and beyond the damage directly caused by the physical injury or lack of oxygen and nutrients.

Next-Generation Cytoprotectant Program.    Compounds that reduce free radicals (e.g., free radical trapping agents such as Cerovive^® (NXY-059)) protect tissues against the damage caused by free radicals that occurs during trauma and stroke. Cerovive^® (NXY-059), the first nitrone-based neuroprotectant to be developed in the clinic for the indication of stroke, is administered via intravenous injection. We are developing next-generation orally active nitrone-based compounds for the treatment of trauma, stroke, neurodegeneration, myocardial infarction, renal disease and potentially other diseases and conditions in which ischemia is thought to play a key role.

Other Programs.    We have identified potential protein biotherapeutics that may facilitate nerve regrowth, repair and restoration of function following damage to the nervous system arising from spinal cord injury and other neurological diseases and disorders. We have entered into a collaboration with Genentech to pursue certain of these opportunities.

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Pain

Pain is often debilitating for patients and many types of pain are not effectively treated by existing drugs.

VR1 Antagonist Program.    Key mediators of pain signaling are ion channels, which regulate the flow of different ions (charged atoms) between the inside and outside of neurons. The transient receptor potential (TRP) ion channels constitute a large and diverse family, several of which are thought to mediate pain signaling and are attractive targets for drug discovery. The best known of these is the vanilloid receptor 1 (VR1).

We believe drugs that block VR1, preventing it from activating nerve cell signaling, could be effective, non-narcotic analgesics and could also be effective for treating non-neurological conditions such as urinary incontinence, irritable bowel syndrome and asthma. We have potential lead development candidates and expect to commence preclinical development of a lead candidate in 2005. To date, we retain all commercial rights to the VR1 antagonist program.

Strategy

Our goal is to become a leading biopharmaceutical company focused on discovering, developing and commercializing novel drugs to treat neurological diseases and disorders. The key elements of our strategy for achieving this goal are to:

Build a balanced portfolio of product candidates based on neurological diseases and disorders.    We believe that our scientific expertise is broadly applicable to a wide range of neurological diseases and disorders and that expanding our product portfolio will mitigate some of the risks associated with drug development. The development and commercialization of our most advanced product candidate, Cerovive^® (NXY-059), is the responsibility of our exclusive licensee AstraZeneca. We intend to advance REN-1654, REN-850 and our earlier stage product candidates toward commercialization as rapidly as practicable, while also seeking to acquire or in-license additional product candidates. We believe our scientific expertise enables us to effectively identify and capitalize on external product opportunities as evidenced by our acquisition of product candidates from Centaur. We also intend to undertake new discovery projects to identify novel product opportunities for internal development or collaboration.

Focus research and development efforts in market opportunities with large unmet medical needs.    Our drug discovery efforts generally target diseases that represent attractive commercial opportunities and that are underserved by available therapeutic alternatives. Shortcomings of currently available treatments may include limited efficacy, side effects or method of delivery. In particular, we believe that orally available drugs that treat disease with a high degree of specificity without these shortcomings will have strong commercial potential.

Develop orally available, small molecule drugs.    Our independent drug discovery and development efforts generally focus on orally available small molecule drugs. The major commercial advantage of small molecule product candidates such as REN-1654 and REN-850 is the potential for oral administration. In addition, small molecule drugs can be manufactured by conventional methods, resulting in lower manufacturing costs and higher margins than for other types of drugs, such as protein therapeutics.

Establish selective corporate collaborations to assist in the development and commercialization of our products while retaining significant commercial rights.    We leverage the development, regulatory and commercialization expertise of AstraZeneca to mitigate risk and accelerate the development of Cerovive^® (NXY-059). We intend to selectively form additional corporate collaborations to further leverage our internal resources to undertake projects that are beyond our resources while retaining significant economic rights to our products. Such projects include establishing a broad-based sales capability and completing large and costly clinical trials.

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Strategic Alliances

AstraZeneca

Our agreement with AstraZeneca grants them exclusive worldwide rights to develop, manufacture and market Cerovive^® (NXY-059). Under the agreement, we are entitled to receive future milestone payments upon occurrence of each of the following events: filing of a marketing authorization application with European or Japanese regulatory authorities, approval of such marketing authorization application, filing of a new drug application (NDA) with the FDA and approval of such NDA. We are also entitled to mid-teen percentage royalties on worldwide net sales of Cerovive^® (NXY-059). AstraZeneca has responsibility for all aspects of clinical development under the agreement, including all costs. The agreement also establishes AstraZeneca’s and our rights and obligations involving defined product opportunities that may arise in the future from our nitrone chemical platform.

If we identify any nitrone-based drug candidate similar to Cerovive^® (NXY-059) (i.e., that functions as a specific type of free radical trap) as a development candidate for stroke or stroke pain, traumatic brain injury or certain types of dementia, AstraZeneca may be entitled to license the compound from us on the terms and conditions of the Cerovive^® (NXY-059) agreement. If we identify a compound of the same type in the areas of neurodegenerative diseases or psychiatric disorders outside the areas identified above, which we choose to partner with a third party, we are obligated to notify AstraZeneca and consider in good faith any interest it may have in such partnership opportunity. If we commercialize a compound (i.e., that functions as a specific type of free radical trap) with a third party in the areas of neurodegenerative diseases or psychiatric disorders, we may be required to pay AstraZeneca a low single-digit percentage royalty on worldwide net sales of that product.

Our agreement with AstraZeneca expires on the later of fifteen years after the first commercial sale of a licensed product, or the expiration of applicable patents, on a country-by-country basis. Additionally, AstraZeneca can terminate the agreement either in whole or in part, without cause, upon 12 months notice.

Genentech

In December 2003, we entered into a collaborative research, development and license agreement with Genentech for the discovery and development of drugs that inhibit pathological or tumor angiogenesis and promote nerve re-growth following nervous system injury. Under the terms of the agreement, Genentech paid us an upfront license and technology access fee of $5.25 million in January 2004 and made a $3.0 million equity purchase concurrent with our initial public offering. In addition, we are eligible to receive future milestone and royalty payments on therapeutic products emerging from the collaboration that are developed and commercialized by Genentech. In exchange, Genentech obtained exclusive worldwide rights to research, develop, manufacture and commercialize protein-based therapeutics and other drug compositions for the treatment of cancer and other diseases in which mechanisms underlying new blood vessel growth play a significant role. Under the collaboration, we will be responsible for evaluating protein biotherapeutic candidates in preclinical models of spinal cord injury. Unless Genentech exercises certain rights and makes additional payments to us, we will have the right to develop and commercialize products arising from the collaboration that are specifically useful for the treatment of central and peripheral nervous system diseases and conditions. We are required to make royalty payments, and in certain cases milestone payments, to Genentech on therapeutic products that we develop and commercialize under the collaboration.

Intellectual Property

Patents, Trade Secrets and Licenses

The following factors are important to our success:

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We actively seek, when appropriate, protection for our products, technologies and proprietary information through U.S. and foreign patents. In addition, we rely upon trade secrets and contractual arrangements to protect our proprietary information.

As of December 31, 2004, we owned more than 35 U.S. patents, 40 U.S. patent applications, 70 foreign patents and 120 foreign patent applications related to our technologies, compounds and their applications in pharmaceutical development or their use as pharmaceuticals. In particular, we own patents and patent applications which materially relate to our ability to develop and commercialize our product candidates, REN-1654 and REN-850. As of December 31, 2004, we have licensed, from institutions such as the Oklahoma Medical Research Foundation (OMRF), the University of Kentucky Research Foundation (UKRF), the Regents of the University of California (the Regents) and others, the exclusive rights to more than 30 U.S. patents, 20 U.S. patent applications, 100 foreign patents and 40 foreign patent applications related to our technologies, compounds and their applications in pharmaceutical development or their use as pharmaceuticals. We face the risk that one or more of the above patent applications may be denied. We also face the risk that our issued patents may be challenged or circumvented or may otherwise not provide protection for any commercially viable products we develop. We also note that U.S. patents and patent applications may be subject to interference proceedings and U.S. patents may be subject to reexamination proceedings in the U.S. Patent and Trademark Office (and foreign patents may be subject to opposition or comparable proceedings in the corresponding foreign patent office), which proceedings could result in either loss of the patent or denial of the patent application or loss or reduction in the scope of one or more of the claims of the patent or patent application. In addition, such interference, reexamination and opposition proceedings may be costly. In the event that we seek to enforce any of our owned or exclusively licensed patents against an infringing party, it is likely that the party defending the claim will seek to invalidate the patents we assert, which, if successful, would result in the entire loss of our patent or the relevant portion of our patent and not just with respect to that particular infringer. Any litigation to enforce or defend our patent rights, even if we were to prevail, could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations.

In addition, our ability to assert our patents against a potential infringer depends on our ability to detect the infringement in the first instance. Many countries, including certain European countries, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties in some circumstances (for example, the patent owner has failed to “work” the invention in that country, or the third party has patented improvements). In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of the patent. Compulsory licensing of life saving drugs is also becoming increasingly popular in developing countries either through direct legislation or international initiatives. Such compulsory licenses could be extended to include some of our product candidates, which could limit our potential revenue opportunities. Moreover, the legal systems of certain countries, particularly certain developing countries, do not favor the aggressive enforcement of patent and other intellectual property protection which makes it difficult to stop infringement.

Our success will also depend in part upon our not infringing patents issued to others. If our product candidates are found to infringe the patents of others, our development, manufacture and sale of such potential products could be severely restricted or prohibited. In this regard, we have received correspondence from a third party alleging that we infringe certain patents held by the third party. We do not believe there is a reasonable basis for this action claiming that we are infringing any valid and enforceable patents of such third party. To date, we have not been subject to any infringement actions. Although we do not believe that these patents seriously harm our ability to develop and commercialize our products, we cannot be certain of this. It is likely that in the future we will encounter other similar situations which will require us to determine whether we need to license a technology or face the risk of defending an infringement claim.

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Patent litigation can involve complex factual and legal questions and its outcome is uncertain. Any claim relating to infringement of patents that is successfully asserted against us may require us to pay substantial damages. Even if we were to prevail, any litigation could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations. Furthermore, as a result of a patent infringement suit brought against us or our strategic partners or licensees, we or our strategic partners or licensees may be forced to stop or delay developing, manufacturing or selling potential products that are claimed to infringe a third party’s intellectual property unless that party grants us or our strategic partners or licensees rights to use its intellectual property. In such cases, we may be required to obtain licenses to patents or proprietary rights of others in order to continue to commercialize our products. However, we may not be able to obtain any licenses required under any patents or proprietary rights of third parties on acceptable terms, or at all. Even if our strategic partners, licensees or we were able to obtain rights to the third party’s intellectual property, these rights may be non-exclusive, thereby giving our competitors access to the same intellectual property. Ultimately, we may be unable to commercialize some of our potential products or may have to cease some of our business operations as a result of patent infringement claims, which could severely harm our business.

Much of our technology and many of our processes depend upon the knowledge, experience and skills of our scientific and technical personnel. To protect rights to our proprietary know-how and technology, we generally require all employees, contractors, consultants, advisors, visiting scientists and collaborators as well as potential collaborators to enter into confidentiality agreements that prohibit the disclosure of confidential information. The agreements with employees and consultants also require disclosure and assignment to us of ideas, developments, discoveries and inventions. These agreements may not effectively prevent disclosure of our confidential information or provide meaningful protection for our confidential information.

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. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. If we fail in defending such claims, in addition to paying money claims, we may lose valuable intellectual property rights or personnel.

We also use as advisors and consultants individuals who are currently employed by universities. Most of these individuals are parties to agreements pursuant to which some of the work product created by these individuals belongs to their respective universities. While we and these individuals try to maintain records which make it clear that the work these individuals do for us is not subject to their agreements with universities, it is always possible that a university will assert an ownership claim to the work of one or more of these individuals.

OMRF and UKRF.    We hold the exclusive, worldwide license to specified intellectual property related to Cerovive^® (NXY-059) owned by OMRF and UKRF pursuant to a license agreement entered into in July 1992. In consideration for this technology license, we are obligated to pay OMRF and UKRF low-single digit royalties on any future net sales of products relating to our license, subject to a minimum annual royalty payment of $25,000 through the year the FDA first approves an NDA and $100,000 annually thereafter. The license agreement terminates upon the later of the expiration of the last of any patent rights to licensed products that are developed under the agreement or 15 years from the effective date of the agreement. We may terminate the license agreement for any reason following six months written notice to OMRF and UKRF.

OMRF.    We hold the exclusive, worldwide license to specified intellectual property related to nitrones that are potential therapeutics owned by OMRF pursuant to a license agreement entered into in January 1998. In consideration for this technology license, we are obligated to pay OMRF royalties on any future net sales of products relating to our license, subject to minimum annual royalty payments of $10,000. In addition, we are obligated to pay OMRF milestone payments if we reach certain regulatory milestones. The license agreement terminates upon the later of the expiration of the last to expire of any patent rights to licensed products that are

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developed under the agreement or 15 years from the effective date of the agreement. We may terminate the license agreement for any reason following six months written notice to OMRF.

The Regents of the University of California.    We hold two exclusive, worldwide licenses to specified intellectual property related to targets and potential protein biotherapeutics relevant for inhibition of tumor angiogenesis and other pathological diseases and for nerve regeneration and repair that is a necessary component of our corporate collaboration with Genentech. We licensed this intellectual property from the Regents pursuant to license agreements entered into in June 2001 and November 2002, respectively, each as amended in December 2003. In consideration for these technology licenses, we paid license fees to the Regents. We are required to make additional annual payments on the November 2002 license. We are also obligated to pay the Regents royalties on any future net sales relating to our licenses subject to specified minimum annual royalty payments of $25,000 for products developed under the June 2001 license and $50,000 for products developed under the November 2002 license. In addition, we are obligated to make payments to the Regents based on meeting certain regulatory and clinical milestones. The June 2001 license automatically terminates upon the date of expiration of the last to expire patent under the license. The November 2002 license automatically terminates on or after December 31, 2018.

Cutanix.    Pursuant to an agreement with us, as amended in September 2002, Cutanix received the right to exclusively develop and commercialize certain Renovis compounds for use in the fields of dermatology and cosmetics and other skin care applications. In July 2004, we amended our agreement with Cutanix to obtain all rights to certain of these compounds for Renovis in exchange for a one-time payment, which we made to Cutanix immediately following execution of the amendment.

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 and marketing of pharmaceutical products. 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 products.

The process required by the FDA before product candidates may be marketed in the United States generally involves the following:

The testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any new approvals for our products will be granted on a timely basis, if at all.

Prior to commencing the first clinical trial with a product candidate, we must submit an IND 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. 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 may not result in FDA authorization to commence a clinical trial. A separate submission to the existing IND must be made for each successive clinical trial conducted during product development, and the FDA must grant

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