<PAGE>

                         SECURITIES AND EXCHANGE COMMISSION
                              Washington, D. C. 20549
             _________________________________________________________
                                          
                                    FORM 10-K/A
                                          
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                        THE SECURITIES EXCHANGE ACT OF 1934
                                          
    For the fiscal year ended September 30, 1998      Commission File No. 1-4430
              ________________________________________________________
                                          
                            MAXIM PHARMACEUTICALS, INC.
               (Exact Name of Registrant as specified in its charter)
                                          
     Delaware                                             87-0279983
     (State or other jurisdiction of                  (I.R.S. Employer
     incorporation or organization)               Identification Number)

                       8899 University Center Lane, Suite 400
                            San Diego, California 92122
                                   (619) 453-4040
                (Address, including zip code, and telephone number, 
         including area code, of Registrant's principal executive offices)
                                          
             _________________________________________________________
                                          

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

     Title of Each Class              Name of Each Exchange on Which Registered
     -------------------              -----------------------------------------
Common Stock, $.001 Par Value                  American Stock Exchange
Redeemable Common Stock Purchase Warrants      American Stock Exchange
          

Securities registered pursuant to Section 12(g) of the Act: None 
             _________________________________________________________
                                          
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  X   No 
                                               ---     ---

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

     The aggregate market value of the voting stock held by persons considered
by the registrant for this purpose to be nonaffiliates of the registrant was
approximately $152,451,889 on December 28, 1998, when the closing price of such
stock, as reported in the American Stock Exchange, was $15.375.

     The number of shares outstanding of the registrant's Common Stock, $.001
par value, as of December 28, 1998 was 9,915,570.
           _____________________________________________________________
                                          
                        DOCUMENTS INCORPORATED BY REFERENCE
                                          
1.   Certain portions of the Registrant's Annual Report to Stockholders for the
     fiscal year ended September 30, 1998, are incorporated into Part II hereof.
2.   Certain portions of the Registrant's Proxy Statement for its Annual Meeting
     of Stockholders to be held on February 19, 1999, which will be mailed on or
     about January 11, 1998, are incorporated into Part III hereof.
________________________________________________________________________________
________________________________________________________________________________

<PAGE>

     THIS FORM 10-K CONTAINS FORWARD-LOOKING STATEMENTS REGARDING OUR BUSINESS
AND PRODUCTS AND OUR PROJECTED PROSPECTS AND QUALITIES.  SUCH FORWARD-LOOKING
STATEMENTS INCLUDE STATEMENTS REGARDING THE RESULTS OF PRODUCT DEVELOPMENT
EFFORTS AND CLINICAL TRIALS, AND THE SCOPE AND SUCCESS OF FUTURE OPERATIONS.  
SUCH STATEMENTS ARE ONLY PREDICTIONS AND ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES, PARTICULARLY THOSE INHERENT IN THE PROCESS OF DISCOVERING AND
DEVELOPING DRUGS THAT CAN BE PROVEN TO BE SAFE AND EFFECTIVE FOR USE AS HUMAN
THERAPEUTICS AND THE ENDEAVOR OF BUILDING A BUSINESS AROUND SUCH POTENTIAL
PRODUCTS.  ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THIS
FORM 10-K.  FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE,
BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THIS FORM 10-K INCLUDING, WITHOUT
LIMITATION, IN THE SECTION OF ITEM I ENTITLED "RISK FACTORS."  AS A RESULT, YOU
ARE CAUTIONED NOT TO PLACE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS. 
                                          
                                       PART 1
                                          
ITEM 1.   BUSINESS

     Maxim Pharmaceuticals, Inc. is referred to throughout this report as
"Maxim", the "Company", "we" or "us".

OVERVIEW

     Maxim is developing novel drugs, therapies and vaccines for cancer and 
infectious diseases.  Clinical trials of our lead drug MAXAMINE-TM- in the 
treatment of malignant melanoma and acute myelogenous leukemia have shown a 
more than doubling of survival and remission times while maintaining patient 
quality of life during treatment.  Earlier-stage clinical studies have also 
suggested promise in renal cell carcinoma and hepatitis C.  We are currently 
testing MAXAMINE in three Phase III cancer clinical trials in 12 countries 
around the world.
   
     MAXAMINE, an immuno-modulator, is designed to offer a safer treatment 
that extends life for seriously ill patients.  MAXAMINE is used in 
biotherapy, a class of treatments that are intended to improve the ability of 
a patient's immune system to identify, disable and destroy malignant or 
infected cells. MAXAMINE THERAPY combines the administration of MAXAMINE, 
which protects critical immune cells, with the administration of 
biotherapeutic agents such as cytokines designed to stimulate these immune 
cells.  Because MAXAMINE THERAPY is designed to capitalize upon and enhance a 
patient's own immune capabilities, we believe that it has the potential to be 
used in a wide range of cancers and diseases that can be recognized by the 
immune system.

     In addition to extending survival, maintaining the quality of a 
patient's life during treatment is an important objective of MAXAMINE 
THERAPY.  MAXAMINE is designed to allow self-administration by patients in 
their own homes, and is believed to reduce toxic side effects of cytokines 
and other biological response modifiers.

     We are conducting three Phase III clinical trials of MAXAMINE THERAPY 
for the treatment of cancer.  In June 1997 we commenced a 300-patient Phase 
III clinical trial of MAXAMINE THERAPY for advanced malignant melanoma in the 
United States.  A separate international Phase III advanced malignant 
melanoma trial centered in Europe, Australia and Canada was initiated in 
November 1997. Lastly, we commenced a 400-patient Phase III clinical trial 
for acute myelogenous leukemia ("AML") in the United States, Europe, 
Australia, Canada and Israel  in February 1998.  Each of these trials are 
designed to independently support application for approval to market 
MAXAMINE.   

     In two completed Phase II clinical trials for the treatment of advanced 
malignant melanoma, MAXAMINE THERAPY substantially improved patient survival. 
Median survival time for patients treated with MAXAMINE THERAPY in the two 
studies exceeded 13 and 15 months, respectively, as compared with reported 
median survival times of approximately six to seven months for existing 
available treatments.  In patients for which the melanoma had metastasized to 
the liver, MAXAMINE THERAPY improved median survival time to 19 months 
compared to predicted survival times of approximately four months for these 
patients. 

                                       1

<PAGE>

     Our Phase II clinical trial for the treatment of AML demonstrated a 
substantial improvement of disease-free remission intervals.  As of September 
1998, after a median of 24 months of follow-up, 58% of patients treated with 
MAXAMINE THERAPY during their first complete remission ("CR1") remained in 
leukemia-free remission.  Less than 20-25% would be expected to remain in 
remission under current treatments.  Furthermore, 65% of patients treated 
with MAXAMINE THERAPY without concurrent diseases or antecedent illnesses 
remained in leukemia-free remission.  Patients who relapsed and achieved a 
second or greater remission ("CR2+") and were subsequently treated with 
MAXAMINE THERAPY had a median time in remission in excess of 21 months as 
compared with the historic reported median time in remission of approximately 
six months under the current standard of care. 

     A Phase II clinical trial of MAXAMINE in the treatment of renal cell 
carcinoma was initiated in Europe in late 1998.  We have also tested MAXAMINE 
in a Phase I trial in hepatitis C (HCV) patients. The study suggested that 
the combination of MAXAMINE with interferon-alpha (IFN-a) is safe in the 
treatment of HCV patients, and that MAXAMINE may enhance the efficacy of 
IFN-a in patients who were previously nonresponsive to IFN-a therapy.  We 
currently plan to start a Phase II trial in hepatitis C in 1999. 

     We are also developing MAXDERM-TM-, a MAXAMINE-related drug for the 
treatment of dermatological conditions, infections and conditions for which 
topical therapy is appropriate.  A study in patients with herpes labialis 
(cold sores) that suggested that MAXDERM resolved lesions more effectively 
than a placebo control.  Other potential uses for MAXDERM include the 
treatment of oral mucositis, decubitus ulcers, shingles, burns and related 
conditions.

     Our third technology, MAXVAX-TM-, is currently in preclinical 
development and is designed to facilitate a new class of needle-free vaccines 
for major respiratory infections, sexually transmitted diseases, 
gastrointestinal tract diseases and other infectious diseases.  Nearly 85 
percent of infectious diseases enter the body through the mucosal membranes 
lining the nose, mouth, eyes, ears, lungs, intestinal and urogenital tracts.  
We hope that mucosal vaccines, using the MAXVAX carrier, can provide immune 
protection at these mucosal surfaces. 

MAXAMINE DRUG FOR CANCER AND INFECTIOUS DISEASES

     CANCER MARKET

     Cancer comprises a large and diverse group of diseases resulting from 
the uncontrolled proliferation of abnormal (malignant) cells. Most cancers 
will spread beyond their original sites and invade surrounding tissue and may 
also metastasize to more distant sites and ultimately cause death in the 
patient unless effectively treated. To be effective, cancer treatment must 
target not only the primary tumor site but also distant metastases. CANCER 
FACTS AND FIGURES, a report from the American Cancer Society, estimates that 
a total of approximately 1,230,000 new cases and approximately 565,000 deaths 
will be reported for invasive cancers in the United States in 1998. 
Predominant forms of cancer include leukemia and lymphoma, breast, lung, 
urinary, prostate, melanoma, ovarian, colon, rectal and brain cancers. The 
National Cancer Institute estimates that the direct medical cost of treating 
cancer in the United States is $35 billion per year. Information regarding 
certain cancer indications is summarized below. 

 Estimated Incidence for Selected Cancers for 1998 for Initial Target Markets*

<TABLE>
<CAPTION>
                                                              ANNUAL    
                                                     --------------------
                                                     NEW CASES     DEATHS
                                                     ---------     ------
<S>                                                  <C>           <C>
Malignant Melanoma                                    83,000        15,000
Acute Myelogenous Leukemia                            19,000        13,000
Renal Cell Carcinoma                                  60,000        23,000
All Invasive Cancers                               2,460,000     1,130,000
</TABLE>

     *These estimates are based upon the American Cancer Society's 1998 FACTS
AND FIGURES doubled to provide an estimate of incidence for the European Union
and Australia. 

                                       2

<PAGE>

     Predominant methods of treating cancer generally include surgery, 
radiation therapy, chemotherapy and biotherapy.  Although these techniques 
have achieved success for certain cancers, particularly when detected in the 
early stages, each has drawbacks which may significantly limit their success 
in treating certain types and stages of cancer.  For example, cancer may 
recur even after repeated attempts at surgical removal of tumors or other 
treatment.  Surgery may be successful in removing visible tumors but may 
leave smaller nests of cancer cells in the patient which continue to 
proliferate.  Radiation or chemotherapy are relatively imprecise methods for 
the destruction of cancer cells (i.e., such therapies can kill both cancer 
cells and normal cells) and have toxic side effects which may themselves be 
lethal to the patient; these toxic side effects may also restrict the 
application of these treatment modes to less than optimal levels required to 
ensure eradication of the cancer. 

     The high number of cancer-related deaths indicate the need for more 
efficacious therapies for many patients.  In addition, we believe that new 
cancer therapies will increasingly be expected to maintain patients' quality 
of life during treatment. 

HEPATITIS C MARKET

     The U.S. Centers for Disease Control and Prevention estimates that 
approximately four million Americans are infected with the hepatitis C virus 
("HCV").  The World Health Organization and other sources estimate that at 
least 60 million people are chronically infected worldwide.  Approximately 
85% of HCV patients develop long-term or chronic infection, possibly leading 
to serious liver diseases, cirrhosis (scarring of the liver), liver cancer 
and death.  HCV is the leading cause of liver cancer and the primary reason 
for liver transplantation in many countries.  The majority of patients do not 
effectively respond to existing therapies or to therapies known by us to be 
under development.

BIOTHERAPY FOR CANCER AND INFECTIOUS DISEASES

     In recent years, significant research has focused on attempts to 
capitalize upon and enhance the immune system's ability to combat cancer and 
infectious diseases, a treatment approach known as biotherapy.  New 
cytokines, drugs, vaccines, chemotherapeutic agents and advanced radiation 
therapy technologies are continually being developed in attempts to protect 
and enhance the response of the immune system.  Many of these technologies, 
however, have demonstrated significant limitations in their ability to treat 
cancer and certain infectious agents.  These limitations may include marginal 
efficacy, severe adverse side effects and the development of multi-drug 
resistance. 
  
     Since the early 1980's, much research in the biotherapy area has 
included the testing of cytokines, naturally occurring proteins, such as 
interleukin-2 (IL-2) and interferon-alpha (IFN-a) for the treatment of a 
number of cancers and infectious diseases including advanced malignant 
melanoma, renal cell carcinoma, hepatitis C and AML.  Two kinds of immune 
cells, the natural killer-cells (NK cells) and T cells, possess an ability to 
kill and support the killing of cancer cells and virally infected cells.  
IL-2 and IFN-a are potent stimulators of NK cells and T Cells.  However, 
cytokines are often rendered ineffective in the treatment of patients as the 
NK cells and T cells are suppressed by another component of the body's immune 
system.  As a result, cytokines demonstrate a clinically significant tumor 
response in only a small portion of cancer patients and often produce severe 
adverse side effects.  Moreover, even with recent advances in the use of 
IFN-a in combination with anti-viral drugs or in sustained release 
formulations, the majority of HCV patients do not effectively respond to 
existing therapy.

MAXAMINE TECHNOLOGY

     The method of action of MAXAMINE THERAPY is intended to improve the 
immune system's ability to identify, disable and destroy malignant or 
infected cells. MAXAMINE may be key to many types of biotherapy -- the use of 
the body's own immune or biologic systems to fight cancer and infectious 
diseases.  MAXAMINE is based on a naturally occurring molecule, and its 
usefulness in biotherapy was discovered by Maxim's collaborative scientists 
at the University of Goteborg, Sweden.  

                                      3

<PAGE>

     Two kinds of immune cells, NK Cells and cytotoxic T Cells, possess an 
ability to kill and support the killing of cancer cells and virally infected 
cells. Maxim's researchers have shown, however, that NK Cells and T Cells are 
suppressed by phagocytes, another component of the body's immune system. 
Phagocytes are a class of white blood cells found in abundant quantities at 
the site of tumors and viral infections.  The release of free radicals by 
phagocytes results in apoptosis (programmed cell death) of NK Cells and T 
Cells, thereby destroying their cytotoxic capability and rendering the immune 
response against the tumor or virally infected cell largely ineffective. 

     MAXAMINE is designed to modulate the immune system to protect NK Cells 
and T Cells, allowing biotherapy to be more effective.  When histamine, a 
natural molecule present in the body, or any other molecules in the class 
known as H2 receptor agonists, binds to the H2 receptor on the phagocytes, 
the production and release of free radicals is temporarily prevented.  The 
prevention of the release of free radicals thereby allows immune-activating 
agents, such as IL-2 and IFN-a, to more effectively activate NK Cells and T 
Cells to enhance their killing of tumor cells or virally infected cells.  
     
     We have formulated MAXAMINE, an analogue of histamine, so that it may be 
delivered to patients through a subcutaneous injection.  Among the body of 
proprietary protection surrounding our MAXAMINE technology are United States 
and international patents and patent applications covering not only MAXAMINE, 
or histamine, but the use of any as H2 receptor agonist in the treatment of 
cancer and infectious diseases, as well as patent applications covering their 
use in other medical applications.  See "Patents, Licenses and Proprietary 
Rights."

     In summary, MAXAMINE THERAPY combines the administration of MAXAMINE, 
which protects critical immune cells, with the administration of 
biotherapeutic agents designed to stimulate these immune cells.  The results 
of the series of clinical trials conducted to date highlight the potential of 
MAXAMINE to improve the efficacy of certain biotherapeutic agents.  Because 
MAXAMINE has been shown to increase the effectiveness of cytokines, lower 
doses of cytokines such as IL-2 and IFN-a can potentially be used in MAXAMINE 
THERAPY without compromising therapeutic effectiveness, thereby reducing 
serious side effects associated with the cytokines.  Among the potential 
benefits of MAXAMINE THERAPY is the utilization and enhancement of the body's 
immune capabilities, thereby making the treatment potentially applicable to a 
broad range of cancers and infectious diseases recognizable by the immune 
system.

POTENTIAL BENEFITS OF MAXAMINE

     We believe that MAXAMINE may be integral in the growing trend toward 
combination therapy for certain cancers and infectious diseases, and may 
offer a number of important clinical and commercial advantages relative to 
current therapies or approaches, including: 

     -    EXTENDING LIFE.  Phase II clinical trials and other data have provided
          evidence of improved therapeutic efficacy (extended survival and
          remission intervals) over approved therapies or standards of care. 

     -    MAINTAINING QUALITY OF LIFE.  Phase II clinical trials and other data
          have indicated that MAXAMINE THERAPY may reduce the toxic side effects
          of cytokines and other biological response modifiers, thereby allowing
          the maintenance of the patient's quality of life during this
          outpatient therapy. 

     -    OUTPATIENT ADMINISTRATION.  MAXAMINE can be self-administered on an
          outpatient basis, subcutaneously, in contrast to the in-hospital
          administration required for many other therapies. 

     -    COST EFFECTIVE.  Lower doses of IL-2 or IFN-a are possible for many
          patients, potentially reducing the cost per treatment cycle below
          existing treatment regimens.  In addition, the delivery of MAXAMINE
          THERAPY on an outpatient basis may eliminate the costs associated with

                                       4

<PAGE>

          in-hospital patient care.  These factors, combined with the potential
          improvements in efficacy, contribute favorably to the assessment of
          benefit versus cost for this therapy.   

MAXAMINE CLINICAL TRIAL STATUS

     Building upon the body of human data generated from a series of Phase II 
clinical trials, we have initiated a clinical development program 
encompassing three concurrent Phase III clinical trials of MAXAMINE THERAPY 
for the treatment of cancer based in 12 countries.  Each of these trials is 
designed to independently support regulatory submissions for approval to 
market MAXAMINE. Our Phase III trials target advanced malignant melanoma and 
AML, but we believe that these are only the first potential uses for the 
drug.  A Phase II trial is underway in renal cell carcinoma, and 
earlier-stage trials have been conducted in hepatitis C and multiple myeloma.
  
     The table summarizes our current and completed clinical trial activities 
for each disease we currently target or plan to target. We cannot predict 
when clinical studies for any of the indications set forth below will be 
completed or whether the results of such studies will support the filing of 
New Drug Applications or the equivalent.  In addition, we can give no 
assurance as to when we will be able to commence planned clinical studies. 

                       MAXAMINE THERAPY Clinical Trial Status
<TABLE>
<CAPTION>
          INDICATION               PHASE               STATUS                  LOCATION
          ----------               -----               ------                  --------
 <S>                          <C>                    <C>                  <C>
 Advanced Malignant Melanoma  Phase III trial        Ongoing              United States
 Advanced Malignant Melanoma  Phase III trial        Ongoing              Five countries  (Europe,
                                                                          Australia and Canada)
 Acute Myelogenous Leukemia   Phase III trial        Ongoing              12 countries  (United States, 
                                                                          Europe, Australia 
                                                                          Canada and Israel)
 Renal Cell Carcinoma         Phase II trial         Ongoing              Sweden, Denmark and 
                                                                          United Kingdom
 Multiple Myeloma             Phase I trial          Completed            Sweden
 Hepatitis C                  Phase I trial          Completed            Sweden
 Hepatitis C                  Phase II trial         Planned for 1999     To be determined
 Prostate Adenocarcinoma      Preclinical research   Completed            Sweden
</TABLE>

     ADVANCED MALIGNANT MELANOMA

     Malignant melanoma is the most serious form of skin cancer.  Our initial 
Phase II clinical trial was conducted in Sweden at the Sahlgrenska University 
Hospital in Goteborg.  In that study, fifteen patients with advanced 
metastatic malignant melanoma were treated with a high-dose regimen of IL-2 
together with daily injections of IFN-a in five-day cycles. Eight of the 
patients were also given MAXAMINE THERAPY, which consisted of MAXAMINE 
injections twice daily in combination with treatment with IL-2 and IFN-a. 

     The results of the initial Phase II clinical trial indicated that MAXAMINE
may be given as an effective adjuvant to IL-2/IFN-a therapy.  In the seven
patients who did not receive MAXAMINE THERAPY, one partial response (defined as
a 50% reduction of the total tumor burden) was observed in a patient with skin
and lymph node melanoma.  In the eight patients treated with MAXAMINE THERAPY,
four partial and two mixed responses were observed.  Notably, two of the
MAXAMINE THERAPY patients had complete resolution of their extensive liver
metastases.  Sites of response in the MAXAMINE THERAPY patients also included
skin, lymph nodes, skeleton, spleen and muscle.  In patients receiving MAXAMINE
THERAPY, there was a statistically significant improvement in overall survival
(p  < 0.03).  The MAXAMINE THERAPY patients had a mean survival of 13.3 months,
double the mean 6.8 month survival in the control group.  One patient remained
completely free of detectable disease more than four years after the
commencement of treatment with MAXAMINE THERAPY. 

     A second advanced malignant melanoma study was undertaken at the 
Sahlgrenska University Hospital in Sweden to determine if MAXAMINE THERAPY 
utilizing a lower-dose regimen of the same cytokines (IL-2 and IFN-a)

                                       5

<PAGE>

in combination with the same doses of MAXAMINE would retain the efficacy seen 
in the first study, while reducing the side effects of the cytokine portion 
of the treatment.  In addition to survival, a goal for MAXAMINE THERAPY is to 
lower the toxicity of biotherapy and better maintain the patients' quality of 
life. Lowering the doses of the cytokines reduces many of the side effects of 
these drugs, thereby facilitating tolerance of the therapy and even allowing 
self-administration of the drugs at home.  The median survival time of 
patients with advanced (stage IV) malignant melanoma using conventional 
treatments is historically reported to be six to seven months.  In this 
second, low-dose malignant melanoma study, 11 patients had a median survival 
time of 15 months, more than double the rate generally reported for the 
normal course of the disease and exceeding the favorable results from the 
high-dose study described above.  In this second malignant melanoma clinical 
trial, MAXAMINE THERAPY was well-tolerated and most patients were able to 
treat themselves at home. 

     In the first two trials the median survival time exceeded 13 and 14 
months, respectively, compared to reported medians of six to seven months for 
conventional treatments.  In addition, of the seven patients having liver 
metastases, treatment with MAXAMINE THERAPY was shown to significantly 
improve survival outcome (median of 19 months survival as a group) compared 
to the predicted four months survival time for these patients. 

     In July 1997, we commenced a multi-center Phase III clinical trial of 
MAXAMINE THERAPY in the United States for the treatment of advanced malignant 
melanoma.  In this clinical trial, advanced malignant melanoma patients are 
being treated with a combination of MAXAMINE and IL-2, while patients in the 
control group are being treated with IL-2 alone.  The primary endpoint of the 
study is overall patient survival, and the secondary endpoints include time 
to progression, tumor response rate, duration of response and quality of 
life.  The minimum enrollment objective for the study was 240 patients.  More 
than 50 clinical sites in the United States are participating in the study, 
and we have exceeded the original enrollment goal for the study.  We plan to 
terminate enrollment in the first half of 1999 after enrolling approximately 
300 patients.

     We commenced a second international Phase III trial of MAXAMINE THERAPY 
for the treatment of advanced malignant melanoma in November 1997 based in 
five countries, including clinical sites in Europe,  Australia and Canada.  
Patients in the MAXAMINE THERAPY arm will receive a co-administration of 
MAXAMINE plus low-dose IL-2 and IFN-a, while patients in the control arm will 
receive dacarbazine (DTIC), the most commonly used chemotherapeutic agent for 
the treatment of advanced malignant melanoma.  DTIC has a reported survival 
benefit of six to seven months in advanced malignant melanoma patients.  The 
international study will be designed to encompass approximately 300 patients. 

     Our two Phase III malignant melanoma trials are designed to complement 
each other by addressing separate clinical and marketing issues.  The United 
States trial is designed to demonstrate that treatment with a combination of 
MAXAMINE and IL-2 is better at extending patient survival than the 
administration of IL-2 alone.  The international trial is designed to 
demonstrate that MAXAMINE THERAPY is better at extending patient survival 
than dacarbazine (DTIC), a standard treatment throughout the world for 
advanced malignant melanoma.  A secondary endpoint of both trials is to 
evaluate patient quality of life while on MAXAMINE THERAPY.

     ACUTE MYELOGENOUS LEUKEMIA ("AML")

     Acute Myelogenous Leukemia is the most common form of acute leukemia in 
adults, and prospects for long-term survival are poor for the majority of 
patients.  Once diagnosed with AML, patients are typically treated with 
chemotherapy, and the majority achieve complete remission ("CR").  
Unfortunately 75-80% of patients who achieve their first CR ("CR1") will 
relapse, and the median time in remission before relapse is only 12 months 
with current treatments.  Relapsed patients are typically treated again with 
chemotherapy, and many of these patients die during treatment.  Among those 
relapsed patients who do survive treatment and achieve a second complete 
remission ("CR2"), these subsequent remissions normally have a shorter 
duration than the prior CR (a median of only six months in the case of CR2 
patients). 
 
     We conducted a Phase II study in Sweden in which 39 AML patients in 
remission were treated with MAXAMINE THERAPY.  The objective of MAXAMINE 
THERAPY is to treat AML patients in remission with the combination of 
MAXAMINE and low doses of IL-2 to prevent relapse and prolong leukemia-free 
survival while 

                                      6

<PAGE>

maintaining a good quality of life for patients during treatment. The intent 
is to augment the body's ability to scavenge and attack residual leukemic 
cells.
      
     In the Phase II study, patients treated in their first remission with 
MAXAMINE THERAPY experienced a substantial increase in leukemia-free 
survival, highlighted by the following updated clinical results as of 
September 1, 1998 after a median 24 months of follow-up:

     -    58% (15 of 26) of all CR1 patients treated with MAXAMINE remained in
          leukemia-free remission.  A prior study of AML patients suggested that
          only 20-25% of patients would be expected to be alive after two years.
          
     -    65% (13 of 20) of CR1 patients without concurrent diseases or
          antecedent illnesses treated with MAXAMINE remained in leukemia-free
          remission.
     
     -    After a median of 24 months of follow up, the median time to relapse
          had not been reached in this study as more than 50% of the MAXAMINU-
          treated CR1 patients remained leukemia-free.  By contrast, under the
          normal course for AML, the median time to relapse would be expected to
          be reached after only 12 months.

     These results were achieved despite the fact that the patients treated 
with MAXAMINE were a relatively older group of patients and more than half 
(15 of 26) of the patients were categorized as high risk with a poor 
prognosis for long-term survival.

     Patients treated in their second or subsequent remission ("CR2+") 
historically have a poor prognosis, with about 5% achieving long-term 
survival. The 13 CR2+ patients treated with MAXAMINE THERAPY in the Phase II 
study experienced a substantial increase in remission duration, and the 
median time to relapse for the CR2+ patients was 21 months, more than three 
times the six-month historic median. Remission inversion (prolonging the 
duration of CR2+ to that equal to or exceeding the patient's prior remission 
duration) was achieved in 8 of 11 (73%) patients treated with MAXAMINE 
THERAPY as compared with approximately 10% to 20% under the current standard 
of care.

     In February 1998, we commenced a Phase III AML clinical trial based in 
12 countries, including clinical sites in the United States, Europe, 
Australia, Canada and Israel.  The trial is designed as a remission therapy 
to demonstrate that MAXAMINE THERAPY can prolong leukemia-free remission time 
and prevent relapse in AML patients compared to the current standard of care, 
which is no therapy during remission.  In the study, patients in CR2+ will be 
evaluated for up to 18 months, while patients in CR1 will be evaluated up to 
24 months.   The trial is designed to include up to 400 patients.

     RENAL CELL CARCINOMA

     Advanced renal cell carcinoma (RCC), cancer of the kidneys, is resistant 
to radiation therapy and chemotherapy and patients have a poor prognosis for 
survival.  A pilot study of six RCC patients was conducted at the Sahlgrenska 
Hospital in Gothenburg to evaluate the safety and feasibility of MAXAMINE 
THERAPY in this patient group.  In the small study, three patients were 
treated with MAXAMINE and cytokines (IFN-a and IL-2) and achieved a mean 
survival of 29 months, while another three patients were treated with the 
cytokines alone and achieved a mean survival of four months. 

     In late 1998 we initiated a Phase II clinical trial of MAXAMINE THERAPY 
in the treatment of patients with RCC.  The trial is designed to evaluate 
MAXAMINE THERAPY, consisting in this trial of the combination of MAXAMINE, a 
natural cytokine Interferon Alfanative-Registered Trademark- and IL-2, in the 
treatment of late-stage RCC patients.  Under the trial design, approximately 
40 patients are expected to be enrolled and treated for a period of up to 
nine months.

     HEPATITIS C (HCV)

                                       7

<PAGE>

     Hepatitis C ("HCV"), a viral infection that is estimated to afflict 4 
million people in the United States and at least 60 million people worldwide, 
is a leading cause of liver cirrhosis and liver cancer and the primary reason 
for liver transplantation in the United States.  IFN-a is the primary 
treatment for HCV.  However, even with recent advances in the use of IFN-a in 
combination with anti-viral drugs or in sustained release formulations, the 
majority of patients do not effectively respond to therapy.

     In 1998 we reported results from a Phase I feasibility study in HCV 
patients using MAXAMINE THERAPY.  The study indicated that the combination of 
MAXAMINE with IFN-a is safe in the treatment of HCV patients, and that 
MAXAMINE may enhance the efficacy of IFN-a in patients who were previously 
nonresponsive to IFN-a therapy.  In the study, 10 patients who were 
characterized as nonresponders to previous IFN-a treatment were put back on 
treatment with the same dose of IFN-a plus MAXAMINE.  Eight of the 10 
patients had a decrease in ALT levels, an enzyme used to assess liver 
function, and two patients achieved a complete normalization of ALT.  
Patients treated with MAXAMINE plus IFN-a also demonstrated statistically 
significant decreases of viral load and AST.  Based in part on these results 
and other support for the potential benefit of MAXAMINE in HCV, our goal is 
to commence a Phase II trial in Hepatitis C in 1999.

MAXDERM DERMATOLOGICAL AND TOPICAL THERAPY

     The development of MAXDERM allows for topical delivery of the active 
ingredient in MAXAMINE.  The novel technology underlying MAXDERM is designed 
to modulate the patient's immune, inflammatory and wound healing responses to 
treat certain dermatological conditions, infections and other conditions for 
which topical therapy is appropriate.  MAXDERM encompasses acquired and 
internally developed technologies that include three issued patents and a 
number of patent applications covering material compositions and uses.  

     A total of more than 75 patients have been treated in randomized, 
double-blinded, placebo-controlled pilot studies of MAXDERM.  A pilot study 
in patients with herpes labialis (cold sores) suggested that MAXDERM resolved 
cold sores more effectively than a placebo control.  In the double-blinded 
study, 18 randomized patients were treated with either varying concentrations 
of MAXDERM or the placebo control. Importantly, the study also suggested that 
increasing concentrations of the active ingredient in MAXDERM resulted in 
increased efficacy, providing support that the active ingredient in MAXDERM 
contributed to the healing process.   Virtually all lesions healed in those 
patients treated with the high-dose MAXDERM in five days or less.  

     Small pilot studies were also conducted in patients with oral mucositis, 
canker sores, decubitus ulcers and shingles.  No safety concerns were noted 
in any of the patients, and in each of the studies the data suggested that 
MAXDERM improved healing and resolution of lesions compared to the placebo 
control. 

     We believe that the MAXDERM technology gives us the opportunity to 
expand our product pipeline into therapies for a number of key medical 
conditions for which topical delivery is preferred.  There are unmet needs in 
the treatment of herpes, oral mucositis, shingles, decubitus ulcers and other 
dermatological ailments, and our plan is to evaluate  MAXDERM in further 
clinical studies.

     MAXDERM  represents an early stage development program.  As with any 
such program, substantial additional development will be necessary in order 
for us or our partners to develop products based on the technology, and there 
can be no assurance that our development efforts will lead to development of 
products that are shown to be safe and effective in clinical trials and that 
are commercially viable. 

MAXVAX MUCOSAL VACCINE CARRIER/ADJUVANT PLATFORM

     OVERVIEW OF VACCINE MARKET AND INFECTIOUS DISEASES

     There remains today a broad range of infectious diseases for which no 
therapies currently exist.  One of the most promising areas in the fight 
against such diseases is the development of vaccines.  Recent trends in the 
delivery of health care in the United States, including an increased emphasis 
on preventive health care, have contributed to significant growth of interest 
in disease prevention and development of the vaccine market.

                                       8

<PAGE>

Immunization has long been recognized as an effective means to decrease 
health care costs through disease prevention, and is one of the key areas 
given priority attention by the United States Department of Health and Human 
Services and the World Health Organization in their respective public health 
service publications.  It is estimated that by 1999, the world market for 
human vaccine products will total $5.3 billion. 

     MUCOSAL MEMBRANES - A FIRST-LINE DEFENSE

     The mucosal membranes that line the nasal compartment and sinuses, eyes, 
ears, oral cavity, respiratory tract, gastrointestinal tract and urogenital 
tract represent the body's first line defense against infections and are the 
sites where most infectious agents enter the body.  Examples of infectious 
pathogens which enter the body through the mucosal membranes are: chlamydia, 
herpes simplex viruses and HIV, which cause sexually transmitted diseases; 
respiratory syncytial virus ("RSV"), pneumococcus and streptococcus, which 
cause respiratory diseases; and HELICOBACTER PYLORI (ulcers) and rotavirus 
(diarrhea), which cause gastrointestinal diseases.  There has been a 
long-standing interest in developing mucosal vaccines against these and other 
important infections.
     
     MAXVAX SYSTEM--MUCOSAL VACCINE CARRIER/ADJUVANT PLATFORM

     MAXVAX is a mucosal vaccine carrier/adjuvant platform based on the 
cholera toxin B subunit ("CTB").  CTB has already been administered to 
hundreds of thousands of patients worldwide and is a major component of an 
existing oral cholera vaccine and traveler's diarrhea vaccine.  Most current 
vaccines have been designed to provide systemic immunity administered through 
injection.  They treat or prevent infection only after the infecting organism 
has entered the blood stream or deep tissues of the body.  The mechanisms 
which induce mucosal immunity appear to be distinct from those that protect 
systemically.  We believe that the MAXVAX approach to therapeutic and 
protective vaccines has the potential to elicit both mucosal and systemic 
immunity by delivering antigens directly to the mucosal system.  By combining 
our proprietary recombinant form of CTB ("rCTB") with vaccine antigens and/or 
genes, we believe that we may be able to develop effective, new needle-free 
mucosal-based vaccines. 

     POTENTIAL BENEFITS OF MUCOSAL IMMUNIZATION USING MAXVAX

     The MAXVAX approach to therapeutic and protective vaccines has been 
shown to elicit both mucosal and systemic immunity and is based upon 
"non-injectable" administration.  We believe that there are numerous 
important potential clinical and commercial advantages to mucosal 
immunization compared with traditional injected vaccine products, including: 

     -    GREATER CLINICAL EFFICACY.  The body's largest defense system against
          disease is the mucosal immune system where most infectious agents
          enter the body.  We believe that our mucosal vaccine platform may
          likely result in mucosal and systemic immune stimulation and could
          more effectively prevent or treat most infectious diseases, as
          compared to traditional injected vaccines. 

     -    HIGHER LEVEL OF SAFETY.  CTB-based vaccines have been administered to
          hundreds of thousands of patients worldwide in clinical trials for
          cholera and traveler's diarrhea.  CTB is widely thought to be a safe
          and effective mucosal vaccine carrier. 

     -    LOWER COST OF ADMINISTRATION.  The administration of potential MAXVAX
          vaccines by oral, nasal and topical applications involving direct
          contact with mucosal surfaces may not require patients to go to
          clinics or require trained personnel, thereby effectively lowering the
          cost of administration.  The vaccines may be prescribed by a doctor
          and dispensed by a pharmacy, thus simplifying delivery and eliminating
          the multiple office visits required for injection delivery of most
          contemporary vaccines. 

     -    IMPROVED VACCINE UTILIZATION.  We believe that the relative ease of
          administration and the concept of "prescription" vaccines may improve
          vaccine utilization over traditionally administered vaccines. 
          Further, we believe that this novel mucosal vaccine concept may allow
          development

                                       9

<PAGE>

          of protective and therapeutic approaches to diseases where previous 
          vaccines and therapeutics have failed. 

     The MAXVAX technology is currently in preclinical development.  Two 
studies published in INFECTION AND IMMUNITY in 1998 highlighted the potential 
of MAXVAX. The first was a human vaccination study that demonstrated mucosal 
antibody responses in female volunteers after nasal and oral application of 
rCTB, the technology underlying MAXVAX.  The results were important as they 
confirmed in humans the results of earlier animal studies in which rCTB has 
been shown to stimulate strong mucosal immune responses.  The results also 
support the potential effectiveness of oral and nasal administration, the two 
most attractive routes for the delivery of mucosal vaccines.  Also published 
was a preclinical study that demonstrated the induction of specific mucosal 
immunity within the female reproductive tract.  The study's vaccination 
regimen was a prototype for mucosal vaccination against human sexually 
transmitted diseases.  

     Prototype MAXVAX-based vaccines are currently being prepared and tested 
in our laboratories.  Our objective is to align ourselves with corporate 
collaborators possessing antigens for specific diseases that can be coupled 
to the MAXVAX carrier, and to develop vaccine candidates in collaboration 
with these partners. 

     The MAXVAX technology represents an early stage discovery and 
development program.  As with any such program, substantial additional 
research and development will be necessary in order for us or our partners to 
develop products based on the technology, and there can be no assurance that 
our research and development efforts will lead to development of products 
that are shown to be safe and effective in clinical trials and that are 
commercially viable. 

PRODUCT DEVELOPMENT AND COLLABORATIVE RELATIONSHIPS

     We conduct our research and other product development efforts through a 
combination of internal research personnel and collaborative programs.  For 
MAXAMINE, we rely upon our clinical management personnel in extensive 
collaboration with universities and other clinical research sites, contract 
research organizations and similar service providers and persons.  We expect 
to rely upon a similar combination of internal personnel and collaborators as 
we expand the clinical and other development of MAXDERM.  Current research 
and development efforts related to MAXVAX are primarily conducted in our 
internal laboratories, although we expect to rely heavily on pharmaceutical 
company collaborative relationships to advance the clinical development of 
the technology. 

     We have relied upon licensing and other transactions to gain access to 
certain of our proprietary technologies.  Conduct of our current and planned 
clinical trials of MAXAMINE THERAPY rely heavily upon contractual 
relationships with universities and other clinical trial sites, contract 
research organizations, home nursing organizations, and regulatory and other 
consultants. Our strategy for development, commercialization and marketing of 
each of our product candidates will involve, where appropriate, the 
establishment of marketing and other collaborative relationships with 
pharmaceutical industry partners.  

     During 1998 we entered into clinical collaborations with Chiron 
Corporation, Amgen Inc. and BioNative AB.  Each of these companies possess 
cytokines that have the potential to benefit from use in combination with 
MAXAMINE, and under each of these agreements we receive economic and other 
support for important clinical trials without giving up any marketing or 
other future rights to MAXAMINE.  For example, Chiron is providing the IL-2 
requirements and other assistance related to our Phase III AML clinical 
trial. These collaborations highlight our belief that MAXAMINE, a combination 
therapy, is complementary rather than competitive with many existing and 
future drugs, and may be the key to the successful use of may biotherapeutic 
agents.
     
     We expect to pursue additional collaborations to further the expanded 
use and development of MAXAMINE.  We will also seek other collaborative 
relationships, particularly for the further development of MAXVAX and in 
other situations where we believe that the clinical testing, marketing, 
manufacturing and other resources of pharmaceutical or other collaborators 
will enable us to more effectively develop particular products or access 
geographic markets. 

                                      10

<PAGE>
 
MARKETING AND SALES

     We expect that our strategy for the potential global market launch of 
MAXAMINE will be based on a combination of direct marketing by Maxim in the 
United States, and the establishment of marketing alliances with 
pharmaceuticals companies for international markets.

     We are currently undertaking efforts to prepare to market MAXAMINE 
directly in the United States.  Our objective is to retain the full revenue 
stream from the potential sale of MAXAMINE in this key market, and we have 
built a core marketing group with experience in planning and managing 
successful United States launches of pharmaceutical products.  As we move 
closer to the potential market launch of MAXAMINE, we have and will continue 
to undertake certain activities required to prepare for launch including 
market evaluations, reimbursement analysis, and building awareness of the 
drug among leading clinicians.  The treatment of cancer is a highly 
specialized activity in which the approximately 3,500 practicing oncologists 
in the United States tend to be concentrated in approximately 1,500 major 
medical centers.  Marketing MAXAMINE directly in the United States will 
require us to build a marketing infrastructure, including the recruitment and 
hiring of sales representatives. Our plan is to defer the build up of this 
infrastructure until obtaining some assurance (after a review of Phase III 
clinical data and initiation of the regulatory approval process) of the 
likelihood and timing of any potential approval to market MAXAMINE in the 
United States. 

     In international markets we are in the process of recruiting, evaluating 
and selecting pharmaceutical companies to serve as marketing collaborators 
for major geographic regions, including Europe and the Pacific Rim.  We are 
currently in discussions with potential collaborative marketing partners, 
although there can be no assurance that any such relationships can be 
consummated, or that any such relationships will be consummated under terms 
favorable to us. 

     Due to the nature of the vaccine markets, we intend to establish 
agreements with pharmaceutical companies with large distribution systems for 
MAXVAX and do not expect to establish a direct sales capability in the 
vaccine area.  Our marketing strategy for MAXDERM will be developed over time 
based upon, among other factors, the specific indications targeted for 
therapy.

MANUFACTURING

     We do not intend to acquire or establish our own dedicated manufacturing 
facilities for MAXAMINE in the foreseeable future.  There are a number of 
facilities with FDA Good Manufacturing Practice ("GMP") approval available 
for contract manufacturing, and we have contracted with established 
pharmaceutical manufacturers for the production of MAXAMINE.  These 
manufacturers are supplying the MAXAMINE requirements under GMP for our 
current clinical trial activities, and have demonstrated the capability to 
supply commercial quantities of the product for the potential market launch.  
The CTB protein portion of MAXVAX is currently being produced by SBL Vaccin 
AB ,  Stockholm, Sweden, under GMP through a system suitable for large-scale 
industrial production. 

     We believe that, in the event of the termination of an agreement with 
any single supplier or manufacturer, we would likely be able to enter into 
agreements with other suppliers or manufacturers on similar terms.  However, 
there can be no assurance that there will be manufacturing capacity available 
to us within the timelines and at quantities required. We expect, however, to 
establish relationships with additional manufacturers during 1999 to provide 
alternate sources of supply for MAXAMINE. 

PATENTS, LICENSES AND PROPRIETARY RIGHTS

     We hold five issued or allowed patents and have eleven patent 
applications pending in the United States.  In addition, we hold license 
rights to six issued patents and three patent applications pending in the 
United States. Corresponding patent applications have been filed, and in a 
number of instances patents have been issued, in major international markets. 
Our policy is to file, where possible, patent applications to protect 
technologies, inventions and improvements that are important to the 
development of our business.  We have devoted substantial attention 

                                      11

<PAGE>

and resources to our patent and license portfolio in an attempt to develop 
the strongest positions available.  Maintaining patents and licenses and 
conducting an assertive patent prosecution strategy is a priority for us. 

     KEY GRANTED PATENTS AND PENDING APPLICATIONS

     We hold a patent relating to the combination of IL-2 and H2 receptor 
agonists ("H2RA's") that was issued by the U.S. Patent and Trademark Office 
in September 1994 and has additionally been granted in Europe, Australia and 
Japan. We also hold a U.S. patent issued in March 1998 relating to the 
combination of IFN-a and H2RA's, and a corresponding patent has also issued 
in Australia.  We also hold seven other patent applications in the United 
States relating to other cytokines, biotherapies, mechanisms, rates and 
routes of administration, and other proprietary claims that have also been 
filed internationally. 

     We also hold a worldwide, exclusive license to Professional 
Pharmaceuticals, Inc.'s (PPI) three U.S. patents for material compositions 
and other rights underlying the MAXDERM technology.  We also hold a U.S. 
patent application related to the MAXDERM technology.  Corresponding patents 
for each of the above have also been filed internationally.  

     In the MAXVAX area, we hold a worldwide exclusive license to the U.S. 
and international patents of Vitec AB ("Vitec") and SBL Vaccin AB ("SBL") for 
recombinantly producing CTB for use in infectious diseases other than 
cholera, bacterial related diarrheas and HIV (We hold non-exclusive rights to 
this patent with regard to HIV).  We also hold exclusive license rights to 
related patent applications as well as a patent application with respect to 
certain therapeutic and anti-inflammatory properties of CTB. 

     We have also filed three of our own U.S. and international patent 
applications related to MAXVAX, covering the use of CTB to make vaccines 
against chlamydia and other sexually transmitted diseases, the use of CTB and 
other proteins in gene delivery of DNA or RNA, and methods for developing 
CTB-based vaccines. 

     MAXAMINE TECHNOLOGY RIGHTS

     In 1993 we entered into a technology transfer agreement under which we 
purchased the core intellectual property and patent rights related to our 
MAXAMINE technology.  The technology transfer agreement requires that we pay 
certain royalty obligations to the two inventors of the technology, although, 
as part of a subsequent agreement with us, one of the inventors waived his 
royalty rights.  We have also filed a number of additional patent 
applications and received additional patents encompassing the MAXAMINE 
technology as described above. 

     MAXDERM TECHNOLOGY RIGHTS

     In 1998 we entered into a license agreement with PPI for an exclusive, 
worldwide license to technology related to material compositions and other 
patent rights underlying the MAXDERM technology.  The license agreement 
requires that we pay certain royalty obligations to PPI.  We have also filed 
an additional patent application related to the MAXDERM technology.

                                      12

<PAGE>

     MAXVAX LICENSES AND TECHNOLOGY RIGHTS

     In 1993 we entered into an option and license agreement with Vitec and 
SBL, under which we exercised an option for an exclusive, worldwide license 
to technology related to CTB for use in a chlamydia vaccine.  Under the 
agreement, we are required to use our best efforts to engage SBL to 
manufacture any products which result from the application of the licensed 
technology.  We also have to make royalty payments on the net sales of 
products using the licensed technology and to make additional license and 
milestone payments to Vitec upon the execution of any sub-licenses.  Under 
the agreement, any party may terminate the license agreement, with respect to 
the rights and duties of that party, as a result of a material breach of the 
agreement by another party. 

     In 1994 we entered into a second license agreement with Vitec and SBL 
for an exclusive, worldwide license to technology rights related to CTB for 
all infectious diseases except chlamydia (which is governed by the agreement 
discussed above), HIV (which is governed by a separate non-exclusive 
sub-license agreement held by us), cholera and bacterial-related diarrheas.  
Under the agreement, we have agreed to use our best efforts to engage SBL to 
manufacture any products which result from the application of licensed 
technology, and both Vitec and Maxim shall receive a percentage of any 
profits that SBL derives from manufacturing such products.  The licensors may 
terminate the agreement upon a material breach of the agreement by us. 

     In January 1998 we filed arbitration in Sweden relating to the 
licensors' performance under the above agreements.  The arbitration alleges 
certain causes of action against the licensors (among other things, 
misstatements regarding the scope of Maxim's licensed rights) and seeks 
compensatory and punitive damages and declaratory relief.  The arbitration 
also seeks specific performance of the licensors' obligations under the 
agreements (including full disclosure of relevant manufacturing information). 
We cannot determine what impact, if any, an unfavorable resolution of the 
existing concerns would have on the commercial value of the MAXVAX 
technology.   

     We also hold other licenses relating to CTB, including a non-exclusive 
sub-license to CTB for the prevention and treatment of HIV infection, and an 
exclusive, worldwide license to patent applications and related technology 
rights with respect to certain therapeutic and anti-inflammatory properties 
of CTB. 

GOVERNMENT REGULATION

     Regulation by governmental authorities in the United States and other 
countries is a significant factor in the development, manufacture and 
marketing of our proposed products and in our ongoing research and product 
development activities.  The nature and extent to which such regulation 
applies to Maxim will vary depending on the nature of any products which may 
be developed by us. We anticipate that many if not all of our products will 
require regulatory approval by governmental agencies prior to 
commercialization.  In particular, human therapeutic and vaccine products are 
subject to rigorous preclinical and clinical testing and other approval 
procedures of the U.S. Food and Drug Administration ("FDA") and similar 
regulatory authorities in European and other countries.  Various governmental 
statutes and regulations also govern or influence testing, manufacturing, 
safety, labeling, storage and record-keeping related to such products and 
their marketing.  The process of obtaining these approvals and the subsequent 
compliance with appropriate statutes and regulations require the expenditure 
of substantial time and money.  Any failure by us or our collaborators to 
obtain, or any delay in obtaining, regulatory approval could adversely affect 
the marketing of any products developed by us, and prevent us from generating 
product revenues and obtaining adequate cash to continue present and planned 
operations. 

     FDA APPROVAL PROCESS

     Prior to commencement of clinical studies involving humans, preclinical 
testing of new pharmaceutical products is generally conducted on animals in 
the laboratory to evaluate the potential efficacy and the safety of the 
product. The results of these studies are submitted to the FDA as a part of 
an Investigational New Drug ("IND") application, which must become effective 
before clinical testing in humans can begin.  Typically, human clinical 
evaluation involves a time consuming and costly three-phase process.  In 
Phase I, clinical trials are conducted with a small number of people to 
assess safety and to evaluate the pattern of drug distribution and metabolism 
within the 
                                      13
<PAGE>

body.  In Phase II, clinical trials are conducted with groups of patients 
afflicted with a specific disease in order to determine preliminary efficacy, 
optimal dosages and expanded evidence of safety.  In Phase III, large-scale, 
multi-center, comparative trials are conducted with patients afflicted with a 
target disease in order to provide enough data to demonstrate the efficacy 
and safety required by the FDA.  The FDA closely monitors the progress of 
each of the three phases of clinical testing and may, at its discretion, 
re-evaluate, alter, suspend or terminate the testing based upon the data 
which have been accumulated to that point and its assessment of the 
risk/benefit ratio to the patient. 

     The results of the preclinical and clinical testing on a non-biologic 
drug and certain diagnostic drugs are submitted to the FDA in the form of a 
New Drug Application ("NDA") for approval prior to commencement of commercial 
sales.  In the case of vaccines, the results of clinical trials are submitted 
as a Product License Application ("PLA").  In responding to an NDA or PLA, 
the FDA may grant marketing approval, request additional information or deny 
the application if the FDA determines that the application does not satisfy 
its regulatory approval criteria.  There can be no assurance that approvals 
will be granted on a timely basis, if at all, for any of our products.  
Similar procedures are in place in countries outside the United States. 

     The Advisory Committee of Immunization Practices ("ACIP") of the Centers 
for Disease Control and Prevention ("CDCP") has a role in influencing the 
markets for most, if not all, of the vaccine products we intend to make.  The 
ACIP meets quarterly to review developing data on licensed vaccines, and 
those approaching license, as well as epidemiologic data on the need for 
these products.  The recommendations of the ACIP on the appropriate use of 
vaccines and related products are published in the MORBIDITY AND MORTALITY 
WEEKLY REPORT and reprinted in several journals.  The CDCP develops 
epidemiological data in support of the need for new vaccines and monitors 
vaccine usage and changes in disease incidence.  In addition, CDCP staff 
frequently act as key advisors to the FDA in their review process. 

     EUROPEAN AND OTHER REGULATORY APPROVAL

     Whether or not FDA approval has been obtained, approval of a product by 
comparable regulatory authorities in Europe and other countries will likely 
be necessary prior to commencement of marketing the product in such 
countries.  The regulatory authorities in each country may impose their own 
requirements and may refuse to grant, or may require additional data before 
granting, an approval even though the relevant product has been approved by 
the FDA or another authority.  As with the FDA, the European Union ("EU") 
countries and other developed countries have very high standards of technical 
appraisal and, consequently, in most cases a lengthy approval process for 
pharmaceutical products.  The process for gaining such approval in particular 
countries varies, but generally follows a similar sequence to that described 
for FDA approval.  In Europe, the European Committee for Proprietary 
Medicinal Products provides a mechanism for EU-member states to exchange 
information on all aspects of product licensing.  The EU has established a 
European agency for the evaluation of medical products, with both a 
centralized community procedure and a decentralized procedure, the latter 
being based on the principle of licensing within one member country followed 
by mutual recognition by the other member countries. 

      OTHER REGULATIONS

     We are also subject to various U.S. federal, state, local and 
international laws, regulations and recommendations relating to safe working 
conditions, laboratory manufacturing practices and the use and disposal of 
hazardous or potentially hazardous substances, including radioactive 
compounds and infectious disease agents, used in connection with our research 
work.  The extent of government regulation which might result from future 
legislation or administrative action cannot be predicted accurately.

                                      14

<PAGE>

THIRD-PARTY REIMBURSEMENT

     The business and financial condition of pharmaceutical and biotechnology 
companies will continue to be affected by the efforts of government and 
third-party payors to contain or reduce the cost of health care through 
various means.  For example, in certain international markets, pricing 
negotiations are often required in each country of the European Community, 
even if approval to market the drug under the European Medical Evaluation 
Authority's centralized procedure is obtained.  In the U.S. there have been, 
and we expect that there will continue to be, a number of federal and state 
proposals to implement similar government control. In addition, an increasing 
emphasis on managed care in the U.S. has and will continue to increase the 
pressure on pharmaceutical pricing.  While we cannot predict whether any such 
legislative or regulatory proposals will be adopted or the effect such 
proposals or managed care efforts may have on our business, the announcement 
of such proposals or efforts could have a material adverse effect on our 
ability to raise capital, and the adoption of such proposals or efforts could 
have a material adverse effect on the our business, financial condition and 
results of operations.  Further, to the extent that such proposals or efforts 
have a material adverse effect on other pharmaceutical companies that are 
prospective corporate partners for us, our ability to establish corporate 
collaborations may be adversely affected.  In addition, in both the U.S. and 
elsewhere, sales of prescription pharmaceuticals are dependent in part on the 
availability of reimbursement to the consumer from third-party payors, such 
as government and private insurance plans that mandate predetermined 
discounts from list prices. Third-party payors are increasingly challenging 
the prices charged for medical products and services.  If we succeed in 
bringing one or more products to the market, there can be no assurance that 
these products will be considered cost effective and that reimbursement to 
the consumer will be availale or will be sufficient to allow us to sell our 
products on a competitive basis. 

COMPETITION

     Competition in the discovery and development of methods for treating or 
preventing cancer and infectious disease is intense.  Numerous 
pharmaceutical, biotechnology and medical companies and academic and research 
institutions in the United States and elsewhere are engaged in the discovery, 
development, marketing and sale of products for the treatment of cancer and 
infectious disease.  These include surgical approaches, new pharmaceutical 
products and new biologically derived products.  We expect to encounter 
significant competition for the principal pharmaceutical products we plan to 
develop.  Companies that complete clinical trials, obtain regulatory 
approvals and commence commercial sales of their products before us may 
achieve a significant competitive advantage.  A number of pharmaceutical 
companies are developing new products for the treatment of the same diseases 
being targeted by us, particularly hepatitis C.  In some instances, our 
competitors already have products in late-stage clinical trials.  In 
addition, certain pharmaceutical companies are currently marketing drugs for 
the treatment of the same diseases being targeted by us, and may also be 
developing new drugs to address these disorders. 

     In the area of biotherapy, the impact of competition for MAXAMINE may be 
reduced by the fact that the drug may be complementary to many other 
biotherapeutic agents.  MAXAMINE THERAPY combines the administration of 
MAXAMINE with the administration of biotherapeutic agents.  Accordingly, 
MAXAMINE and these biotherapeutic agents may not be competitive but may play 
complementary and synergistic roles in enhancing the immune system.  For this 
reason, we believe that continuing advancements in the overall field of 
biotherapy may create new opportunities for MAXAMINE.

     Many of our competitors have substantially greater financial, clinical 
testing, regulatory compliance, manufacturing, marketing, human and other 
resources.  Additional mergers and acquisitions in the pharmaceutical 
industry may result in even more resources being concentrated with our 
competitors.  We believe that our competitive success will be based on our 
ability to create and maintain scientifically advanced technology, develop 
proprietary products, attract and retain scientific personnel, obtain patent 
or other protection for our products, obtain required regulatory approvals, 
obtain orphan drug status for certain products and manufacture and 
successfully market our products either independently or through outside 
parties. 

                                      15

<PAGE>

EMPLOYEES AND CONSULTANTS

     As of December 28, 1998, the Company had 53 employees, all but two of 
whom were based at its two facilities in San Diego, California.  The Company 
believes its relationships with its employees are satisfactory.  Other 
experienced professionals and personnel are expected to be hired to join our 
company in 1999 to, among other things, address the requirements of the 
expansion of clinical trials of MAXAMINE and other commercialization efforts. 

     In addition to our employees, we have engaged a number of experienced 
consultants in North America, Europe and Australia with pharmaceutical and 
business backgrounds to assist in its product development efforts.  We plan 
to leverage our key personnel by making extensive use of contract 
laboratories, development consultants, and collaborations with pharmaceutical 
companies to expand our preclinical and clinical trials. 

                                      16

<PAGE>

RISK FACTORS

     In evaluating Maxim and its business, you should carefully consider the 
following risk factors in addition to the other information contained herein.

     DEVELOPMENT-STAGE COMPANY; HISTORY OF OPERATING LOSSES; UNCERTAINTY OF 
FUTURE PROFITABILITY.  Maxim, as a development-stage enterprise, has 
experienced net losses every year since its inception and, as of September 
30, 1998, had a deficit accumulated during the development stage of 
approximately $42.7 million. We have not commercially introduced any product 
and each of our product candidates are in varying stages of development and 
testing.  We anticipate incurring substantial additional losses over at least 
the next several years due to the need to expend substantial amounts on 
clinical trials, other anticipated research and development activities, 
preparation for the potential market launch of MAXAMINE, and the general and 
administrative expenses associated with these activities.  Attaining 
profitability will depend upon our ability to develop products that are 
effective and commercially viable, to obtain regulatory approval for the 
manufacture and sale of our products and to market our products successfully. 
We cannot guarantee that we will ever achieve profitability or that 
profitability, if achieved, can be sustained on an ongoing basis.  See 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations." 

     NEED FOR ADDITIONAL FUNDS; UNCERTAINTY OF ADDITIONAL FUNDING.  Our
operations to date have consumed substantial amounts of cash.  Negative cash
flow from our operations is expected to continue and to accelerate over at least
the next several years.  Our capital requirements will depend on numerous
factors, including: 

     -    the results of our clinical trials; 
     -    the timing and scope of any additional clinical trials undertaken;
     -    the scope and results of our research and development programs; 
     -    the time required to obtain regulatory approvals; 
     -    our ability to establish marketing alliances and collaborative
          agreements;
     -    the cost of our internal marketing activities; and
     -    the cost of filing, prosecuting and, if necessary, enforcing patent
          claims. 

     We will likely have to raise substantial additional funds to complete 
development of our products and to bring these products to market.  Issuance 
of additional equity securities by us, for these or other purposes, could 
result in dilution to then existing stockholders.  Additional financing may 
not be available on acceptable terms, if at all.  If adequate funds are not 
available on acceptable terms, we may be required to delay, scale back or 
eliminate one or more of our product development programs or obtain funds 
through arrangements with collaborative partners or others that may require 
us to relinquish rights to certain of our technologies or products that we 
would not otherwise relinquish, which may have a detrimental effect on our 
business, financial condition and results of operations.  See "Management's 
Discussion and Analysis of Financial Condition and Results of Operations." 

     NO ASSURANCE OF SUCCESSFUL CLINICAL TRIALS AND PRODUCT DEVELOPMENT. 
Potential products based on our MAXAMINE, MAXDERM and MAXVAX technologies 
will require extensive clinical testing, regulatory approval and substantial 
additional investment prior to commercialization.  There can be no assurance 
that any such products will be successfully developed, prove to be safe and 
effective in clinical trials, meet applicable regulatory standards, be 
capable of being produced in commercial quantities at acceptable costs, be 
eligible for third party reimbursement from governmental or private insurers, 
be successfully marketed or achieve market acceptance.  Additional research 
and development and preclinical work will be required before clinical trials 
can be initiated with the MAXVAX technology, and may be required before 
clinical trials of the MAXAMINE and MAXDERM technologies can be expanded. 

     We have not completed testing for efficacy or safety in humans on any of 
our products.  We may find, at any stage of the clinical testing process, 
that products that appeared promising in preclinical studies or Phase I and 
Phase II clinical trials do not demonstrate efficacy in larger-scale, Phase 
III clinical trials and do not receive regulatory approvals.  Further, our 
products may prove to have undesirable or unintended side effects that may 
prevent or limit their commercial use.  Accordingly, any product development 
program undertaken by us may be curtailed, redirected or eliminated at any 
time.  There may be delays in our expected testing and development

                                      17

<PAGE>

schedules, and any such delays could have a material adverse effect on our 
business, financial condition and results of operations. 

     NO ASSURANCE OF REGULATORY APPROVAL; GOVERNMENT REGULATION.  The U.S. 
Food and Drug Administration (the "FDA") and comparable agencies in countries 
outside the United States impose substantial requirements on the introduction 
of therapeutic pharmaceutical products and vaccines through lengthy and 
detailed laboratory and clinical testing procedures and other costly and time 
consuming procedures.  Satisfaction of these requirements typically takes a 
number of years and varies substantially based upon the type, complexity and 
novelty of the pharmaceutical agent.  In general, the FDA approval process 
for pharmaceuticals involves the submission of an Investigational New Drug 
("IND") application following preclinical studies, clinical trials in humans 
to demonstrate the safety and efficacy of the product under the protocols set 
forth in the IND and submission of preclinical and clinical data as well as 
other information to the FDA in a New Drug Application ("NDA") or Product 
License Application ("PLA").  We are expending substantial time and financial 
resources to conduct clinical trials, but there can be no assurance that the 
results of such trials will support the submission of an NDA or PLA, or that 
any such applications will be approved by the FDA or any comparable agencies 
on a timely basis, or at all.  

     We cannot assure that we will have sufficient resources to complete the 
required regulatory review process, or that we could overcome the inability 
to obtain, or delays in obtaining, such approvals.  The failure to receive 
FDA approval for our products under development would preclude us from 
marketing and selling our products in the United States.  Therefore, failure 
to receive such FDA approval would prevent us from generating product 
revenues and would be extremely detrimental to our business, financial 
condition and results of operations.  European and other international 
regulatory approvals are subject to the same risks and uncertainties as FDA 
and other regulatory approvals in the United States. 

     The production and marketing of our proposed products, as well as our 
ongoing research and development activities, are also subject to regulation 
by governmental agencies of the United States and other countries.  The 
effect of government regulation may be to delay marketing of our products for 
a considerable period of time, to impose costly procedures upon our 
activities and to furnish a competitive advantage to larger companies that 
compete with us.  In addition, the marketing and manufacturing of 
pharmaceuticals are subject to continuing FDA (or comparable international 
agency) review and surveillance and failure to comply with regulations or 
discovery of previously unknown problems can result in FDA (or comparable 
international agency) action against the product or the manufacturer, 
including fines, recalls, product seizures and suspension or withdrawal of 
previously granted regulatory approvals. Furthermore, government regulation 
may increase at any time, creating additional costs and delays for us.  The 
extent of potential adverse government regulation which might arise from 
future legislation or administrative action cannot be predicted.  See 
"Business--Government Regulation." 

     UNCERTAINTY REGARDING PATENTS AND PROPRIETARY RIGHTS. Our success 
depends in large part on our ability to obtain, maintain and protect patents, 
protect trade secrets and operate without infringing upon the  proprietary 
rights of others.  The patent positions of biotechnology and pharmaceutical 
companies are highly uncertain and involve complex legal and factual 
questions, and the breadth of claims allowed in biotechnology and 
pharmaceutical patents cannot be predicted.  Patents may not issue from any 
of our patent applications.  Patent applications in the United States are 
maintained in secrecy until a patent issues, and we cannot be certain that 
others have not filed patent applications for technology covered by our 
pending applications or that we were the first to file patent applications 
for such technology.  Competitors may have filed applications for, or may 
have received patents and may obtain additional patents and proprietary 
rights relating to, compounds or processes that block or compete without 
infringing on those held by Maxim.  In addition, patents currently held by us 
or issued to us in the future, or to licensors from whom we have licensed 
technology rights, may be challenged, invalidated or circumvented and the 
rights granted thereunder may not protect our technologies or provide 
commercial advantage to us. 

     Other public and private concerns, including universities, may have 
filed applications for or have been issued patents with respect to technology 
potentially useful or necessary to us.  The scope and validity of such 

                                      18

<PAGE>

patents, the extent to which we may wish or need to acquire licenses under 
such patents, and the cost or availability of such licenses, are currently 
unknown. 

     In addition to patents and proprietary rights, we rely on unpatented 
trade secrets and proprietary know-how, and there can be no assurance that 
others will not obtain access to or independently develop such trade secrets 
and know-how. Although potential corporate partners and our research partners 
and consultants are not given access to trade secrets and proprietary 
know-how of ours until they have executed confidentiality agreements, these 
agreements may be breached by the other party or may otherwise be of limited 
effectiveness or enforceability. 

     The pharmaceutical industry has experienced extensive litigation 
regarding patent and other intellectual property rights.  Accordingly, we 
could incur substantial costs in defending ourselves in suits that may be 
brought against us claiming infringement of the patent rights of others or in 
asserting our patent rights in a suit against another party.  We may also be 
required to participate in interference proceedings declared by the United 
States Patent and Trademark Office for the purpose of determining the 
priority of inventions in connection with our patent applications or other 
parties' patent applications.  Adverse determinations in litigation or 
interference proceedings could require us to seek licenses that may not be 
available on commercially reasonable terms or subject us to significant 
liabilities to third parties, and could therefore have a material adverse 
effect on us.  See "Business--Patents, Licenses and Proprietary Rights."

     DEPENDENCE ON QUALIFIED PERSONNEL.  Our future performance depends in 
part upon the continued contributions of our senior management team and on 
our ability to attract and retain qualified management and scientific 
personnel. Competition for such personnel is intense, and there can be no 
assurance that we will be able to continue to attract, assimilate or retain 
highly qualified technical and management personnel.  The loss of key 
personnel or the failure to recruit additional personnel or to develop needed 
expertise could have a material adverse effect on our business, financial 
condition and results of operations.  See "Business--Employees and 
Consultants." 

     DEPENDENCE ON COLLABORATIVE PARTNERS.  Our strategy for the clinical 
testing, manufacturing, international marketing and certain research and 
development activities related to our products requires arrangements with 
numerous collaborators.  These collaborators include universities, hospitals 
and other clinical trial sites, clinical contract research organizations, 
contract manufacturers, other corporate and university collaborators, 
licensors, marketing partners, licensees, consultants and others.  Our 
success is dependent upon the success of these outside parties in performing 
their responsibilities. Although we believe that these parties will have an 
economic motivation to perform their contractual responsibilities, the amount 
and timing of resources and skill applied to these activities by our 
collaborators may not be within our control.  In addition, some collaborators 
may pursue alternative technologies as a means for developing treatments for 
the diseases targeted by these collaborative programs.  Furthermore, we may 
not be able to negotiate acceptable collaborative arrangements required in 
the future to implement our strategies, and such collaborative arrangements 
may not be successful.  See "Business--Product Development and Collaborative 
Relationships." 

     NO MARKETING AND SALES CAPABILITIES; ANTICIPATED DEPENDENCE UPON 
MARKETING COLLABORATIONS.  Our current strategy is to market MAXAMINE 
directly in the United States, but we currently do not possess pharmaceutical 
marketing or sales capabilities.  In order to market and sell MAXAMINE or 
other products, we will need to develop a sales force and a marketing group 
with relevant pharmaceutical experience, or make appropriate arrangements 
with strategic partners.  We cannot guarantee that we will be able to 
attract, assimilate or retain highly qualified marketing and sales personnel, 
or successfully employ them to commercialize MAXAMINE.  The inability to 
develop the required marketing and sales expertise could have a material 
adverse effect on our business, financial condition and results of operations.

     Our strategy for the commercialization and marketing of MAXAMINE in 
international markets, and for MAXVAX in all markets, is expected to rely 
upon the establishment of marketing and other collaborative relationships 
with pharmaceutical industry partners.  We cannot guarantee that any such 
relationships can be consummated on terms favorable to us, that such 
marketing collaborators will apply adequate resources and skills

                                      19

<PAGE>

to their responsibilities, or that marketing efforts undertaken by such 
partners will be successful.  See "Business--Marketing and Sales." 

     NO ASSURANCE OF MARKET ACCEPTANCE.  MAXAMINE, and any of our other 
products in development, may not achieve market acceptance even if approved 
by the FDA and other regulatory agencies.  The degree of market acceptance of 
our products will depend upon a number of factors, including the scope of 
regulatory approvals, the establishment and demonstration in the medical 
community of the clinical efficacy and safety of our products and their 
potential advantages over existing treatment methods, and reimbursement 
policies of government and other third-party payors.  We cannot guarantee 
that physicians, patients, payors or the medical community in general will 
accept and utilize any products that may be developed by us.  See 
"Business--Competition" and --Third-Party Reimbursement." 

     NO MANUFACTURING CAPABILITIES.  We do not intend to acquire or establish 
our own dedicated manufacturing facilities for MAXAMINE in the foreseeable 
future, and have and expect to continue to contract with established 
pharmaceutical manufacturers for the production of the product.  If we are 
unable to continue to contract for manufacturing capabilities on acceptable 
terms, our ability to conduct clinical testing and to produce commercial 
quantities of MAXAMINE and other products will be adversely affected.  Such 
manufacturing deficiencies could result in delays in submissions for 
regulatory approval and in commercial product launches, which in turn could 
materially impair our competitive position and the possibility of achieving 
profitability. We cannot guarantee that we will be able to maintain our 
existing contract manufacturing relationships, or acquire or establish new, 
satisfactory third-party relationships to provide adequate manufacturing 
capabilities.  See "Business--Manufacturing." 

     COMPETITION.  There are many companies, both publicly and privately 
held, including well-known pharmaceutical companies, and academic and other 
research institutions, engaged in developing pharmaceutical and 
biologically-derived products for the treatment of cancer and vaccines and 
therapeutics for the prevention or the treatment of infectious diseases.  
Many of our competitors and potential competitors have substantially greater 
capital, research and development capabilities and human resources than us 
and represent significant competition.  Many of these competitors also have 
significantly greater experience than us in undertaking preclinical testing 
and clinical trials of new pharmaceutical products and obtaining FDA and 
other regulatory approvals. Additional mergers and acquisitions in the 
pharmaceutical industry may result in even more resources being concentrated 
with our competitors.  If any of our products are approved for commercial 
sale, we will also be competing with companies that have greater resources 
and experience in the manufacturing, marketing and sales of pharmaceutical 
products.  Our competitors may succeed in developing products that are more 
effective, less costly, or have better side effect profiles than any that may 
be developed by us, and such competitors may also prove to be more successful 
than us in manufacturing, marketing and sales. See "Business--Competition." 

     TECHNOLOGICAL CHANGES AND UNCERTAINTY.  We are engaged in the 
pharmaceutical field, which is characterized by extensive research efforts 
and rapid technological progress.  New developments in oncology, cancer 
therapy, medicinal pharmacology, biochemistry and other fields are expected 
to continue at a rapid pace in both industry and academia.  Research and 
discoveries by others may render some or all of our proposed programs or 
products noncompetitive or obsolete.  Our business strategy is subject to the 
risks inherent in the development of new products using new technologies and 
approaches.  Unforeseen problems may develop with these technologies or 
applications, and we may not be able to successfully address technological 
challenges we encounter in our research and development programs to the 
extent required to develop commercially feasible products.  See 
"Business--Competition." 

     PRODUCT LIABILITY EXPOSURE AND INSURANCE.  Our business exposes us to 
potential product liability risks which are inherent in the clinical testing, 
manufacturing and marketing of human therapeutic products.  We currently 
maintain product liability insurance coverage for our clinical trials, and 
intend to expand our insurance coverage to include the sales of commercial 
products if marketing approval is obtained for MAXAMINE or other products 
under development.  Such coverage may not be adequate now or in the future, 
and adequate insurance may not be available in the future at an acceptable 
cost, if at all.  A product liability claim, even if we have insurance 
coverage, could materially adversely affect our business or financial 
condition. 

                                      20

<PAGE>

     POTENTIAL ADVERSE EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE; PRICE 
VOLATILITY OF THE COMMON STOCK. Our common stock currently trades on the 
American Stock Exchange and on the Stockholm Stock Exchange.  Historically, 
our common stock has generally experienced relatively low daily trading 
volumes in relation to the aggregate number of shares outstanding.  Sales of 
substantial amounts of our common stock in the public market could adversely 
affect the prevailing market prices for our common stock and our ability to 
raise equity capital in the future.

     Factors that may have a significant impact on the market price or the 
liquidity of the common stock also include:

     -    Actual or potential clinical trial results relating to products under
          development by us or our competitors;
     -    Delays in our testing and development schedules,;
     -    Events or announcements relating to our collaborative relationships
          with others;
     -    Announcements of technological innovations or new products by us or
          our competitors;
     -    Developments or disputes concerning patents or proprietary rights;
     -    Regulatory developments in both the United States and countries
          outside of the United States;
     -    Economic and other external factors, as well as period-to-period
          fluctuations in our financial results. 

     External factors may also adversely affect the market prices for our 
common stock.  The price and liquidity of our common stock may be 
significantly affected by the overall trading activity and market factors on 
the AMEX and SSE, and these factors may differ between the two markets.  In 
addition, the securities markets have from time to time experienced 
significant price and volume fluctuations that may be unrelated to the 
operating performance of particular companies.  The market prices of the 
common stock of many publicly traded pharmaceutical or biotechnology 
companies have in the past been, and can in the future be expected to be, 
especially volatile. 

                                      21

<PAGE>

ITEM 2.  PROPERTIES

     We currently lease approximately 35,000 square feet of laboratory and 
office space in two facilities in San Diego, California.  Approximately 5,000 
square feet of laboratory space is subleased to a third party.  We believe 
that our existing facilities will be adequate to accommodate the 
implementation of our current business strategies.

ITEM 3.  LEGAL PROCEEDINGS

     None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders during the 
quarter ended September 30, 1998.

                                      22

<PAGE>

                                   PART II
                                          
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED MATTERS

     (a) The information required by this Item 5(a) is incorporated herein by 
reference to the information set forth on page 34 of our Annual Report to 
Stockholders for the fiscal year ended September 30, 1998, filed as Exhibit 
13.1 hereto.  
     
In addition, in August and September 1998, the Company issued 10,769 and 
16,666 shares of Common Stock, respectively, upon exercise of warrants at a 
price per share of $3.00.  The Company issued such shares in reliance upon 
the exemption provided by Section 4(2) of the Securities Act of 1933.
     
     (b) During the fiscal year ended September 30, 1998, 392,000 of the 
2,875,000 Redeemable Warrants issued in the Company's initial public offering 
were exercised for 392,000 shares of Common Stock at an exercise price of 
$10.50 per share, for aggregate proceeds to the Company of $4,116,000.

Of the net offering proceeds to the Company of $22,336,000, including 
$18,220,000 received at the time of the initial public offering and 
$4,116,000 received upon subsequent exercises of the Redeemable Warrants, 
through September 30, 1998, the following payments have been made:

<TABLE>
<CAPTION>
                                                 (A)               (B)
 <S>                                               <C>           <C>
 Purchase and installation of 
 machinery and equipment                                         1,101,000

 Repayment of indebtedness                     289,000             795,000

 Interest earning bonds and                                      1,017,000
 securities

 R&D expenses                                                   14,983,000

 Business development expenses                                     977,000

 G&A expenses                                                    2,637,000

 Intellectual property                                             537,000
</TABLE>

(A)  Direct or indirect payments to directors, officers, general partners of the
     issuer or their associates; to persons owning ten percent or more of any
     class of equity securities of the issuer; and to affiliates of the issuer.
(B)  Direct or indirect payments to others.  


ITEM 6.  SELECTED FINANCIAL DATA

     The information required by this Item 6 is incorporated herein by 
reference to the information set forth on page 35 of our Annual Report to 
Stockholders for the fiscal year ended September 30, 1998, filed as Exhibit 
13.1 hereto.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND    
        RESULTS OF OPERATION

     The information required by this Item 7 is incorporated herein by 
reference to the information contained under the caption "Management's 
Discussion and Analysis" on pages 17-20 of our Annual Report to Stockholders 
for the fiscal year ended, September 30, 1998, filed as Exhibit 13.1 hereto.

                                      23

<PAGE>
     
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     We invest our excess cash in interest-bearing investment-grade 
securities that we hold for the duration of the term of the respective 
instrument.  We do not utilize derivative financial instruments, derivative 
commodity instruments or other market risk sensitive instruments, positions 
or transactions in any material fashion.  Accordingly, we believe that, while 
the investment-grade securities we hold are subject to changes in the 
financial standing of the issuer of such securities, we are not subject to 
any material risks arising from changes in interest rates, foreign currency 
exchange rates, commodity prices, equity prices or other market changes that 
affect market risk sensitive instruments.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this Item 8 is incorporated herein by 
reference to the information set forth on pages 21-36 of our Annual Report to 
Stockholders for the fiscal year ended September 30, 1998, filed as Exhibit 
13.1 hereto.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     None.

                                       24

<PAGE>

                                     PART III
                                          
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information concerning directors and executive officers is incorporated 
herein by reference to the information under the captions "Election of 
Directors" and "Other Information - Executive Officers" set forth in our 
definitive Proxy Statement to be filed with the Securities and Exchange 
Commission within 120 days after September 30, 1998, for our Annual Meeting 
of Stockholders to be held on February 19, 1999.       Information concerning 
compliance with Section 16(a) of the Exchange Act is incorporated herein by 
reference to the information included under the caption "Section 16(a) 
Beneficial Ownership Reporting Compliance" set forth in our definitive Proxy 
Statement to be filed with the Securities and Exchange Commission within 120 
days after September 30, 1998, for our Annual Meeting of Stockholders to be 
held on February 19, 1999.

ITEM 11.  EXECUTIVE COMPENSATION

     The information required by this Item 11 is incorporated herein by 
reference to the information under the caption "Executive Compensation" set 
forth in our definitive Proxy Statement to be filed with the Securities and 
Exchange Commission within 120 days after September 30, 1998, for our Annual 
Meeting of Stockholders to be held on February 19, 1999.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this Item 12 is incorporated herein by 
reference to the information under the caption "Security Ownership of Certain 
Beneficial Owners and Management" in our definitive Proxy Statement to be 
filed with the Securities and Exchange Commission within 120 days after 
September 30, 1998, for our Annual Meeting of Stockholders to be held on 
February 19, 1999.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this Item 13 is incorporated herein by 
reference to the information under the caption "Certain Transactions" in our 
definitive Proxy Statement to be filed with the Securities and Exchange 
Commission within 120 days after September 30, 1998, for our Annual Meeting 
of Stockholders to be held on February 19, 1999. 

                                      25

<PAGE>

                                    PART IV
                                          
ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K

     (a)  The following documents are filed as part of this Annual Report:

          1.   FINANCIAL STATEMENTS

          The following financial statements, including the Notes thereto, are
          incorporated herein by reference from pages 21-36 of our Annual Report
          to Stockholders for the fiscal year ended September 30, 1998 filed as
          Exhibit 13.1 hereto:
          
          Balance Sheets as of September 30, 1998 and 1997

          Statements of Operations for the years ended September 30, 1998, 1997,
          and 1996, and from October 23, 1989 (date of inception) to September
          30, 1998

          Statements of Stockholders' Equity from October 23, 1989 (date of
          inception) through September 30, 1998

          Statements of Cash Flows for the years ended September 30, 1998, 1997,
          and 1996, and from October 23, 1989 (date of inception) to September
          30, 1998

     
          2.   FINANCIAL STATEMENT SCHEDULES

          All schedules have been omitted since the required information is not
present in amounts sufficient to require submission of the schedule, or because
the information required is included in the consolidated financial statements or
notes thereto.

          EXHIBITS

          See list of Exhibits set forth in paragraph (c) below.
          
          The following management contracts or compensatory plans and
          arrangements are required to be filed as exhibits to this Annual
          Report pursuant to Item 14(c).
          
          10.15     Employment Agreement dated October 1, 1998 between the
                    Registrant and Kurt R. Gehlsen.
          10.16     Employment Agreement dated October 1, 1998 between the
                    Registrant and Dale A. Sander.
          10.17     Employment Agreement dated November 9, 1998 between the
                    Registrant and Larry G. Stambaugh.
          10.23     Employment Agreement dated October 1, 1998 between the
                    Registrant and Geoffrey B. Altman.

     (b)  The Company filed no reports on Form 8-K during the fourth quarter of
the fiscal year ended September 30, 1998.

                                      26

<PAGE>

     (c)  Exhibits

EXHIBIT
  NO.         DESCRIPTION
-------       -----------
 3.1      Amended and Restated Certificate of Incorporation of Registrant. (1)

 3.2      Bylaws of Registrant. (1) 

 4.1      Reference is made to Exhibits 3.1 and 3.2.

 4.2      Form of Common Stock Certificate. (1)

10.1      Form of Indemnification Agreement for directors and officers of the
          Registrant. (1)

10.2      Form of Representative's Warrant Agreement between the Company and
          National Securities Corporation, as representative of the several
          Underwriters (the "Representative"), including form of
          Representative's Warrant Certificate. (1)

10.3      Form of Warrant Agreement between the Company, the Representative and
          American Stock Transfer & Trust Company, including form of Warrant
          Certificate. (1)
     
10.4      Option to Buy Technology and Rights Agreement, dated March 30, 1993,
          between the Registrant and Estero Anstalt. (1)(2)
     
10.5      Security Agreement, dated July 27,1993, between the Registrant and
          Estero Anstalt. (1)(2)
     
10.6      Exclusive License Agreement, dated June 14, 1995, among the
          Registrant, Jan Holmgren, M.D., Ph.D., Cecil Czerkinsky, Duotol AB and
          Triotol Ltd. (1)(2) 
     
10.7      Option and License Agreement, dated May 19, 1993, among the
          Registrant, Vitec AB and SBL Vaccin AB, as amended. (1)(2) 
     
10.8      License Agreement dated January 14, 1994, among the Registrant, Vitec
          AB and SBL Vaccin, AB, as amended. (1)(2)
     
10.9      Agreement, dated December 2, 1995, among the Registrant, Syntello
          Vaccine Development AB and Estero Anstalt. (1)(2)
     
10.10     Agreement, dated April 23, 1996, among the Registrant, Anders Vahlne,
          M.D., Ph.D. and Syntello Vaccine Development AB. (1)(2)
     
10.11     Letter Agreement, dated February 15, 1996, between the Registrant and
          Burrill & Craves, Inc.(1)
     
10.12     Lease dated November 1, 1996 between DM Spectrum LLC, a California
          limited liability company, as Landlord and the Registrant for 3099
          Science Park Road, Suite 150, San Diego, California  92121. (3)
      
10.13     Stock Purchase Agreement, dated as of July 5, 1996, by and between Dr.
          Anders Vahlne and the Registrant. (1)
     
10.14     Amended and Restated 1993 Long-Term Incentive Plan and forms of stock
          option agreements. (4)
     
10.15     Employment Agreement dated October 1, 1998 between the Registrant and
          Kurt R. Gehlsen. 
     
10.16     Employment Agreement dated October 1, 1998 between the Registrant and
          Dale A. Sander.

                                      27

<PAGE>

10.17     Employment Agreement dated November 9, 1998 between the Registrant and
          Larry G. Stambaugh. 

10.18      Loan and Security Agreement between the Registrant and Silicon Valley
          Bank. (5)
     
10.19     Financial Advisory Services Agreement between the Registrant and
          Rodman & Renshaw, Inc. dated September 17, 1997. (6)
     
10.20     Lease dated January 13, 1998 between British Pacific Properties
          Corporation, a California Corporation, as Landlord, and the
          Registrant. (7)

10.21     Amendment to Loan and Security Agreement dated March 6, 1998 between
          the Registrant and Silicon Valley Bank. (8)
     
10.22     Lease dated July 2, 1998 between British Pacific Properties
          Corporation, a California Corporation, as Landlord, and the
          Registrant. (9)

10.23     Employment Agreement dated October 1, 1998 between the Registrant and
          Geoffrey B. Altman.

10.24     Amendment to Loan and Security Agreement dated September 1, 1998
          between the Registrant and Silicon Valley Bank

11.1      Statement re: computation of pro forma loss per share.  
     
13.1      Registrant's Annual Report to Stockholders for the fiscal year ended
          September 30, 1998.
     
23.1      Consent of KPMG Peat Marwick LLP, Independent Auditors. 

24.1      Power of Attorney.  Reference is made to page 30. 

27        Financial Data Schedule. 
     
99        Independent Auditors' Report. 
_________________

(1)  Previously filed together with the Registrant's Registration Statement on
     Form SB-2 (File No. 333-4854-LA) or amendments thereto and incorporated
     herein by reference.

(2)  Certain confidential portions deleted pursuant to Order Granting
     Application Under the Securities Act of 1933 and Rule 406 thereunder
     respecting confidential treatment.

(3)  Previously filed together with the Registrant's Annual Report on Form 10-K
     (File No. 1-4430) dated September 30, 1996 and incorporated herein by
     reference.

(4)  Previously filed together with the Registrant's Quarterly Report on Form
     10-Q (File No. 1-4430) dated December 31, 1996 and incorporated herein by
     reference.

(5)  Previously filed together with the Registrant's Quarterly Report on Form
     10-Q (File No. 1-4430) dated March 31, 1997 and incorporated herein by
     reference.

(6)  Previously filed together with the Registrant's Registration Statement on
     Form S-1 (File No. 333-35895) dated September 18, 1997 and incorporated
     herein by reference.

                                      28

<PAGE>

(7)  Previously filed together with the Registrant's Quarterly Report on Form
     10-Q (File No. 1-4430) dated December 31, 1997 and incorporated herein by
     reference.

(8)  Previously filed together with the Registrant's Quarterly Report on Form
     10-Q (File No. 1-4430) dated March  31, 1998 and incorporated herein by
     reference.

(9)  Previously filed together with the Registrant's Quarterly Report on Form
     10-Q (File No. 1-4430) dated June 30, 1998 and incorporated herein by
     reference.

                                        29

<PAGE>
                                            
                                     SIGNATURES
                                          
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
                              MAXIM PHARMACEUTICALS, INC.

                              By:  /s/ DALE A. SANDER               
                                  -------------------
                              Dale A. Sander,
                              Vice President, Finance
                              and Chief Financial Officer 

                              Date:  December 29, 1998

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature 
appears below constitutes and appoints Larry G. Stambaugh and Dale A. Sander, 
and each of them, as his true and lawful attorneys-in-fact and agents, with 
full power of substitution and resubstitution, for him and in his name, place 
and stead, in any and all capacities, to sign any and all amendments to this 
Report, and to file the same, with all exhibits thereto, and other documents 
in connection therewith, with the Securities and Exchange Commission, 
granting unto said attorneys-in-fact and agents, and each of them, full power 
and authority to do and perform each and every act and thing requisite and 
necessary to be done in connection therewith, as fully to all intents and 
purposes as he might or could do in person, hereby ratifying and confirming 
that all said attorneys-in-fact and agents, or any of them or their or his 
substitute or substituted, may lawfully do or cause to be done by virtue 
hereof.

     Pursuant to the requirements of the Securities Exchange Act of 1934, 
this report has been signed below, by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE                           TITLE                                 DATE
---------                           -----                                 ----
<S>                           <C>                                   <C>
/S/ LARRY G. STAMBAUGH        Chairman of the Board                 December 29, 1998
-----------------------       Director, President and           
Larry G. Stambaugh            Chief Executive Officer
                              (Principal Executive Officer)

/S/ DALE A. SANDER            Vice President, Finance, and          December 29, 1998
-----------------------       Chief Financial Officer
Dale A. Sander                (Principal Accounting Officer and
                              Principal Financial Officer)

/S/ COLIN B. BIER             Director                              December 29, 1998 
-----------------------
Colin B. Bier, Ph.D. 

/S/ PER-OLOF MARTENSSON       Director                              December 29, 1998
-----------------------
Per-Olof Martensson

/S/ F. DUWAINE TOWNSEN        Director                              December 29, 1998
-----------------------
F. Duwaine Townsen
</TABLE>

                                      30