Medivation (MDVN)

NOTE 9 — INCOME TAXES

The Company’s tax provision for the three months ended March 31, 2009 was $428,000. The March 31, 2009 tax provision expense differs from the expected rate because the Company is required to accelerate revenue for income tax purposes which is deferred for financial statement purposes related to the Pfizer license payment the Company received in 2008. This acceleration of revenue brings the Company to a profit for tax purposes. For federal purposes, the Company has fully offset taxable income with net operating loss carryforwards. California has suspended the utilization of net operating loss carryforwards for the tax years 2008 and 2009. The Company is therefore expecting a tax provision for 2009.

The Company maintained a full valuation allowance on the net deferred tax assets as of March 31, 2009. The valuation allowance was determined in accordance with the provisions of SFAS No. 109, Accounting for Income Taxes, or SFAS No. 109, which requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable; such assessment is required on a jurisdiction by jurisdiction basis. The Company intends to maintain a full valuation allowance on the U.S. deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance.

(p) Income Taxes

The Company records a valuation allowance to reduce its deferred tax assets to the amount that it believes is more likely than not to be realized. Due to the Company’s lack of earnings history, the Company intends to maintain a full valuation allowance on the U.S. deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance.

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On January 1, 2007, the Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109,” or FIN 48. The Company did not have any unrecognized tax benefits and there was no effect on our financial condition or results of operations as a result of adopting FIN 48. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense as incurred.

(p) Income Taxes

The Company records a valuation allowance to reduce its deferred tax assets to the amount that it believes is more likely than not to
be realized. Due to the Company’s lack of earnings history, the Company intends to maintain a full valuation allowance on the U.S. deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance.

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On January 1, 2007, the Company adopted FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109,” or FIN 48. The Company did not have any unrecognized tax benefits and there was no effect on our financial condition or results of operations as a result
of adopting FIN 48. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense as incurred.

SIZE="2">(q) Net Loss per Common Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number
of common shares outstanding during the period. Diluted net loss per share is computed similarly to basic net loss per share, except that the denominator is increased to include all dilute potential common shares, including outstanding options,
warrants and common stock subject to repurchase. Potentially dilutive common shares have been excluded from the diluted loss per common share computations in all periods presented because such securities have an anti-dilutive effect on loss per
common share due to the Company’s net loss. There are no reconciling items used to calculate the weighted average number of common shares outstanding for basic and diluted net loss per share data.

(g) Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities.

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ORION ACQUISITION CORP. II

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

8. INCOME TAXES

The tax effects of temporary differences which give rise to the deferred tax provision at December 31, 2003 consisted of the following:

The following table presents the current and deferred income tax provision for (benefit from) federal and state income taxes for the period from inception (September 4, 2003) to December 31, 2003:

The provision for income taxes differs from the amount that would result from applying the federal statutory rate for the period from inception (September 4, 2003) to December 31, 2003 as follows:

15

MEDIVATION, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS—(Continued)

December 31, 2003

The valuation allowance increased by $124,336 for the period from inception (September 4, 2003) to December 31, 2003. The deferred income tax benefit of the loss carryforward is the only significant deferred income tax asset or liability of the Company and has been offset by a valuation allowance since management does not believe the recoverability of this deferred tax asset during the next fiscal year is more likely than not. Accordingly, a deferred income tax benefit for the year ended December 31, 2003 has not been recognized in these financial statements.

As December 31, 2003, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $401,080 and $400,280, respectively. The net operating loss carryforwards begin expiring in 2022 and 2012, respectively.

8. INCOME TAXES

The tax effects of temporary differences which give rise to the deferred tax provision at December 31, 2003 consisted of the following:

The following table presents the current and deferred income tax provision for (benefit from) federal and state income taxes for the period from inception (September 4, 2003) to December 31, 2003:

The provision for income taxes differs from the amount that would result from applying the federal statutory rate for the period from inception (September 4, 2003) to December 31, 2003 as follows:

15

MEDIVATION, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS—(Continued)

December 31, 2003

The valuation allowance increased by $124,336 for the period from inception (September 4, 2003) to December 31, 2003. The deferred income tax benefit of the loss carryforward is the only significant deferred income tax asset or liability of the Company and has been offset by a valuation allowance since management does not believe the recoverability of this deferred tax asset during the next fiscal year is more likely than not. Accordingly, a deferred income tax benefit for the year ended December 31, 2003 has not been recognized in these financial statements.

As December 31, 2003, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $401,080 and $400,280, respectively. The net operating loss carryforwards begin expiring in 2022 and 2012, respectively.

(g) Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities.

(g) Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities.