##### Table of Contents



United StatesSecurities and Exchange Commission
 Washington, D.C. 20549
 
 Form 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For
the quarterly period ended June 30, 2007
 Commission
file number 000-28401
 MAXYGEN, INC.
 (Exact name of registrant as specified in its charter)
 Delaware(State of incorporation)
    
    77-0449487(I.R.S. Employer Identification No.)
 515 Galveston Drive
Redwood City, California 94063
 (Address of principal executive offices, including zip code)
 (650) 298-5300  (Registrants telephone number, including area code)
 
  þ o
  o þ o
  o þ




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##### 



MAXYGEN, INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 2007
  Part I
    
    FINANCIAL INFORMATIONItem 1:
    
    Financial Statements:Condensed
Consolidated Balance Sheets as of December 31, 2006 and June 30, 2007
    
    1Condensed
Consolidated Statements of Operations for the three and six month periods ended June 30, 2006 and 2007
    
    2Condensed
Consolidated Statements of Cash Flows for the six month periods ended June 30, 2006 and 2007
    
    3Notes to Condensed Consolidated Financial Statements
    
    4Item 2:
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    14Item 3:
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    21Item 4:
    
    Controls and Procedures
    
    21Part II
    
    OTHER INFORMATIONItem 1:
    
    Legal Proceedings
    
    22Item 1A:
    
    Risk Factors
    
    22Item 2:
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    36Item 3:
    
    Defaults Upon Senior Securities
    
    37Item 4:
    
    Submission of Matters to a Vote of Security Holders
    
    37Item 5:
    
    Other Information
    
    37Item 6:
    
    Exhibits
    
    37SIGNATURES
    
    38EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
    i




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® ®
 Forward Looking Statements
  
    
    our ability to develop products suitable for commercialization;
    
    our predicted development and commercial timelines for any of our potential products,
including the timing of any commencement of clinical trials of any product candidate and
the progress of such clinical trials;
    
    our liquidity and future financial performance;
    
    the establishment, development and maintenance of any manufacturing or collaborative
relationships;
    
    the effectiveness of our MolecularBreeding directed evolution platform and other
technologies and processes;
    
    our ability to protect our intellectual property portfolio and rights;
    
    our ability to identify and develop new potential products;
    
    the attributes of any products we may develop; and
    
    our business strategies and plans.
   ii




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PartI  Financial Information
 
 Item 1. Financial Statements
 MAXYGEN, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 December 31,
    
    
    June 30,2006
    
    
    2007(Note 1)
    
    
    (unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    46,504
    
    
    $
    25,070Short-term investments
    
    
    133,384
    
    
    
    137,831Accounts receivable and other receivables
    
    
    4,099
    
    
    
    588Prepaid expenses and other current assets
    
    
    3,133
    
    
    
    2,470Total current assets
    
    
    187,120
    
    
    
    165,959Property and equipment, net
    
    
    3,262
    
    
    
    3,023Goodwill
    
    
    12,192
    
    
    
    12,192Long-term investments
    
    
    2,988
    
    
    
    4,990Deposits and other long-term assets
    
    
    85
    
    
    
    85Total assets
    
    $
    205,647
    
    
    $
    186,249LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    2,435
    
    
    $
    2,032Accrued compensation
    
    
    4,708
    
    
    
    3,656Other accrued liabilities
    
    
    2,954
    
    
    
    5,477Deferred revenue
    
    
    1,527
    
    
    
    Taxes payable
    
    
    140
    
    
    
    Total current liabilities
    
    
    11,764
    
    
    
    11,165Non-current deferred revenue
    
    
    4,066
    
    
    
    Other long-term liabilities
    
    
    18
    
    
    
    49Commitments and contingenciesStockholders equity:Preferred stock, $0.0001 par value, 5,000,000 shares
authorized, no shares issued and outstanding at
December 31, 2006 and June 30, 2007
    
    
    
    
    
    
    Common stock, $0.0001 par value: 100,000,000 shares
authorized, 36,157,910 and 36,847,558 shares issued and
outstanding at December 31, 2006 and June 30, 2007,
respectively
    
    
    4
    
    
    
    4Additional paid-in capital
    
    
    411,195
    
    
    
    419,688Accumulated other comprehensive loss
    
    
    (696
    )
    
    
    (616
    )Accumulated deficit
    
    
    (220,704
    )
    
    
    (244,041
    )Total stockholders equity
    
    
    189,799
    
    
    
    175,035Total liabilities and stockholders equity
    
    $
    205,647
    
    
    $
    186,249
  1




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MAXYGEN, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2006
    
    
    2007
    
    
    2006
    
    
    2007(unaudited)Collaborative research and development revenue
    
    $
    7,950
    
    
    $
    874
    
    
    $
    12,017
    
    
    $
    8,471Revenue from related party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    556Grant revenue
    
    
    1,355
    
    
    
    1,207
    
    
    
    2,253
    
    
    
    2,146Total revenues
    
    
    9,305
    
    
    
    2,081
    
    
    
    14,270
    
    
    
    11,173Operating expenses:Research and development
    
    
    10,212
    
    
    
    16,343
    
    
    
    23,474
    
    
    
    30,943General and administrative
    
    
    4,065
    
    
    
    3,528
    
    
    
    8,383
    
    
    
    7,859Total operating expenses
    
    
    14,277
    
    
    
    19,871
    
    
    
    31,857
    
    
    
    38,802Loss from operations
    
    
    (4,972
    )
    
    
    (17,790
    )
    
    
    (17,587
    )
    
    
    (27,629
    )Interest income and other (expense), net
    
    
    1,931
    
    
    
    2,118
    
    
    
    3,824
    
    
    
    4,292Equity in net loss of minority investee
    
    
    (342
    )
    
    
    
    
    
    
    (342
    )
    
    
    Net loss
    
    $
    (3,383
    )
    
    $
    (15,672
    )
    
    $
    (14,105
    )
    
    $
    (23,337
    )Basic and diluted net loss per share
    
    $
    (0.09
    )
    
    $
    (0.43
    )
    
    $
    (0.39
    )
    
    $
    (0.64
    )Shares used in basic and diluted net loss per
share calculations
    
    
    36,024
    
    
    
    36,791
    
    
    
    35,999
    
    
    
    36,688
  2




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MAXYGEN, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Six months endedJune 30,2006
    
    
    2007(unaudited)Operating activitiesNet loss
    
    $
    (14,105
    )
    
    $
    (23,337
    )Adjustments to reconcile net loss from continuing operations
to net cash used in operating activities:Depreciation and amortization
    
    
    1,213
    
    
    
    847Equity in net loss of minority investee
    
    
    342
    
    
    
    Non-cash stock compensation
    
    
    3,335
    
    
    
    3,750Changes in operating assets and liabilities:Accounts receivable and other receivables
    
    
    3,175
    
    
    
    3,511Prepaid expenses and other current assets
    
    
    953
    
    
    
    663Deposits and other assets
    
    
    (16
    )
    
    
    Accounts payable
    
    
    513
    
    
    
    (403
    )Accrued compensation
    
    
    (915
    )
    
    
    (1,052
    )Other accrued liabilities
    
    
    (428
    )
    
    
    2,553Taxes payable
    
    
    
    
    
    
    (140
    )Deferred revenue
    
    
    (1,474
    )
    
    
    (5,593
    )Net cash used in operating activities
    
    
    (7,407
    )
    
    
    (19,201
    )Investing activitiesPurchases of available-for-sale securities
    
    
    (70,127
    )
    
    
    (122,005
    )Maturities of available-for-sale securities
    
    
    87,499
    
    
    
    115,646Investment in minority investee
    
    
    (600
    )
    
    
    Acquisition of property and equipment
    
    
    (730
    )
    
    
    (609
    )Net cash provided by (used in) investing activities
    
    
    16,042
    
    
    
    (6,968
    )Financing activitiesProceeds from issuance of common stock
    
    
    538
    
    
    
    4,743Net cash provided by financing activities
    
    
    538
    
    
    
    4,743Effect of exchange rate changes on cash and cash equivalents
    
    
    24
    
    
    
    (8
    )Net increase (decrease) in cash and cash equivalents
    
    
    9,197
    
    
    
    (21,434
    )Cash and cash equivalents at beginning of period
    
    
    26,940
    
    
    
    46,504Cash and cash equivalents at end of period
    
    $
    36,137
    
    
    $
    25,070
  3




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MAXYGEN, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 1. Basis of Presentation and Significant Accounting Policies
 Basis of Presentation
    Principles of Consolidation
    4




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Revenue Recognition
     5




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Loss Per Common Share
   Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2006
    
    
    2007
    
    
    2006
    
    
    2007Net loss
    
    $
    (3,383
    )
    
    $
    (15,672
    )
    
    $
    (14,105
    )
    
    $
    (23,337
    )Basic and diluted:Weighted-average shares used in
computing basic and diluted net loss
per share
    
    
    36,024
    
    
    
    36,791
    
    
    
    35,999
    
    
    
    36,688Basic and diluted net loss per common
share
    
    $
    (0.09
    )
    
    $
    (0.43
    )
    
    $
    (0.39
    )
    
    $
    (0.64
    )
  6




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Accumulated Other Comprehensive Loss
  December 31,
    
    
    June 30,2006
    
    
    2007Unrealized gain on available-for-sale securities
    
    $
    46
    
    
    $
    71Unrealized losses on available-for-sale securities
    
    
    (108
    )
    
    
    (45
    )Foreign currency translation adjustments
    
    
    (634
    )
    
    
    (642
    )Accumulated other comprehensive loss
    
    $
    (696
    )
    
    $
    (616
    )
 Recent Accounting Pronouncements
     7




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Stock-Based Compensation
   Stock Options
   8




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Three months ended
    
    Three months endedJune 30, 2006
    
    June 30, 2007U.S.
    
    Danish
    
    U.S.
    
    DanishEmployees
    
    Employees
    
    Employees
    
    EmployeesExpected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Risk-free interest rate rangeOptions
    
    
    5.01
    %
    
    
    5.05
    %
    
    
    4.76
    %
    
    
    4.97
    %Expected lifeOptions
    
    5.13 years
    
    2.4 years
    
    5.7 years
    
    2.4 yearsExpected volatilityOptions
    
    
    54.48
    %
    
    
    45.78
    %
    
    
    51.30
    %
    
    
    44.88
    %
 Six months ended
    
    Six months endedJune 30, 2006
    
    June 30, 2007U.S.
    
    Danish
    
    U.S.
    
    DanishEmployees
    
    Employees
    
    Employees
    
    EmployeesExpected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Risk-free interest rate rangeOptions
    
    4.30% to 5.01%
    
    4.34% to  5.05%
    
    4.64% to 4.76%
    
    4.76% to 4.97%Risk-free interest rate rangeESPP
    
    3.2% to 4.36%
    
    
    
    
    
    4.74% to 5.09%
    
    
    Expected lifeOptions
    
    5.13 years
    
    2.4 years
    
    5.7 years
    
    2.4 yearsExpected lifeESPP
    
    0.92 years
    
    
    
    
    
    0.94 years
    
    
    Expected volatilityOptions
    
    54.48% to 56.42%
    
    44.38% to 45.78%
    
    51.30% to 52.96%
    
    44.88% to 45.28%Expected volatilityESPP
    
    
    42.97
    %
    
    
    
    
    
    
    48.31
    %
    
    
    
  Valuation and Expense Information under SFAS 123(R)
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2006
    
    
    2007
    
    
    2006
    
    
    2007Research and development
    
    $
    426
    
    
    $
    816
    
    
    $
    1,031
    
    
    $
    1,434General and administrative
    
    
    1,237
    
    
    
    898
    
    
    
    2,115
    
    
    
    2,133Stock-based compensation expense
before income taxes
    
    
    1,663
    
    
    
    1,714
    
    
    
    3,146
    
    
    
    3,567Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total stock-based compensation
expense after income taxes
    
    $
    1,663
    
    
    $
    1,714
    
    
    $
    3,146
    
    
    $
    3,567
  9




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2. Cash Equivalents and Investments
   Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueMoney market funds
    
    $
    25,070
    
    
    $
    
    
    
    $
    
    
    
    $
    25,070Commercial paper
    
    
    67,375
    
    
    
    68
    
    
    
    
    
    
    
    67,443Corporate bonds
    
    
    3,740
    
    
    
    1
    
    
    
    
    
    
    
    3,741U.S. government agency securities
    
    
    71,680
    
    
    
    2
    
    
    
    (45
    )
    
    
    71,637Total
    
    
    167,865
    
    
    
    71
    
    
    
    (45
    )
    
    
    167,891Less amounts classified as cash
equivalents
    
    
    (25,070
    )
    
    
    
    
    
    
    
    
    
    
    (25,070
    )Total investments
    
    $
    142,795
    
    
    $
    71
    
    
    $
    (45
    )
    
    $
    142,821
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueMoney market funds
    
    $
    45,258
    
    
    $
    
    
    
    $
    
    
    
    $
    45,258Commercial paper
    
    
    60,139
    
    
    
    28
    
    
    
    
    
    
    
    60,167Corporate bonds
    
    
    20,082
    
    
    
    2
    
    
    
    (7
    )
    
    
    20,077U.S. government agency securities
    
    
    57,459
    
    
    
    16
    
    
    
    (101
    )
    
    
    57,374Total
    
    
    182,938
    
    
    
    46
    
    
    
    (108
    )
    
    
    182,876Less amounts classified as cash
equivalents
    
    
    (46,504
    )
    
    
    
    
    
    
    
    
    
    
    (46,504
    )Total investments
    
    $
    136,434
    
    
    $
    46
    
    
    $
    (108
    )
    
    $
    136,372
  10




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Amortized
    
    
    EstimatedCost
    
    
    Fair ValueDue within one year
    
    $
    137,796
    
    
    $
    137,831Due after one year through two years
    
    
    4,999
    
    
    
    4,990$
    142,795
    
    
    $
    142,821
 3. Derivatives and Financial Instruments
  4. Litigation
 In
re Initial Public Offering Securities Litigation
 In re Initial Public Offering Securities Litigation
   11




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5. Commitments
   For the remainder of 2007
    
    $
    7,937
 Year endingDecember 31,2008
    
    $
    5,1482009
    
    
    865Thereafter
    
    
    21Total commitments beyond current year
    
    $
    6,034
 6. Guarantees and Indemnifications
    12




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7. Related Party Transactions
   8. Income Taxes
  13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Executive Summary
       14




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15




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Critical Accounting Policies and Estimates
  Results of Operations
 Revenues
    16




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Research and Development Expenses
     Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2006
    
    
    2007
    
    
    2006
    
    
    2007Collaborative projects funded by third parties(1)
    
    $
    2,201
    
    
    $
    214
    
    
    $
    4,842
    
    
    $
    2,451Government grants
    
    
    1,284
    
    
    
    1,329
    
    
    
    2,130
    
    
    
    2,261Internal projects
    
    
    6,727
    
    
    
    14,800
    
    
    
    16,502
    
    
    
    26,231Total
    
    $
    10,212
    
    
    $
    16,343
    
    
    $
    23,474
    
    
    $
    30,943
 
 (1)
    
    Research and development expenses related to collaborative projects funded by third
parties may be less than the reported revenues due to the amortization of non-refundable up-front
payments, as well as a portion of the collaborative research and development revenue that is
charged for general and administrative expenses.  17




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General and Administrative Expenses
   Interest Income and Other Income (Expense), Net
  18




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Recent Accounting Pronouncements
      19




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Liquidity and Capital Resources
       Payments Due by PeriodMoreContractual Obligations
    
    Total
    
    
    Less than
    
    
    1-3
    
    
    4-5
    
    
    than 51 Year
    
    
    Years
    
    
    Years
    
    
    YearsOperating lease obligations
    
    $
    2,445
    
    
    $
    1,074
    
    
    $
    1,371
    
    
    $
    
    
    
    $
    Purchase obligations
    
    
    11,526
    
    
    
    6,863
    
    
    
    4,663
    
    
    
    
    
    
    
    Total
    
    $
    13,971
    
    
    $
    7,937
    
    
    $
    6,034
    
    
    $
    
    
    
    $
    
   20




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Item 3. Quantitative And Qualitative Disclosures About Market Risk
 Market risk management
  
 Item 4. Controls and Procedures
 Evaluation of Controls and Procedures
  Changes in Internal Control
  Limitations on the Effectiveness of Controls
  21




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Part II  Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 A restated description of the risk factors associated with our business is set forth below.
This description includes any material changes to and supersedes the description of the risk
factors associated with our business previously disclosed in Part I, Item 1A of our Annual Report
on Form 10-K for the year ended December 31, 2006. You should carefully consider the risks
described below, together with all of the other information included in this report, in considering
our business and prospects. The risks and uncertainties described below are not the only ones
facing our company. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial also may impair our business operations. If any of the following risks
actually occur, our business could be harmed. In such case, the trading price of our common stock
could decline, and you may lose all or part of your investment.
 We have a history of net losses. We expect to continue to incur net losses and may not achieve
or maintain profitability.
  We are an early stage company deploying unproven technologies. If we do not develop
commercially successful products, we may be forced to cease operations.
  22




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Drug development is a long, expensive and uncertain process and may not result in the
development of any commercially successful products.
      23




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Our clinical development strategy, which relies on third party contract research
organizations, exposes us to additional risk.
  Our revenues, expenses and operating results are subject to fluctuations that may cause our
stock price to decline.
  
    
    termination of research and development contracts with collaborators or government
research grants, which may not be renewed or replaced;
    
    the success rate of our development or discovery efforts leading to milestones and
royalties;
    
    timing of licensing fees or the achievement of milestones under new or existing
licensing and collaborative arrangements;
    
    timing of expenses, particularly with respect to contract manufacturing,
preclinical studies and clinical trials;
    
    the timing and willingness of collaborators to commercialize our products, which
would result in royalties to us; and
    
    general and industry specific economic conditions, which may affect our
collaborators research and development expenditures.
   Our potential products are subject to a lengthy and uncertain regulatory process. If our
potential products are not approved, we will not be able to commercialize those products.
  24




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
    
    a drug candidate may not be safe or effective;
    
    regulatory officials may not find the data from preclinical testing and clinical trials sufficient;
    
    the FDA and other regulatory agencies might not approve our third-party
manufacturers processes or facilities; or
    
    the FDA or other regulatory agencies may change its approval policies or adopt new
regulations.
   25




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Our current and future product candidates could take a long time to gain regulatory approval,
or may never gain approval, which could reduce or eliminate our revenue by delaying or terminating
the potential commercialization of our product candidates.
    
    
    deficiencies in the conduct of the clinical trials;
    
    negative or inconclusive results from the clinical trials that necessitate
additional clinical studies;
    
    difficulties or delays in identifying and enrolling patients who meet trial
eligibility criteria;
    
    delays in obtaining or maintaining required approvals from institutions, review
boards or other reviewing entities at clinical sites;
    
    inadequate supply or deficient quality of product candidate materials necessary for
the conduct of the clinical trials;
    
    the occurrence of unacceptable toxicities or properties or unforeseen adverse side
effects, especially as compared to currently approved drugs intended to treat the same
indications;
    
    our lack of financial resources to continue the development of a product candidate;
    
    future legislation or administrative action or changes in FDA policy or the policy
of foreign regulatory agencies during the period of product development, clinical
trials and FDA regulatory review; or
    
    other reasons that are internal to the businesses of our collaborative partners,
which they may not share with us.
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Our manufacturing strategy, which relies on third-party manufacturers, exposes us to
additional risks.
     The manufacturing of our product candidates presents technological, logistical and regulatory
risks, each of which may adversely affect our potential revenues.
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
    
    before we can obtain approval of any of our products or product candidates for the
treatment of a particular disease or condition, we must demonstrate to the
satisfaction of the FDA and other governmental authorities that the drug manufactured
for commercial use is comparable to the drug manufactured for clinical trials and that
the manufacturing facility complies with applicable laws and regulations;
    
    it may not be technically feasible to scale up an existing manufacturing process to
meet demand or such scale-up may take longer than anticipated; and
    
    failure to comply with strictly enforced GMP regulations and similar foreign
standards may result in delays in product approval or withdrawal of an approved
product from the market.
  We may need additional capital in the future. If additional capital is not available, we may
have to curtail or cease operations.
   If our collaborations are not successful, we may not be able to effectively develop and market
some of our products.
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Any conflicts with our collaborators could harm our business.
   Any inability to adequately protect our proprietary technologies could harm our competitive
position.
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Litigation or other proceedings or third party claims of intellectual property infringement
could require us to spend time and money and could require us to shut down some of our operations.
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Budget or cash constraints may force us to delay or terminate our efforts to develop certain
products and could prevent us from executing our business plan, meeting our stated timetables and
commercializing our potential products as quickly as possible.
   Our revenues are substantially dependent on a limited number of collaborative arrangements and
government grants, and our inability to establish or maintain collaborations or grants would
adversely impact our revenues, financial position and results of operation.
  Other biological products may compete with our products.
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Many potential competitors who have greater resources and experience than we do may develop
products and technologies that make ours obsolete.
     Legislative actions, recent and potential new accounting pronouncements and higher compliance
costs are likely to adversely impact our future financial position and results of operations.
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If we do not attract and retain key employees, our business could be impaired.
  The operation of international locations may increase operating expenses and divert management
attention.
  
    
    regulatory requirements that may limit or prevent the offering of our products in
local jurisdictions;
    
    local legal and governmental limitations on company-wide employee benefit
practices, such as the operation of our employee stock option plan in local
jurisdictions;
    
    government limitations on research and/or research involving genetically engineered
products or processes;
    
    difficulties in staffing and managing foreign operations;
    
    currency exchange risks; and
    
    potentially adverse tax consequences.
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Acquisitions could result in dilution, operating difficulties and other harmful consequences.
  
    
    diversion of management time (both ours and that of the acquired company) from
focus on operating the businesses to issues of integration during the period of
negotiation through closing and further diversion of such time after closing;
    
    decline in employee morale and retention issues resulting from changes in
compensation, reporting relationships, future prospects, or the direction of the
business;
    
    the need to integrate each companys accounting, management information, human
resource and other administrative systems to permit effective management and the lack
of control if such integration is delayed or not implemented; and
    
    the need to implement controls, procedures and policies appropriate for a larger
public company in companies that before acquisition had been smaller, private
companies.
   Our stock price has been, and may continue to be, extremely volatile, and an investment in our
stock could decline in value.
  
    
    our failure to meet our publicly announced revenue and/or expense projections
and/or product development timetables;
    
    adverse or inconclusive results or delays in preclinical development or clinical trials;
    
    any material amendment or termination of our collaborative agreements;
    
    any decisions to discontinue or delay development programs or clinical trials;
    
    announcements of new technological innovations or new products by us or our competitors;
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
    
    conditions or trends in the biotechnology and life science industries;
    
    changes in the market valuations of other biotechnology or life science companies;
    
    developments in domestic and international governmental policy or regulations;
    
    announcements by us or our competitors of significant acquisitions, strategic
partnerships, joint ventures or capital commitments;
    
    changes in general economic, political and market conditions, such as recessions,
interest rate changes, terrorist acts and other factors;
    
    developments in or challenges relating to patent or other proprietary rights; and
    
    sales of our common stock or other securities in the open market.
  Substantial sales of shares may adversely impact the market price of our common stock.
  If we or our collaborators receive regulatory approval for our drug candidates, we will be
subject to ongoing FDA obligations and continued regulatory review, and we may also be subject to
additional FDA post-marketing obligations, all of which may result in significant expense and limit
our ability to commercialize our potential drugs.
  We may be subject to costly product liability claims and may not have adequate insurance.
  We currently have no product marketing capabilities.
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The coverage and reimbursement status of newly approved drugs is uncertain and failure to
obtain adequate coverage and reimbursement could limit our ability to market any drugs we may
develop and decrease our ability to generate revenue.
  Some of our existing stockholders can exert control over us, and may not make decisions that
are in the best interests of all stockholders.
  Our facilities in California are located near an earthquake fault, and an earthquake or other
types of natural disasters or resource shortages could disrupt our operations and adversely affect
our results.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  (a)
    
    The stockholders reelected the seven nominees for our board of directors:
 Shares Voted For
    
    SharesCandidate
    
    Candidate
    
    WithheldM.R.C. Greenwood
    
    
    26,586,563
    
    
    
    894,120Russell J. Howard
    
    
    26,774,184
    
    
    
    706,499Louis G. Lange
    
    
    26,537,735
    
    
    
    942,948Ernest Mario
    
    
    26,537,749
    
    
    
    942,934Gordon Ringold
    
    
    26,584,113
    
    
    
    896,570Isaac Stein
    
    
    26,583,454
    
    
    
    897,229James R. Sulat
    
    
    26,710,277
    
    
    
    770,406
 (b)
    
    The stockholders ratified the selection of Ernst & Young LLP as our independent registered
public accounting firm for the fiscal year ending December 31, 2007:
 Shares voted for
    
    
    27,262,917Shares voted against
    
    
    206,634Shares abstaining
    
    
    11,132Broker non-votes
    
    
    0
 
 Item 5. Other Information
  
 Exhibits
  31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
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Signatures
  MAXYGEN, INC.August 2, 2007
    
    
    
    By: /s/ Russell J. HowardRussell J. HowardChief Executive OfficerAugust 2, 2007
    
    
    
    By: /s/ Lawrence W. BriscoeLawrence W. BriscoeChief Financial Officer
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Exhibit Index
 Exhibit No.
    

Description31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002