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TABLE OF CONTENTS QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNESEPTEMBER 30, 2009

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Commission File No. 0-16614

PONIARD PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)

7000 Shoreline Court, Suite 270, South San Francisco, CA 94080
(Address of principal executive offices)

Registrant's telephone number, including area code:(650) 583-3774

        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 ý    No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o    No o

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

        As of July 31,October 30, 2009, 34,742,84734,961,497 shares of the registrant's common stock, $0.02 par value per share, were outstanding.

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TABLE OF CONTENTS

QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNESEPTEMBER 30, 2009

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PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

PONIARD PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

See notes to the condensed consolidated financial statements.

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PONIARD PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

See notes to the condensed consolidated financial statements.

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PONIARD PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

See notes to the condensed consolidated financial statements.

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of presentationPresentation

        The accompanying unaudited condensed consolidated financial statements include the accounts of Poniard Pharmaceuticals, Inc. and its subsidiary (the Company)"Company"). All intercompany balances and transactions have been eliminated in consolidation.

        The accompanying condensed consolidated financial statements contained herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC)("SEC"). As permitted under those rules, certain footnotes or other financial information that are normally required by U.S.accounting principles generally accepted accounting principlesin the United States have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company's management, the accompanying interim unaudited condensed financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the Company's financial position as of JuneSeptember 30, 2009, the results of operations for the three and sixnine months ended JuneSeptember 30, 2009 and 2008 and cash flows for the sixnine months ended JuneSeptember 30, 2009 and 2008.

        The results of operations for the periodsperiod ended JuneSeptember 30, 2009 and 2008 are not necessarily indicative of the expected operating results for the full year.

        The balance sheet as of December 31, 2008 has been derived from the audited financial statements at that date. The balance sheet does not include all of the information and footnotes required by U.S.accounting principles generally accepted accounting principlesin the United States for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 16, 2009, and available on the SEC's website,www.sec.gov.

        Reclassifications:    Certain balances and results from prior years have been reclassified to conform to the Company's current year presentation. The Company's reclassifications had no effect on net earnings or shareholders' equity.

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

        Subsequent Events Evaluation:    Management has reviewed and evaluated material subsequent events, if any, occurring after the balance sheet date of JuneSeptember 30, 2009 through the financial statements issuance date of August 7,November 6, 2009. All appropriate subsequent event disclosures, if any, have been made in the notes to ourthe unaudited condensed consolidated financial statements.

        Going concern:Concern:    The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for a reasonable period of time. The Company has historically experienced recurring operating losses and negative cash flows from operations. As of JuneSeptember 30, 2009, the Company had working capital of $32,663,000,$23,739,000, an accumulated deficit of $384,861,000,$394,866,000 and total shareholders' equity of $27,871,000.$20,218,000.

        The Company's current loan facility contains covenants that restrict certain financing activities by the Company and require the Company to maintain a minimum amount of unrestricted cash (see

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited) (Continued)

Note 1. Basis of presentationPresentation (Continued)

Note 5 for further details). Taking into account the minimum unrestricted cash requirement and the Company's projected operating results, the Company believes that its current cash, cash equivalents and investment securities balances will provide adequate resources to fund operations at least into the first quarter of 2010. However, given the uncertainties of outcomes of the Company's ongoing clinical trials, there is no assurance that the Company can achieve its projected operating results. The Company has no assurance that, especially in light of the current distressed economic environment, the lenders will be willing to waive or renegotiate the terms of the loan agreement to address or avoid financial or other defaults. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. Management is developing plans to address the Company's liquidity needs, including raising additional capital through the public or private sale of equity or debt securities or through the establishment of credit or other funding facilities and entering into strategic collaborations, which may include joint ventures or partnerships for product development and commercialization, merger, sale of assets or other similar transactions, and taking other actions to limit the Company's expenditures. There can be no assurance that the Company can obtain financing or otherwise raise additional funds, if at all, on terms acceptable to the Company or to its lenders.

Note 2. Fair value measurementsValue Measurements

        Effective January 1, 2008, the Company adopted SFAS No. 157, "Fair Value Measurements" (SFAS No. 157) as it applies to its financialWe categorize assets and liabilities. The SFAS No. 157 framework requiresliabilities recorded at fair value in our condensed consolidated balance sheet based upon the level of judgment associated with inputs used to be determined based onmeasure their value. Fair value is defined as the exchange price that would be received forto sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants onat the measurement date. SFAS No. 157 establishes a fair value hierarchy which requires an entity toWe use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when measuringdetermining fair value.value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy set forth by the Financial Accounting Standards Board ("FASB"). The standard describes the following three levels of inputs that may be used to measurethe FASB fair value:value hierarchy are as follows:

•

Level 1—Quoted prices in active markets for identical assets or liabilities.



•

Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.



•

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

        The determination of a financial instrument's level within the fair value hierarchy is based on an assessment of the lowest level of any input that is significant to the fair value measurement. The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited) (Continued)

Note 2. Fair value measurementsValue Measurements (Continued)

        The following table presents a summary of the Company's assets that are measured at fair value on a recurring basis (in thousands):

        As of September 30, 2009 and December 31, 2008, the Company's cash equivalents and investment securities are recorded at fair value as determined through market prices and other observable and corroborated sources. At JuneSeptember 30, 2009 the cash equivalents balance consists of $16,216,000 in money market funds and investment$1,304,000 of corporate debt securities purchased with a maturity date less than 90 days from the purchase date. Investment securities are comprised of corporate debt securities and federal government and agency securities (see Note 3 below for further details on investment securities).

        When the estimated fair value of a security is below its carrying value, the Company evaluates whether it is more likely than not that it will be required to sell the security before its anticipated recovery in market value and whether evidence indicating that the cost of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. The Company also evaluates whether or not it intends to sell the investment. If the impairment is considered to be other-than-temporary, the security is written down to its estimated fair value. In addition, the Company considers whether credit losses exist for any securities. A credit loss exists if the present value of cash flows expected to be collected is less than the amortized cost basis of the security. Other-than-temporary declines in estimated fair value and credit losses are charged to investment income. The Company has not deemed it necessary to record any charges related to impairments or other-than-temporary declines in the estimated fair values of its marketable debt securities or credit losses as of September 30, 2009.

Note 3. Investment securitiesSecurities

        The Company's investment securities, consisting of debt securities, are classified as available-for-sale. Unrealized holding gains or losses on these securities are included in other comprehensive income.income (loss). Realized gains and losses and declines in value judged to be other-than-temporary (of which there have been none to date) on available-for-sale securities are included in interest income.income and other, net.

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3. Investment Securities (Continued)

        Investment securities consisted of the following at JuneSeptember 30, 2009 (in thousands):

        Investment securities consisted of the following at December 31, 2008 (in thousands):

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

Note 3. Investment securities (Continued)(Unaudited)

        Investment securities consisted of the following at December 31, 2008 (in thousands):

        As of June 30, 2009, the Company held a debt security issued by American General Finance Corporation (AGFC), a wholly-owned subsidiary of American International Group, Inc. (AIG), with a par value of $1,200,000, coupon rate of 3.875%, amortized cost of approximately $1,198,000 and maturity date of October 1, 2009. The market value for this security as of June 30, 2009, based on Level 2 inputs as described in SFAS No. 157, was approximately $1,146,000, resulting in an unrealized loss of approximately $52,000. This unrealized loss has resulted from downgrades from various rating agencies since September 2008. The Company's management has concluded that the unrealized loss on the AGFC debt security, and the other debt securities that it holds, is temporary due to (a) the relatively short duration of the decline in value of the investments; (b) the assessment of the Company's management that it is probable that all contractual amounts under the debt securities will be received and (c) the Company's intent and ability to hold the securities until at least substantially all of the cost is recovered.

Note 4. Accrued liabilitiesLiabilities

        Accrued liabilities consist of the following (in thousands):

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

Note 5. Note payablePayable

        On September 2, 2008, the Company entered into an Amended and Restated Loan and Security Agreement (loan agreement)("loan agreement"), with GE Business Financial Services Inc. (formerly known as Merrill Lynch Capital) and Silicon Valley Bank. The loan agreement amends and restates in its entirety the earlier Loan and Security Agreement dated as of October 25, 2006 (original loan)("original loan"), with Merrill Lynch Capital and Silicon Valley Bank, pursuant to which the Company obtained a $15,000,000 capital loan that was to mature on April 1, 2010.

        The loan agreement provides for a $27,600,000 senior secured term loan facility (loan facility)("loan facility") to be made available as follows: (i) an initial term loan advance in the amount of $17,600,000, which is comprised of (a) the outstanding principal balance of $7,600,000 remaining on the original loan and (b) an additional cash advance in the amount of $10,000,000 (cash portion)("cash portion"), which was fully funded on September 2, 2008; and (ii) a second term loan advance in the amount of $10,000,000, which was fully funded on September 30, 2008. The cash portion of the initial term loan advance and the proceeds of the second term loan advance will be used to fund the Company's clinical trials and for general corporate purposes. The advances under the loan facility are repayable over 42 months, commencing on October 1, 2008. Interest on the advances is fixed at 7.80% per annum. Final loan payments in the amounts of $1,070,000 and $900,000 are due upon maturity or earlier repayment of the initial term loan advance and the second term loan advance, respectively. Additionally, as a condition to the amendment and restatement of the original loan, the Company agreed to modification of the final payment obligations under the original loan, pursuant to which the Company paid $600,000 to Silicon Valley Bank on September 2, 2008, the effective date of the loan facility, and will pay $675,000 to GE Business Financial Services on the earlier of March 31, 2010 or the date of repayment of the loan facility. All final payment amounts are being accreted to the note payable balance over the term of the loan facility using the effective interest rate method and reflected as additional interest expense. All interest payable under the loan agreement and the full amount of the final payments must be paid upon any prepayment of a term loan advance. The loan facility is secured by a first lien on all of the non-intellectual property assets of the Company.

        In connection with the loan agreement, the Company issued to the lenders ten-year warrants to purchase an aggregate of 219,920 shares of the Company's common stock at an exercise price of $4.297 per share. The fair value of the warrants using the Black-Scholes option-pricing model was approximately $928,000 based upon assumptions of expected volatility of 90%, a contractual term of ten

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 5. Note Payable (Continued)

years, an expected dividend rate of zero and a risk-free interest rate of 3.74%. The portion of the loan proceeds allocable to the warrants is approximately $806,000 based on the relative fair value of the warrants, which the Company recorded as additional discount to notes payable. The total of the final loan payments and the proceeds allocated to the warrants of approximately $4,051,000 are being amortized to interest expense using an effective interest rate of 13.8%. At JuneSeptember 30, 2009, the outstanding principal balance under the loan facility was $22,057,000,$20,409,000, net of discount of $2,274,000.$1,951,000.

        The loan agreement contains restrictions on the Company's ability to, among other things, dispose of certain assets, engage in certain mergers and acquisition transactions, incur indebtedness, create liens on assets, make investments, pay dividends and repurchase stock. The loan agreement also contains covenants requiring the Company to maintain unrestricted cash in an amount equal to the lesser of (i) $17,940,000 or (ii) the outstanding aggregate principal balance of the term loans plus $4,000,000. The loan agreement contains events of default that include nonpayment of principal, interest or fees, breaches of covenants, material adverse changes, bankruptcy and insolvency events, cross defaults to any other indebtedness, material judgments, inaccuracy of representations and warranties, and events

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

Note 5. Note payable (Continued)

constituting a change of control. The occurrence of an event of default would increase the applicable rate of interest by 5% and could result in the acceleration of the Company's payment obligations under the loan agreement. The Company was in compliance with all loan covenants as of September 30, 2009.

Note 6. Committed Equity Line of Credit

        On August, 19, 2009, the Company entered into an equity line of credit arrangement with Azimuth Opportunity Ltd. ("Azimuth") pursuant to a Common Stock Purchase Agreement ("Purchase Agreement"), which provides that, upon the terms and subject to the conditions set forth therein, Azimuth is committed to purchase up to $60 million worth of shares of the Company's common stock over the 18-month term of the Purchase Agreement. From time to time over the term of the Purchase Agreement, the Company may, at its sole discretion and upon presentation of a draw down notice, require Azimuth to purchase its common stock over ten consecutive trading days or such other period mutually agreed upon by the Company and Azimuth ("Draw Down Period"). Each draw down is subject to limitations based on the price of the Company's common stock and a limit of 2.5% of the Company's market capitalization at the time of the draw down. The Purchase Agreement requires a minimum price of $3.00 per share to allow the Company to issue shares to Azimuth. Under the Purchase Agreement, the Company may sell to Azimuth up to 6,955,606 shares of its common stock. The Company may present Azimuth with up to 24 draw down notices during the term of the Purchase Agreement with only one such draw down notice allowed per Draw Down Period and a minimum of five trading days required between each Draw Down Period. As of September 30, 2009, no shares have been sold under the Purchase Agreement.

Note 6.7. Restructuring and asset impairmentAsset Impairment

        Effective March 31, 2009, the Company implemented a strategic restructuring plan to refocus its cash resources on clinical and commercial development of picoplatin, resulting in the discontinuation of the Company's preclinical research operations and reducing its workforce by approximately 12%, or eight employees. The Company incurred severance charges totaling $296,000 related to the reduction in staff. All severance charges related to the restructuring have been paid as of JuneSeptember 30, 2009. The

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 7. Restructuring and Asset Impairment (Continued)

Company incurred additional charges totaling approximately $172,000 related to the closure of its lab facilities in South San Francisco, California. Of this amount, $6,000 was incurred as share-based compensation expense, $12,000 was a write-off of prepaid expenses, and $154,000 was incurred for contract and other termination costs. As of JuneSeptember 30, 2009, $13,000$14,000 remained unpaid and is payable within one year.

        The following table summarizes the impact of the restructuring charges through JuneSeptember 30, 2009 (in thousands):

        In conjunction with the decision to discontinue the Company's preclinical research operations, the Company recognized an asset impairment loss of $588,000 on certain facilities and equipment related to the lab in South San Francisco, California. The loss on the assets was determined based on estimates of potential sales values of used equipment. These impairment charges established new cost bases for the impaired assets, which are included in assets held for sale and reported in the prepaid expenses and other current assets line on the accompanying Condensed Consolidated Balance Sheets.

        The following table summarizes information related to the impairment charges (in thousands):

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

Note 6. Restructuring and asset impairment (Continued)(Unaudited)

        The following table summarizes information related to the impairment charges (in thousands):

Note 7.8. Picoplatin licenseLicense and amendmentAmendment

        The Company has entered into an exclusive worldwide license, as amended, with Genzyme Corporation (successor to AnorMED, Inc.) for the development and commercial sale of picoplatin. Under that license, the Company is solely responsible for the development and commercialization of picoplatin. Genzyme retains the right, at the Company's cost, to prosecute its patent applications and maintain all licensed patents. The parties executed the license agreement in April 2004, at which time the Company paid a one-time up-front payment of $1,000,000 in common stock and $1,000,000 in cash. The original agreement excluded Japan from the licensed territory and provided for $13,000,000 in development and commercialization milestones, payable in cash or a combination of cash and common stock, and a royalty rate of up to 15% on product net sales after regulatory approval. The parties amended the license agreement on September 18, 2006, modifying several key financial terms and expanding the licensed territory to include Japan, thereby providing the Company worldwide rights. In consideration of the amendment, the Company paid Genzyme $5,000,000 in cash on October 12, 2006 and an additional $5,000,000 in cash on March 30, 2007. The amendment eliminated all development milestone payments to Genzyme. Genzyme remains entitled to receive up to $5,000,000 in commercialization milestones upon the attainment of certain levels of annual net sales of picoplatin after regulatory approval. The amendment also reduced the royalty payable to Genzyme to a maximum of 9% of annual net product sales and eliminated the sharing of sublicense revenues with Genzyme.

        The Company accounted for all payments made in consideration of the picoplatin license, as amended, by capitalizing them as an intangible asset. The Company's capitalization of the total $12,000,000 of picoplatin license payments is based on the Company's reasonable expectation at the time of acquisition and through the date of the amendment that the intravenous formulation of picoplatin, as it existed at the time of the acquisition of the picoplatin license and the license amendment, would be used in research and development (R&D)("R&D") projects and therefore had alternative future uses in the treatment of different cancer indications. At the time of acquisition, the Company planned to use intravenous picoplatin in a Phase II clinical trial in patients with small cell lung cancer and reasonably expected that the intravenous formulation could be used in additional, currently identifiable R&D projects in the form of clinical trials for other solid tumor cancer indications, such as prostate and colorectal cancers.

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

Note 7. Picoplatin license and amendment (Continued)

        The Company determined the original useful life of the picoplatin intangible asset in accordance with the requirements of the Financial Accounting Standards Board's (FASB) SFAS No. 142, "Goodwill and Other Intangible Assets."        The Company, at the time of acquisition of the picoplatin license, reasonably anticipated using intravenous picoplatin in clinical trials that could be conducted during the remaining term of the primary patent, which is active through 2016. The Company concluded that the twelve years remaining for the primary patent term was the appropriate useful life for the picoplatin intangible asset, in satisfaction ofaccordance with the expected use and legal life provisions of SFAS No. 142,FASB's guidance for intangibles, and is amortizing the initial $2,000,000 license payment over this twelve year useful life beginning in April 2004. The Company concluded that no change in the twelve-year useful life of the picoplatin intangible asset occurred as a result of the 2006 license amendment and is, therefore, continuing to amortize the initial $2,000,000 license payment over the twelve year useful life and is amortizing the license amendment payment of $10,000,000 over the remainder of the twelve year useful life of the picoplatin intangible asset.

        Licensed products consist of the picoplatin amortizable intangible asset with a gross amount of $12,000,000, net of accumulated amortization of $3,801,000$4,104,000 and $3,193,000 at JuneSeptember 30, 2009 and December 31, 2008, respectively.

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 8.9. Net loss per common shareLoss Per Common Share

        Basic and diluted loss per share are based on net loss applicable to common shares, which is comprised of net loss and preferred stock dividends in all periods presented. Shares used to calculate basic loss per share are based on the weighted average number of common shares outstanding during the period. Shares used to calculate diluted loss per share are based on the potential dilution that would occur upon the exercise or conversion of securities into common stock using the treasury stock method. The calculation of diluted loss per share excludes the effect of the following stock options and warrants to purchase additional shares of common stock because the share increments would not be dilutive.

        In addition, 39,015 shares of common stock that would be issuable upon conversion of the Company's Series 1 preferred stock are not included in the calculation of diluted loss per share for the periods ended JuneSeptember 30, 2009 and 2008, respectively, because the effect of including such shares would not be dilutive.

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

Note 9.10. Stock-based compensationCompensation

        A summary of the fully vested stock options is presented below (shares and aggregate intrinsic value in thousands):

        The Company recorded the following amounts of stock-based compensation expense, not including expense for options granted to non-employee consultants, for the periods presented (in thousands):

        The compensation expense for the sixnine months ended JuneSeptember 30, 2008 includes the grant of stock options in the first quarter to Company officers to purchase an aggregate of 460,000 shares of

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 10. Stock-based Compensation (Continued)

common stock. Certain options that were granted to officers of the Company during 2006 and 2007 vest 50% in equal monthly installments over four years from the date of grant and vest 50% on the seven-year anniversary of the date of grant, subject to accelerated vesting of up to 25% of such portion of the options, based on the Company's achievement of annual performance goals established under its management incentive plan, at the discretion of the equity awards subcommittee of the compensation committee of the Company's board of directors. Based on the overall achievement of corporate goals in 2007 the equity awards subcommittee accelerated vesting with respect to 20% of the shares subject to the seven-year vesting schedule in the first quarter of 2008. As of JuneSeptember 30, 2009, the cumulative accelerated vesting equals 60% of the shares subject to the seven-year vesting schedule.

        No income tax benefit has been recorded for stock option expense as the Company has a full valuation allowance and management has concluded it is more likely than not that the Company's net deferred tax assets will not be realized. As of June 30, 2009, total unrecognized costs related to employee stock compensation was $9,744,000, which is expected to be recognized over a weighted average period of approximately 2.5 years.

        Estimated fair values of stock options granted have been determined using the Black-Scholes option pricing model with the following assumptions for the periods presented:

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

Note 9. Stock-based compensation (Continued)

        During 2008 the Company awarded 92,000 restricted stock units (RSUs)("RSUs") under the 2004 Incentive Compensation Plan, as amended and restated (the "2004 Plan"), to non-officer employees as an incentive for future performance. An additional 4,000 RSUs were awarded in 2009.2009 for this incentive program. Upon vesting, each RSU is payable with one share of the Company's common stock. The average fair value of the RSUs was $3.13 per unit, or approximately $299,000 in total, based upon the closing market price of the Company's common stock on the award dates. The RSUs vest based on the achievement of certain performance milestones during 2009 and 2010. As of JuneSeptember 30, 2009, the first two performance milestones were achieved and therefore 40% of the shares have vested and have been released. The third performance milestone, if achieved no later than June 30, 2010, would result in the vesting of the remaining 60% upon the date of achievement. As of JuneSeptember 30, 2009, the Company determined that the third milestone is probable of being achieved and is therefore recognizing the related stock-based compensation expense on a pro-rata basis through the estimated date of achievement.

        On July 23, 2009 the Company awarded an additional 290,400 RSUs under the 2004 Plan to non-officer employees as an incentive for future performance. The fair value of the RSUs was $7.34 per unit, or approximately $2,132,000 in total, based upon the closing market price of the Company's common stock on the award date. The RSUs vest based on the achievement of certain performance milestones during 2010. As of September 30, 2009, the Company determined that milestones are probable of being achieved and is therefore recognizing the related stock-based compensation expense on a pro-rata basis through the estimated dates of achievement.

        On July 11, 2009, a Company director, was awarded 170,000 RSUs as compensation for consulting services. The RSUs vest 50% on each of the first two anniversaries of the grant and is subject to 100% acceleration upon the achievement of a performance milestone. The fair value of the award is

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 10. Stock-based Compensation (Continued)

approximately $1,272,000 at September 30, 2009, and will be re-measured at each reporting date because it is a non-employee award. As of September 30, 2009, the Company determined that the performance milestone is probable of being achieved in 2010 and is thus recognizing stock compensation for the fair value of the award on a pro-rata basis through the estimated date of achievement.

        No income tax benefit has been recorded for stock-based compensation expense as the Company has a full valuation allowance and management has concluded it is more likely than not that the Company's net deferred tax assets will not be realized. As of September 30, 2009, total unrecognized costs related to employee stock-based compensation was $11,074,000, which is expected to be recognized over a weighted average period of approximately 2.3 years.

Note 10.11. Comprehensive lossLoss

        The Company's comprehensive loss for the three and sixnine months ended JuneSeptember 30, 2009 and 2008 is summarized as follows (in thousands):

Note 11.12. Recent accounting pronouncementsAccounting Pronouncements

        In June 2009, the FASB issued SFAS No. 168, "TheFASB Accounting Standards Codification™ andestablished the Hierarchy of Generally Accepted Accounting Principles." This standard replaces SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles," and establishes only two levels of U.S. generally accepted accounting principles ("GAAP"), authoritative and nonauthoritative. The FASB Accounting Standards Codification (the "Codification"("FASB ASC") will becomeas the source of authoritative nongovernmental GAAP, except for rules and interpretive releases ofaccounting principles recognized by the SEC, which are sources of authoritative GAAP for SEC registrants. All other non-grandfathered, non-SEC accounting literature not includedFASB. The FASB will issue new standards in the Codification will become nonauthoritative. This standardform of Accounting Standards Updates ("ASUs"). FASB ASC is effective for financial statements issued for interim orand annual reporting periods ending after September 15, 2009 and therefore is effective for the Company in the third quarter of 2009. The Company will beginissuance of FASB ASC does not change accounting principles generally accepted in the United States and therefore the adoption of FASB ASC only affects the specific references to useaccounting literature in the new guidelines and numbering system prescribed by the Codification when referringnotes to GAAP for the quarter ended September 30, 2009. As the Codification was not intended to change or alter existing GAAP, it will not have any other impact on the Company's consolidated financial statements.

        In June 2008,August 2009, the FASB ratifiedissued ASU 2009-05, "Fair Value Measurements and Disclosures (Topic 820)—Measuring Liabilities at Fair Value" ("ASU 2009-05," currently within the consensus opinionscope of ASC Subtopic 820-10). ASU 2009-05 provides clarification regarding valuation techniques when a quoted price in EITF Issue No. 07-5, "Determining Whether an Instrument (or Embedded Feature) Is Indexedactive market for an identical liability is not available in addition to treatment of the existence of restrictions that prevent the transfer of a liability. The ASU also clarifies that both a quoted price in an Entity's Own Stock" (EITF 07-5). EITF 07-5 provides guidanceactive market for determining whether an equity-linked financial instrument or embedded featureidentical liability at the measurement date and the quoted price for an identical liability when traded as an asset in an active market (when no adjustments to the quoted price of the asset are required) are Level 1 fair value measurements. The ASU is considered indexed to an entity's own stock. The consensus establishes a two-stepeffective for the first reporting

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PONIARD PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited) (Continued)

Note 11.12. Recent accounting pronouncementsAccounting Pronouncements (Continued)

approach as a framework for determining whether an instrument or embedded feature is indexed to an entity's own stock. The approach includes evaluating (1) the instrument's contingent exercise provisions, if any, and (2) the instrument's settlement provisions. If a financial instrument is shown not to be indexed solely to its issuing company's stock, it is required to be classified as a liability and re-measured at fair value at each reporting period, with changes in fair value recognized in operating results. EITF 07-5 is effective for financial statements issued for fiscal yearsincluding interim periods, beginning after December 15, 2008. The Company adopted EITF 07-5issuance. Adoption of ASU 2009-05 did not have a material effect on January 1, 2009 and, for the three months ended March 31, 2009, applied the requirements of the consensus to warrants issued by the Company in connection with a financing in 2005 (the 2005 financing warrants), which contain provisions requiring the adjustment of the exercise price and the number of shares issuable if the Company sells shares of common stock at a price lower than the then-current exercise price of the warrants. The Company recorded the cumulative effect of adopting EITF 07-5 with respect to the 2005 financing warrants as of January 1, 2009 (reductions in both additional paid-in capital and accumulated deficit of approximately $1,255,000). The fair value of the liability recorded with respect to the 2005 financing warrants was estimated to be $57,000 and $54,000 as of January 1, 2009 and March 31, 2009, respectively, resulting in a credit of $3,000 to other income for the three months ended March 31, 2009. Subsequent to March 31, 2009 and upon further review of the adjustment terms of the warrants, the Company determined that the warrants' exercise provisions became fixed when an adjustment floor was reached in connection with a financing in 2006, and, therefore, the Company's application of EITF 07-5 to the 2005 financing warrants in the first quarter of 2009 was not appropriate. Accordingly, (i) the liability associated with the 2005 financing warrants was derecognized as of June 30, 2009, (ii) the $3,000 credit to other income recognized for the three months ended March 31, 2009 was reversed for the three months ended June 30, 2009, and (iii) the $1,255,000 reduction in additional paid in capital and accumulated deficit that was recognized as the cumulative effect of adopting EITF 07-5 as of January 1, 2009 were reversed as of June 30, 2009. Management believes that the effect was not material to either the March 31, 2009 or the June 30, 2009 financial statements and accordingly, has reflected the correction in the June 30, 2009condensed consolidated financial statements.

Note 12.13. Commitments and contingenciesContingencies

        The Company entered into a picoplatin active pharmaceutical ingredient (API)("API") commercial supply agreement with W.C. Heraeus (Heraeus)("Heraeus") in March 2008. Under this agreement Heraeus will produce picoplatin API to be used for preparing picoplatin finished drug product for commercial use. Manufacturing services are provided on a purchase order, fixed-fee basis, subject to certain purchase price adjustments and minimum quantity requirements. The costs to Heraeus for the purchase and set-up of dedicated equipment as required under the commercial supply agreement, estimated to be approximately $1,727,000$1,800,000 (including interest charges of approximately $322,000)$336,000) will be repaid by the Company in the form of a surcharge on an agreed upon amount of the picoplatin API ordered and delivered on or before December 31, 2013. If the Company orders and takes delivery of less than the agreed upon amount of picoplatin API through December 31, 2013, it will be obligated to pay the balance of the dedicated equipment cost as of that date. As of JuneSeptember 30, 2009, Heraeus had completed partial construction of the dedicated equipment at a cost of approximately $1,421,000$1,722,000 (including interest). Because the Company is not under a present obligation to pay this amount and the agreement is not under any potential circumstance of default or termination, it is not probable that a financial liability exists for this amount as of JuneSeptember 30, 2009 and therefore no such liability was recorded on the condensed consolidated balance sheet as of that date. The Company anticipates that the dedicated equipment will be ready for use during the fourth quarter of 2009, after which it expects to account for the equipment and related surcharge payments as a capital lease.

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Important Information Regarding Forward-Looking Statements

        This Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or future financial performance and are subject to change based on various important factors, many of which are beyond our control. In some cases, you can identify forward-looking statements by terminology such as "currently," "may," "will," "should," "expect," "plan," "intend," "anticipate," "believe," "target," "estimate," "predict," "potential," "propose" or "continue," the negative of these terms or other terminology. These statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties that are difficult to predict. In evaluating these statements, you should specifically consider various factors described below in the section entitled "Risk Factors." These and other factors may cause our actual results to differ materially from any forward-looking statements contained in this report or otherwise made by us.

        Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on our forward-looking statements, which speak only as of the date of this report. We undertake no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this report, or to reflect the occurrence of unanticipated events.

Critical Accounting Policies and Estimates

        Our critical accounting policies and estimates have not materially changed from those reported in our Annual Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 16, 2009. For a more complete description, please refer to our Annual Report on Form 10-K.

Results of Operations

Three and SixNine Months Ended JuneSeptember 30, 2009 Compared to the Three and SixNine Months Ended JuneSeptember 30, 2008

Research and Development

        Our major research and development program is picoplatin, a new generation platinum-based chemotherapeutic designed to overcome platinum resistance in the treatment of solid tumors. We completed patient enrollment in our Phase II clinical study of picoplatin in small cell lung cancer in August 2006 and, based on positive median overall survival data from that study, we initiated a Phase III pivotal trial of picoplatin in small cell lung cancer in April 2007. We completed enrollment in our Phase III trial in March 2009. In September 2009, we announced that 320 evaluable events (patient deaths) have occurred in our Phase III trial, enabling us to begin final analysis of data. We currently anticipate completing and reporting results of our preliminary analysis in November 2009 and, if positive, initiating a rolling submission of a new drug application ("NDA") with the U.S. Food and Drug Administration ("FDA") by year-end.

        In May 2006, we treated our first patients in two Phase I/II studies evaluating picoplatin as a first-line treatment of: (1) advanced colorectal cancer and (2) castration-resistant (or hormone-refractory) prostate cancer. We initiated enrollment in the Phase II component of our colorectal cancer study in November 2007 and completed enrollment in May 2008. We initiated the Phase II component of our prostate cancer study in July 2007 and completed enrollment in December 2007. We also have completed a Phase I study of an oral formulation of picoplatin in advanced solid tumors.

        Research and development expenses decreased 38% to $5.7 million, from $9.2 million during the second quarter of 2009, and decreased 11% to $13.8 million, from $15.5 million in the six months

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        Research and development expenses decreased 40% to $5.4 million from $9.0 million during the third quarter of 2009 and decreased 22% to $19.2 million from $24.5 million in the nine months ended JuneSeptember 30, 2009 compared to the comparable periods in 2008. Our research and development expenses are summarized as follows:

        Research and development expenses decreased significantly during the secondthird quarter of 2009 from the comparable period in 2008 as a result of our picoplatin trials entering their final stages. We did not incur any research expenses during the discontinuationthird quarter of our in-house preclinical research operations in connection with2009 due to our strategic restructuring implemented effective March 31, 2009. Contract manufacturing costs decreased 43%38% to $0.8$0.7 million in the secondthird quarter of 2009 and decreased 15%23% to $1.8$2.5 million in the first sixnine months of 2009 from the comparable periods in 2008. These decreases reflect reduced clinical drug production activity due to the Company'sresulting from our trials nearing completion. Clinical costs decreased 30%35% to $4.5$4.2 million in the secondthird quarter of 2009 and decreased 4%15% to $10.5$14.7 million in the first sixnine months of 2009 from the comparable periods in 2008. These decreases reflect reduced clinical activity in connection with our current picoplatin studies, all of which are fully enrolled and two of which are in a follow-up or extended follow-up stage. Share-based compensation expense increased 11% to $0.5 million in the third quarter of 2009 from the comparable period in 2008, due primarily to an employee incentive program introduced during the third quarter of 2009. Share-based compensation expense decreased 12% and 18%7% to $0.3$1.2 million and $0.7 million, respectively, for the three and six month periodsnine months ended JuneSeptember 30, 2009 from the comparable periodsperiod in 2008, primarily due primarily to lower per share fair valuesthe effects of options granted in the first half of 2009, which reflect lower price levels in our common stock during the first half of 2009, and, for the six months ended June 30, 2009, to the acceleration of vesting of certain stock options in the first quarter of 2008.

        The following table shows expenses incurred for preclinical study support, contract manufacturing for clinical supplies and clinical trial services provided by third parties, as well as other associated costs for our picoplatin product candidate. The table also presents unallocated costs which consist of facilities, consulting fees, patent costs and other costs not directly allocable to development programs: