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SECURITIES AND EXCHANGE COMMISSIONWashington, D. C. 20549

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FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2001 Commission File No. 1-14430

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MAXIM PHARMACEUTICALS, INC.(Exact Name of Registrant as specified in its charter)

|Delaware(State or other jurisdiction of incorporation or organization) | 87-0279983(I.R.S. Employer Identification Number)
|---------------------------------------------------------------------- | -------------------------------------------------

8899 University Center Lane, Suite 400
San Diego, California 92122
(858) 453-4040(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

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Securities
registered pursuant to Section 12(b) of the Act: None

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

|Title of Each Class           |  | Name of Each Exchange on Which Registered
|----------------------------- |  | -----------------------------------------
|Common Stock, $.001 Par Value |  | NASDAQ National Market                   

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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. / /

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 $165,071,693 on
December 10, 2001, when the closing price of such stock, as reported in the Nasdaq National Market, was $7.20. This number is provided only for the purposes of this report and does not
represent an admission by either the Registrant or any such person as to the status of such person.

The
number of outstanding shares of the registrant's Common Stock, $.001 par value, as of December 10, 2001 was 23,252,593.

DOCUMENTS INCORPORATED BY REFERENCE

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This Form 10-K contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements are characterized by future or
conditional verbs and include statements regarding the results of product development efforts, clinical trials and applications for marketing approval of pharmaceutical products, and the scope and
success of future operations. Such statements are only predictions and our actual results may differ materially from those anticipated in these forward-looking statements. Factors that may cause such
differences include, but are not limited to, those discussed under "Risk Factors" and elsewhere in this Form 10-K for the year ended September 30, 2001, as filed with the
Securities and Exchange Commission, including the uncertainties associated with product development, the risk that products that appeared promising in early clinical trials do not demonstrate efficacy
in larger-scale clinical trials, the risk that we will not obtain approval to market our products, the need for additional financing, and the dependence upon collaborative partners. We do not assume
any obligation to update forward-looking statements as circumstances change.

PART 1

ITEM 1. BUSINESS

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

Overview

We are a global bio-pharmaceutical company with a diverse pipeline of therapeutic candidates for life-threatening cancers and
hepatitis.

Our
lead drug candidate Ceplene (histamine dihydrochloride) is designed to prevent or reverse damage associated with oxidative stress, thereby protecting immune cells and
other critical cells and tissue. Because Ceplene impacts basic immune functions, it has the potential to be used in a broad range of diseases in which oxidative stress plays an important role. More
than 1,300 patients have participated in our 15 completed and ongoing clinical trials of Ceplene in the following diseases:



In
addition to the above diseases, expanded clinical trials of Ceplene in 2002 are expected to include pilot testing in chronic liver disease. Clinical trials completed to date have
suggested that Ceplene can be safely administered by most patients in their own homes.

In
2000 we submitted a New Drug Application (NDA) to the FDA seeking approval to market Ceplene for the treatment of advanced metastatic melanoma with liver metastases based on the
data from a 305-patient U.S. Phase 3 clinical study. In January 2001, the FDA determined that this single study would not be adequate to support approval. Despite the FDA action, we
were pleased with the trial results as this was the first time that a significant survival benefit was shown in any published, large, controlled study in advanced metastatic melanoma with liver
metastasesa deadly disease that has a critical need for more effective therapies. Data from this clinical trial were selected for presentation at a number of key scientific conferences
during 2001, including the 37th meeting of the American Society of Clinical Oncology (ASCO), the World Health Organization 5th World Conference on Melanoma, and the
European Cancer Conference. We expect to commence in January 2002 a second Phase 3 trial based in the United States and Europe designed, in combination with the completed U.S. Phase 3 trial, to
form the basis for approval in the United States and other countries.

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A clinical development program for Ceplene is also underway in hepatitis C and is designed to improve patient care through a triple-drug combination of Ceplene, pegylated
interferon and ribavirin. In 2001 we completed a Phase 2 dose-ranging study of Ceplene in combination with interferon-alpha (IFN-alpha) in the treatment of
naïve, chronically infected hepatitis C patients. As of the 72-week end-of-trial evaluation date, 35 percent of all patients
(intent-to-treat basis) treated with Ceplene and IFN-alpha achieved a complete sustained viral response. Published reports suggest that approximately
13 percent of hepatitis C patients attain a sustained viral response from treatment with IFN-alpha alone. In December 2001 we commenced a randomized, controlled Phase 2 study
designed to compare the treatment of nonresponder hepatitis C patients with a triple-drug combination of Ceplene and Schering Corporation's Peg-Intron
(peginterferon alfa-2b) and Rebetol® (ribavirin, USP) versus treatment with Peg-Intron and Rebetol combination therapy alone.

The
foundation of our apoptosis modulator technology platform is a proprietary high-throughput screening system that is targeted to the identification of compounds that
can modulate programmed cell death, or apoptosis. Compounds thatinduce apoptosismay serve as new drugs for cancer. Compounds that inhibit apoptosismay form the basis for important new drugs for a wide variety of
disease targets, such as myocardial infarction, stroke, liver failure, sepsis, and other degenerative diseases. Our high-throughput screening technology has generated a pipeline of
compounds that have the potential to modulate apoptosis, including several drug candidates that have undergone extensivein vitroand in vivotesting.
Among the anti-cancer drug candidates that have been identified to date through this high-throughput screening
technology is the MX2105 series of compounds that was licensed to Shire-BioChem. This license agreement requires that Shire-BioChem make licensing, research and milestone payments to Maxim totaling up
to $55 million upon successful commercialization of the compound for treatment of two cancer indications, as well as pay a royalty on product sales.

Lastly,
our MaxDerm technology is designed for the treatment of medical conditions for which topical therapy is appropriate such as oral mucositis, burns, herpes,
decubitus ulcers, shingles and related conditions.

CepleneDrug Candidate for Cancer and Infectious Diseases

Overview

A substantial body of research suggests that the immune system's ability to destroy virally infected or cancer cells is suppressed by oxygen free radicals
released by certain immune cells, commonly referred to as oxidative stress. Oxidative stress, implicated in numerous diseases, causes tissue damage and can damage or destroy the liver in patients with
hepatitis and other chronic liver diseases.

Ceplene,
based on the naturally occurring molecule histamine, prevents the production and release of oxygen free radicals, thereby reducing oxidative stress. Accordingly, treatment
with Ceplene has the potential to prevent or reverse damage induced by oxidative stress, thereby protecting critical cells and tissue, including immune cells.

Because
Ceplene impacts basic immune functions, it has the potential to be used in a broad range of diseases in which oxidative stress plays an important role. More than 1,300
patients have participated in our 15 completed and ongoing clinical trials of Ceplene in combination with cytokines such as interleukin-2 (IL-2) and IFN-alpha. The
results of clinical trials completed suggest that Ceplene can be safely administered by most patients in their own homes. To date, clinical trials of Ceplene have been conducted in the following
life-threatening diseases:



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In
addition to the above diseases, a clinical trial of Ceplene in a non-viral liver disease is expected to commence in early 2002.

Ceplene Mechanism of Action

Ceplene, based on the naturally occurring molecule histamine, prevents the production and release of oxygen free radicals, thereby reducing oxidative stress.
Research suggests that treatment with Ceplene has the potential to protect immune cells and other critical cells and tissue, and prevent or reverse damage induced by oxidative stress. This body of
research has demonstrated that the primary elements of Ceplene's mechanism of action are as follows:

Reversing Immune Suppression:Two kinds of immune cells, Natural Killer (NK) cells and cytotoxic T cells, possess an
ability to kill and support the killing of cancer cells and virally infected cells. Natural-Killer/T cells (NK/T cells), a form of NK cells that are commonly found in the liver, also have
anti-cancer and anti-viral properties. Much of the current practice of immunotherapy is based on treatment with cytokines such as interferon and interleukin-2
(IL-2), proteins that stimulate NK, T and NK/T cells.

However,
research has shown that phagocytic cells (including monocytes, macrophages and neutrophils), a type of white blood cell typically present in large quantities in virally
infected liver tissue and in sites of malignant cell growth, release reactive oxygen free radicals that have been shown to inhibit the cell-killing activity of human NK cells and T cells.
In preclinical studies, human NK, T, and liver-type NK/T cells have been shown to be sensitive to oxygen free radical-induced apoptosis when these immune cells were exposed to phagocytes.
The release of free radicals by phagocytes results in apoptosis, or programmed cell death, of NK, T and NK/T cells, thereby destroying their cytotoxic capability and rendering the immune response
against the tumor or virus largely ineffective. In addition, the liver-type immune cells (NK/T cells) were shown to be particularly susceptible to oxygen free radical-induced apoptosis.

Histamine,
a natural molecule present in the body, or other molecules in the class known as histamine type-2 (H2) receptor agonists, bind to the H2
receptor on the phagocytes, temporarily preventing the production and release of oxygen free radicals. By preventing the production and release of oxygen free radicals, Ceplene may protect the NK, T,
and liver-type NK/T cells. This protection may allow immune-stimulating agents, such as IL-2 and IFN-alpha, to activate NK cells, T cells and NK/T cells more
effectively, thus enhancing the killing of virally infected cells or tumor cells.

Preventing Oxidative Damage:Most acute and chronic liver diseases have oxidative damage as a common feature of their
pathology. Phagocytic cells and Kupffer cells, both typically present in large quantities in virally infected liver tissue, release oxygen free radicals in response to infections or other factors.
Research suggests that oxygen free radicals cause much of the cell damage in the liver common to hepatitis and other liver diseases. By preventing the production and release of oxygen free radicals by
phagocytic and Kupffer cells, Ceplene may prevent and reverse oxidative damage to the liver.

Among
the proprietary protections surrounding our Ceplene technology are U.S. and international patents and patent applications covering the therapeutic use of histamine, upon which
Ceplene is based, or any H2 receptor agonist in the treatment of cancer, infectious diseases and other diseases, either alone or in combination therapies, as well as the novel synthetic
method for the production of pharmaceutical-grade histamine dihydrochloride.

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Potential Benefits of Ceplene

The results from our completed U.S. Phase 3 study in advanced metastatic melanoma, and earlier stage results in our other disease targets, have suggested that
Ceplene 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:



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Ceplene Clinical Trial Status

The table below summarizes our current and completed clinical trial activities for each disease we currently target or may target in the future with Ceplene.
We have 12 Phase 1/2 trials and three Phase 3 trials completed or currently underway, and we currently plan to commence several additional clinical trials in 2002. Our clinical trials are
staged to provide multiple opportunities for approval of the drug candidate in future years.

|Indication                  |  | Trial
Number |  | Trial Phase               |  | Number of
Patients
(Enrollment
Objective) |  | Status                                |  | Location                                                      
|--------------------------- |  | ------------ |  | ------------------------- |  | ----------------------------------------- |  | ------------------------------------- |  | --------------------------------------------------------------
|Advanced Malignant Melanoma |  | MP-8899-0104 |  | Phase 3                   |  | 224                                       |  | Expected to commence in 1/02          |  | United States,
Europe,
Canada                                 
|                            |  | MP-US-M01    |  | Phase 3                   |  | 305                                       |  | Completed                             |  | United States                                                 
|                            |  | MP-MA-0102   |  | Phase 3                   |  | 240                                       |  | Ongoing, patient enrollment completed |  | Europe,
Australia,
Canada &
Israel                            
|                            |  | MP-MA-0103   |  | Phase 2 Advanced research |  | 163                                       |  | Ongoing, patient enrollment completed |  | United States                                                 
|                            |  | MP-S01       |  | Phase 2                   |  | 42                                        |  | Completed                             |  | Europe                                                        
|                            |  | MM-2         |  | Phase 2 low-dose          |  | 27                                        |  | Completed                             |  | Europe                                                        
|                            |  | MM-1         |  | Phase 2 high-dose         |  | 17                                        |  | Completed                             |  | Europe                                                        
|Acute Myelogenous Leukemia  |  | MP-MA-0201   |  | Phase 3                   |  | 320                                       |  | Ongoing, patient enrollment completed |  | United States,
Europe,
Australia,
Canada,
Israel &
New Zealand
|                            |  | AML1         |  | Phase 2                   |  | 39                                        |  | Completed                             |  | Europe                                                        
|Renal Cell
Carcinoma        |  | MP-MA-SO2    |  | Phase 2 controlled        |  | 41                                        |  | Ongoing, patient enrollment completed |  | Europe                                                        
|                            |  | MP-MA-SO4    |  | Phase 2 controlled        |  | 60                                        |  | Ongoing                               |  | Europe                                                        
|                            |  | I-318-MA     |  | Phase 2 single arm        |  | 48                                        |  | Completed                             |  | Europe                                                        
|Multiple Myeloma            |  |              |  | Phase 1                   |  | 7                                         |  | Completed                             |  | Europe                                                        
|Hepatitis C 
Nonresponder  |  | MP-MA-0406   |  | Phase 2                   |  | 282                                       |  | Ongoing                               |  | Europe &
Israel                                               
|                            |  | MP-MA-S05    |  | Phase 2                   |  | 18                                        |  | Completed                             |  | Israel                                                        
|Hepatitis C 
Naive         |  | MP-MA-0405   |  | Phase 2                   |  | 129                                       |  | Completed                             |  | Europe &
Israel                                               

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Potential Cancer Indications for Ceplene

A report from the American Cancer Society,2001 Cancer Facts and Figures, estimates that a total of
approximately 1,268,000 new cases and approximately 553,400 deaths were expected for invasive cancers in the United States in 2001. 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
$60 billion per year.

Information
regarding certain cancer indications is summarized below. These following estimates are for the cancers initially targeted by Ceplene based upon the American Cancer
Society's2001 Cancer Facts and Figuresfor the United States.

Estimated Incidence for Selected Cancers for 2001 for the United States

|                                                   |  | Annual   
|-------------------------------------------------- |  | ---------
|
|Malignant Melanoma                                 |  | 51,400   
|Acute Myelogenous Leukemia                         |  | 10,000   
|Renal Cell Carcinoma                               |  | 30,800   
|Primary Liver Carcinoma and Intrahepatic Bile Duct |  | 16,200   
|All Invasive Cancers                               |  | 1,268,000

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

The
high number of cancer-related deaths indicates the need for more efficacious therapies for many patients. Many existing therapies have been approved on the basis that they shrink
or limit the growth of tumors for a short period of time, but they have failed to demonstrate that they provide a survival benefit to patients.

CepleneAdvanced Metastatic Melanoma

Malignant melanoma is the most deadly form of skin cancer and is one of the most rapidly increasing cancers in the developed world. There are approximately
51,400 new cases of melanoma and 7,800 deaths from the disease each year in the United States.

In
March 2000, we completed a 305-patient Phase 3 clinical trial of Ceplene in the United States for the treatment of advanced metastatic melanoma, a trial that
commenced in 1997 (the M01 trial). In the Phase 3 trial, advanced metastatic melanoma patients were treated with a combination of Ceplene and IL-2, while patients in the control group were
treated with the same dose of IL-2 alone. More than 50 clinical sites in the United States participated in the study.

The
purpose of the multi-center, controlled trial was to evaluate whether Ceplene improves the efficacy of IL-2, an immunotherapeutic agent already approved for the
treatment of advanced

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metastatic melanoma. The primary endpoint of the Phase 3 trial was survival duration evaluated through application of the unadjusted Log-Rank Test to Kaplan Meir survival curves, evaluated
in two primary populations:



In
2000 we sought FDA approval of Ceplene for the treatment of advanced metastatic melanoma with liver metastases based on the 12-month follow-up data from the
Phase 3 M01 trial that were available at the time of submission of the New Drug Application. The 12-month data from the Phase 3 trial demonstrated that combination therapy using Ceplene
plus IL-2 significantly improved the survival of advanced metastatic melanoma patients with liver involvement (adjusted p=0.008). For all patients entering the study, treatment with the
Ceplene/IL-2 combination improved survival over treatment with IL-2 alone, with a trend toward significance (p = 0.125). This data was promising but did not achieve the
p=0.05 threshold for statistical significance, therefore we applied for approval in the United States only for the patient population that achieved statistical significance, the patients with liver
metastases. In January 2001, the FDA determined that this single study would not be adequate to support approval. Despite the FDA action, we were pleased with the trial results as this was the
first time that a significant survival benefit was shown in any published, large, controlled study in advanced metastatic melanoma with liver metastasesa deadly disease that has a
critical need for more effective therapies.

As
the M01 trial has matured with an additional year of patient follow up, the Phase 3 data have retained their strong statistical significance in the liver metastases population and
also reached statistical significance in the overall intent-to-treat population of 305 patients. In October 2001, Sanjiv S. Agarwala, M.D., Associate Medical Director of
the Melanoma Center at the University of Pittsburgh Cancer Institute, made a keynote presentation at the European Oncology Conference (ECCO), describing updated results from the Phase 3 trial,
including the following:



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The 24-month results for the Phase 3 trial are highlighted in the following table.

24-Month Results from M01 Phase 3 Trial

|                   |                | All Patients Enrolled
in Study (ITT)
(n = 305) |    | All Patients Enrolled
in Study with Liver Metastases
(n = 129) |   
|------------------ | -------------- | ---------------------------------------------- | -- | -------------------------------------------------------------- | --
|Two Year Survival: |                |                                                |    |                                                                |   
|                   | IL-2 Alone     |                                                | 10 | %                                                              | 3 
|                   | Ceplene + IL-2 |                                                | 18 | %                                                              | 18
|                   |                | p = 0.046 (a                                   | )  | p = 0.0028 (a                                                  | ) 

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In
addition to the survival benefit suggested by the study results, another notable outcome of the M01 Phase 3 study was the fact that this survival benefit was achieved without
additional clinically significant degradation in patient quality of life or additional toxicity. Also notable, for the first time in any major study, advanced-stage malignant melanoma patients were
allowed to self-administer treatment at home. At the November 2001 ECCO conference, Steven O'Day, M.D., Director of Medical Oncology at the John Wayne Cancer Center, Santa Monica,
California, presented safety data from 391 patients participating in the M01 U.S. Phase 3 trial as well as the Phase 2 M103 trial. Safety and toxicity were
assessed according to National Cancer Institute (NCI) Common Toxicity Criteria in all patients who received at least one dose of study drug. The conclusion of this assessment was that Ceplene does not
add clinically significant grade 3 or 4 toxicity compared to IL-2 alone and may be safely administered in conjunction with a regimen of low-dose, subcutaneous IL-2.

We
have now completed or announced interim data from multiple clinical trials of Ceplene for the treatment of advanced metastatic melanoma in 500 patients, and each trial has shown a
survival benefit associated with treatment with the combination of Ceplene and cytokines.

We
believe that the need for an effective therapy in this population supports undertaking an additional trial to support approval. We expect to commence in January 2002 a Phase
3 trial based in the United States and Europe designed, in combination with the M01 study, to form the basis for approval in the United States and other countries. The trial will include approximately
224 patients with advanced metastatic melanoma with liver metastases (the patient population in which Ceplene demonstrated the strongest survival benefit in the M01 Phase 3 trial). We currently
estimate that the timeline for the trial will be comprised of 18 months for patient enrollment, and 18 months of patient follow up.

In
September 2000, we completed enrollment of a second Phase 3 trial of Ceplene for the treatment of advanced metastatic melanoma based in Europe, Australia, Canada and Israel.
The international trial commenced in November 1997 and includes 241 patients. Patients in the Ceplene group receive a co-administration of Ceplene plus low-dose
IL-2 and IFN-alpha, while patients in the control group receive dacarbazine (DTIC), the most commonly used chemotherapeutic agent for the treatment of advanced malignant
melanoma, particularly in Europe and Australia. The international Phase 3 malignant melanoma trial was designed to complement the U.S. Phase 3 trial by broadening the exposure of the drug outside the
United States and by providing a comparison between combination immunotherapy with Ceplene versus a chemotherapeutic agent.

The
FDA has granted orphan drug status to Ceplene for the treatment of advanced metastatic melanoma. Orphan drug status provides for U.S. marketing exclusivity for seven years upon
marketing approval by the FDA. The status also provides certain tax benefits and exempts us from certain FDA application fees.

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CepleneOther Cancer Indications

Acute Myelogenous Leukemia:Acute Myelogenous Leukemia (AML) is the most common form of acute leukemia in adults, and
prospects for long-term survival are poor for the majority of patients. There are approximately 10,000 new cases of AML and 7,200 deaths caused by the cancer each year in the United
States. Once diagnosed with AML, patients are typically treated with chemotherapy, and the majority achieve complete remission. Unfortunately, 75-80% of patients who achieve their first
complete remission will relapse, and the median time in remission before relapse is only 12 months with current treatments. The prospects for these relapsed patients is poor, and less than five
percent survive long term. There are currently no effective remission therapies for AML patients. The FDA has granted orphan drug status to Ceplene for the treatment of AML.

We
conducted a Phase 2 study in Sweden in which 39 AML patients in remission were treated with the combination of Ceplene and low-dose IL-2. Remission therapy
with the Ceplene/IL-2 combination is designed to augment the body's ability to scavenge, attack and eliminate residual leukemic cells, and the objective of the therapy is to prevent
relapse and prolong leukemia-free survival while maintaining a good quality of life for patients during treatment. The results of the Phase 2 study suggest that the
Ceplene/IL-2 combination is safe and feasible in AML.

In
September 2000, we completed enrollment of a Phase 3 AML clinical trial based in 12 countries, including clinical sites in the United States, Europe, Australia, Canada and
Israel. The global trial commenced in November 1997 and includes 320 patients. The trial is designed as a remission therapy to demonstrate that the combination of Ceplene and IL-2
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. The purpose of this study is to
expand the potential use of Ceplene in key markets, and to potentially expand the labeling for the drug candidate if approval is received for the treatment of melanoma. Patients in the study will be
evaluated for up to 36 months, and the trial is expected to be completed in late 2004.

Renal Cell Carcinoma:There are approximately 30,800 new cases annually of renal cell carcinoma (RCC), a deadly cancer
of the kidneys, in the United States. Metastatic RCC often is resistant to radiation therapy and chemotherapy, and the disease results in more than 12,100 deaths each year. In a preliminary survey,
more than 80% of oncologists indicated that they would use Ceplene in RCC upon approval for advanced metastatic melanoma.

In
May 2001, researchers presented at the ASCO meeting the results from a Phase 2 trial of Ceplene in combination with interferon-alpha and IL-2 for the treatment
of metastatic RCC. The 46 patients in the single-arm study treated with the Ceplene triple-drug combination achieved a median survival on an
intent-to-treat basis of 16.3 months, compared to published reports suggesting approximately eight to ten months typically expected for such patients. Two randomized
studies of the combination of Ceplene and IL-2 versus IL-2 alone in a total of approximately 100 patients are currently underway.

Hepatocellular Carcinoma:Recent research results, including the substantial improvements in survival suggested for
metastatic melanoma patients with liver metastases treated with Ceplene, have led us to expand the clinical testing of Ceplene in diseases of the liver. Supporting these clinical results is the
preclinical research presented during 2001 highlighting the Ceplene's ability to prevent immune
suppression of NK cells and T cells induced by oxidative stress in the liver. We expect to commence in early 2002 a pilot study of Ceplene in the treatment of hepatocellular carcinoma (liver cancer).
These patients have a very poor prognosis for survival, and there are approximately 16,200 new cases and 14,100 deaths caused by hepatocellular carcinoma each year in the United States.

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CepleneHepatitis C

Hepatitis C is the leading blood-borne infection in the United States. The U.S. Center for Disease Control and Prevention estimates that over
4.5 million Americans are infected with the hepatitis C virus. The World Health Organization and other sources estimate that at least 200 million people are infected worldwide. Hepatitis
is a viral infection in which oxidative stress causes inflammation and tissue damage in the liver and, in many cases, permanent cirrhosis (scarring). The cycle of disease from infection to significant
liver damage can take 20 years or more. Some experts estimate that without substantial improvements in treatment, deaths from hepatitis C will surpass those from HIV. Hepatitis C is the leading
cause of liver cancer and the primary reason for liver transplantation in many countries.

The
standard treatment for hepatitis C is interferon-alpha (IFN-alpha), an immunotherapeutic agent often given in combination with the anti-viral drug
ribavirin. The most recent advance in hepatitis C therapy approved by the FDA is a pegylated, or sustained release, formulation of IFN-alpha given in combination with ribavirin. Even with
recent advances, approximately half of patients do not attain a sustained response with current therapies. In addition, the majority of patients that fail to respond to initial treatment will also
fail to respond when retreated.

Several
factors can influence the patient's response to therapy, including the patient's viral load and the genotype of the virus with which the patient is infected. Of the several
variations, or genotypes, of hepatitis C, genotype-1 is the most common type in the United States. Patients infected with this genotype, and those with viral levels greater than two
million copies per milliliter of blood, typically have the poorest response to treatment.

Our
clinical development program for Ceplene in hepatitis C is designed to improve patient care through a triple-drug combination of Ceplene, pegylated interferon and
ribavirin. A series of studies have been completed that provide the foundation for more advanced clinical testing of Ceplene in hepatitis C.

In
May 1999, we commenced a Phase 2 clinical trial of Ceplene in the treatment of patients with hepatitis C. The trial was designed to evaluate the combination of Ceplene and
IFN-alpha in the
treatment of chronic hepatitis C patients who had not previously received treatment with IFN-alpha. The primary purpose of this study was to determine the most appropriate dose regimen for
Ceplene in the treatment of chronic hepatitis C, and to provide evidence that Ceplene may benefit cytokines such as IFN-alpha in the treatment of hepatitis C. The trial was based in the
United Kingdom, Belgium, Israel and Russia, and 129 patients were enrolled. Patients were randomly assigned to one of four treatment groups, with each patient receiving Ceplene, in one of four dosing
regimens, plus IFN-alpha under the current standard dose regimen (3 MIU three times per week). The study was designed to evaluate the efficacy and safety of each of the four dosing
regimens of Ceplene.

Patients
were treated for up to 48 weeks, and then followed an additional 24 weeks to evaluate the primary measures of efficacy, reduction of viral load, as defined by virus levels
that are below the limit of detection using a validated PCR-RNA technique, and normalization of liver function, measured by the liver enzyme ALT, a standard measure of liver function. The
study included a high percentage of patients that would normally be considered difficult to treat as characterized by high viral loads and a genotype-1 variant of the virus. The mean viral
load of the patients in this study was 6.7 million copies per milliliter of blood, and 50% of the patients were infected with genotype-1.

Results
from the 129-patient Phase 2 study were presented by Yoav Lurie, M.D., principal investigator in the study and Head, Hepatitis Clinic, Liver Unit, Institute of
Gastroenterology and Hepatology, Tel Aviv Souraski Medical Center, Israel, at the 2001 American Association for the Study of Liver Diseases meeting. As of the 72-week
end-of-trial evaluation date, 35 percent of all patients (intent-to-treat basis) treated with Ceplene and IFN-alpha achieved a
complete sustained viral

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response. Published reports suggest that approximately 13 percent of hepatitis C patients attain a sustained viral response from treatment with IFN-alpha alone. A sustained
biochemical responses for all patients at the 72-week time point was achieved in 35 percent of patients treated with Ceplene and IFN-alpha. Published reports suggest a
sustained biochemical response of approximately 16 percent for patients treated with IFN-alpha alone.

In
addition to the favorable results in the overall study, response rates achieved for the higher-risk patients treated with the Ceplene/IFN-(alpha)
combination were substantially better than those typically expected for treatment with IFN-alpha alone. Despite the poor prognosis for successful treatment, 29 percent of all
patients (intent-to-treat basis) with the genotype-1 variant of the hepatitis C virus treated with Ceplene and IFN-alpha achieved a sustained complete
viral response. Published reports suggest that approximately 7 percent of genotype-1 patients attain a sustained response when treated with IFN-alpha alone.

In
addition to the Phase 2 dose-ranging study, we completed a pilot safety study to evaluate the feasibility and safety of triple-drug treatment with Ceplene
in combination with IFN-alpha and the anti-viral drug ribavirin in hepatitis C patients who were nonresponsive to prior therapy or relapsed
after prior therapy. This trial was designed to support the advancement of triple-drug therapy with Ceplene into larger-scale trials in hepatitis C.

The
results of this study were also presented at the 2001 AASLD conference. At 72 weeks, sustained complete viral response was observed in 28 percent (5/18) of patients who
entered the study, and in 38 percent (5/13) of evaluable patients (patients who completed at least four weeks of therapy). No serious adverse events and no unexpected or irreversible side
effects were reported in the Ceplene study. We believe that these results suggest that Ceplene can be safely administered in this triple-drug combination, and that this
triple-drug therapy is feasible in nonresponder patients.

In
December 2001 we commenced a randomized, controlled Phase 2 study designed to compare the treatment of nonresponder hepatitis C patients with a triple-drug
combination of Ceplene and Schering Corporation's Peg-Intron (peginterferon alfa-2b) and Rebetol® (ribavirin, USP) versus treatment with
Peg-Intron and Rebetol combination therapy alone. Nonresponder patients represent the largest current unmet medical need in hepatitis C. The study will include up to 282 patients; 50
patients will be enrolled initially and treated for 12 weeks, with the remaining 232 patients to be enrolled after an evaluation of the 12-week safety results for the initial 50 patients.
Patients will be treated for up to 48 weeks and followed for an additional 24 weeks after completion of treatment. The trial is expected to be completed in 2003. To help facilitate this trial and
reduce our costs, we entered into an agreement with Schering Corporation under which Schering will contribute the Peg-Intron and Rebetol product and perform the viral testing for the study
at no cost to Maxim.

We
also expect to start in 2002 a Phase 2 study of the triple-drug combination of Ceplene, pegylated interferon and ribavirin in the treatment-naive patients. Combined
with the nonresponder study, this will establish a clinical program combining Ceplene with the current standard of care in two important hepatitis C populations.

CepleneChronic Liver Diseases

Ceplene has shown the potential to prevent or inhibit oxidative stress, a condition associated with most acute and chronic liver diseases. The liver, the
largest organ in the body, plays an important role in regulating numerous vital processes. This complex organ performs many functions essential to life, and you cannot live without it. In the United
States alone, approximately 25 million people1 in every 10have been afflicted with chronic liver, bile duct or gallbladder diseases. In addition, 26,000 of these
patients die each year from chronic liver diseases and cirrhosis.

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In addition to hepatitis, some of the most common diseases of the liver include:



To
examine the potential role of Ceplene in preventing oxidative damage in chronic liver diseases, Ceplene was studied in an alcohol-induced liver injury hepatitis model in rats.
Animals were given ethanol (5g/kg) once daily for four weeks. Of the two groups of ethanol-fed animals, one group was not treated, while another group received Ceplene administered twice a
day. Animals receiving ethanol but not treated with Ceplene developed steatosis, inflammation, and necrosis and had elevated ALT levels. Animals treated with Ceplene had normalized ALT levels, and
their livers were comparable in appearance to the control group. These results suggest that Ceplene protects against early alcohol-induced liver injury in rats.

As
a result of the foundation represented by the above and other preclinical work, and the results we have seen in hepatitis C, we expect to commence in 2002 pilot testing of Ceplene
in chronic liver diseases such as NASH and alcohol-induced hepatitis.

Apoptosis Modulator Technology Platform

We have developed and are employing a proprietary high-throughput screening system that is targeted to the identification of compounds that can
modulate programmed cell death, or apoptosis. Compounds that modulate apoptosis fall into two primary categories:



Our
high-throughput screening technology has generated a pipeline of compounds that have the potential to modulate apoptosis, including several drug candidates that have
undergone extensivein vitroandin vivotesting.

High-Throughput Screening Assays

We identify promising compounds from large compound libraries using cell-based, High-Throughput Screening (HTS) assays by monitoring
the activity of caspases, key enzymes that modulate and carry out the cellular signaling pathways involved in apoptosis. These HTS assays are able to monitor activation or inhibition of the caspase
cascade inside a wide variety of living cells.

We
believe that our cell-based HTS assays provide many advantages. Our technology platform consists of novel, fluorescent substrates and assay procedures that allow
high-throughput, live-cell fluorescence screening assays for specific recognition of the activated form of any caspase of interest. This technology can be used to screen for
caspase cascade activation or inhibition in any living cells or cell lines derived from any organ system in the body. In fact, our proprietary substrates allow screening for cell-type or
cancer-cell specific compounds.

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Using HTS, we have already screened hundreds of thousands of small molecule compounds and have discovered several classes of novel caspase activators/apoptosis inducers active in
drug-resistant cancers. Furthermore, the assay has a high selectivity for therapeutically useful apoptosis inducers because, unlike many other oncology drug screens which rely on
cell-kill or growth inhibition measurements, non-specific poisons are not detected by our assay.

Apoptosis InducersAnti-Cancer Candidates

One of the key obstacles hindering cancer therapy is the fact that many cancers are resistant to currently used chemotherapeutic agents. Cytotoxic
(chemotherapeutic) drugs can trigger cancer cells to undergo apoptosis by re-activating the dormant caspase cascade. Most anti-cancer drugs work by activating the caspase
cascade using the tumor suppressor gene p53; however over half of all tumors have mutations in which the p53 gene is inactive thereby rendering the tumor resistant to chemotherapy. In addition, many
cancer cells express gene products which suppress the caspase cascade or possess mechanisms that pump the cytotoxic drugs out of the cells, either of which slow the induction of apoptosis in the
cancer cells.

Over
the past several years we have employed our HTS assays to identify compounds that can overcome these resistance mechanisms and destroy cancer cells by activating the caspase
cascade. This work has resulted in the identification of a portfolio of compound candidates that can initiate apoptosis even in cancer cells that have developed resistance to all currently used
chemotherapeutic agents.

The
breadth of development candidates identified through our HTS system affords us the opportunity to develop certain compounds ourselves, while still providing multiple opportunities
for corporate partnering.



Apoptosis InhibitorsDegenerative Diseases

Our caspase inhibitor technology platform consists of several unique compound families, totaling approximately 150 compounds. Our objective is to commence the
licensing of these compounds in 2002. We are also pursuing the development of a number of rationally designed caspase enzyme inhibitors, including MX1013. Results of preclinical studies of MX1013 were
presented at the American Heart Association Meeting in August 2001. The results suggested that MX1013 was effective in preventing apoptosis in animal models of myocardial infarction, stroke and
hepatitis, including a greater than 50% reduction in infarct size (heart damage) in two myocardial infarction models. Furthermore, in a rat middle cerebral artery occlusion reperfusion brain ischemia
model, an intravenous bolus of MX1013 followed by infusion after occlusion resulted in a 50% reduction of mean brain infarct volume. MX1013
has also been shown to be highly active in preclinical models of acute liver failure associated with FAS-induced hepatitis and sepsis.

MaxDerm Topical Therapies

The MaxDerm technology and pipeline of potential products is based on research on the active molecule, histamine, underlying Ceplene. The MaxDerm discovery may
be able to address the underlying mechanisms that cause many topical disorders and may enhance the cellular immune

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response, reduce inflammation, and enhance the wound healing process. This discovery is novel and differs from the anti-viral, pain relieving and anti-bacterial approaches
underlying many existing and proposed treatments.

Small
pilot, randomized, blinded, placebo-controlled trials have been conducted in more than 75 patients with oral mucositis, herpes labialis (cold sores), burns, decubitus ulcers,
shingles and conjunctivitis. Patients experienced improved healing times when treated with topical histamine gels compared to a placebo control.

A
pilot study of topical histamine gels based was conducted in 18 patients with herpes labialis (cold sores). In the randomized, blinded study, patients with herpes labialis treated
with the gel containing the highest concentration of histamine demonstrated a nearly complete (>99%) improvement of their lesions following only four days of administration. Patients treated with the
placebo, conversely, experienced an increase in mean lesion size during the study period.

A
second medical condition in which the topical histamine technology has been evaluated is in oral mucositis (stomatitis), a common and debilitating condition caused by the treatment
of cancer patients with chemotherapy or radiation. In a small pilot human study, nine patients with oral mucositis were randomized and treated with one of two doses of a histamine gel or a placebo.
The patients treated with the histamine gel experienced complete healing of lesions in a mean time of three to four days, depending upon the dosage. Patients treated with the placebo experienced no
reduction in lesions during the treatment period. Patients treated with the histamine gel also reported a reduction in the discomfort associated with eating and drinking.

We
are preparing to commence in early 2002 pilot clinical studies of a topical histamine gel in the following indications:



Product Development and Collaborative Relationships

We conduct our research, clinical trials and other product development activities through a combination of efforts by our internal personnel and collaborative
programs. For Ceplene, we rely upon our clinical management personnel in extensive collaboration with universities and other clinical research sites, contract research organizations and other 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 the apoptosis modulator and
MaxDerm technologies. Earlier-stage research and development efforts related to the apoptosis modulator and MaxDerm technologies are primarily conducted in our internal laboratories, although we
expect to rely on pharmaceutical company collaborative relationships to advance the clinical development of certain compounds and indications encompassed by these technologies. We have relied upon
licensing and other transactions to gain access to certain of our proprietary technologies.

Ceplene Collaborations

In 2001 we entered into an agreement with Schering Corporation related to our Phase 2 clinical trial of the triple-drug combination of Ceplene and
Schering's Peg-Intron and Rebetol in nonresponder hepatitis C patients. Under the agreement, we have full responsibility for conducting the clinical trial, and Schering is providing the
Peg-Intron and Rebetol product and performing the viral testing for the study at no cost to us. Both Maxim and Schering will retain marketing responsibilities and revenues for our
respective drugs. However, we have agreed that during the term of the agreement, before entering

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into an agreement granting a third party the rights to market Ceplene in any territory, we will allow Schering the option to elect to enter into an agreement with Maxim under terms equivalent to those
negotiated with the third party.

In
2000, we entered into a development collaboration with F. Hoffmann-La Roche Ltd., Switzerland and its US branch Hoffmann-La Roche, Inc. to
undertake the clinical development and approval of Ceplene in combination with Pegasys®, Roche's pegylated interferon-alpha agent. In 2001, we and Roche agreed to terminate the development
collaboration. Maxim initiated the termination, and we believe that the termination was in our best interest, as the rate of progress made under the collaboration was not acceptable to us.

During
1998, we entered into clinical collaborations with Chiron Corporation. Chiron has provided the IL-2 drug (Proleukin®) and other assistance related to
our Phase 3 AML clinical trial.

These
aforementioned collaborations reinforce our belief that Ceplene is complementary rather than competitive with many existing and future drugs, and may be the key to the
successful use of many immunotherapeutic agents. We expect to pursue additional collaborations to further the expanded use and development of Ceplene.

Apoptosis Modulator and Other Collaborations

In 2000, we licensed our CV2105 series of anti-cancer compounds to Shire-BioChem. The agreement requires that Shire-BioChem make licensing,
research and milestone payments to us totaling up to $55 million assuming the successful commercialization of the compound for the treatment of two cancer indications, as well as pay a royalty
on product sales resulting from this collaboration. Shire-BioChem will provide the preclinical testing, manufacturing development, and clinical development of the compound.

In
2000, we entered into a collaboration with Celera Genomics under which we have screened approximately 400,000 compounds from Celera's proprietary libraries using our
high-throughput screening technology. We will also perform research regarding the mechanisms of action for any promising compounds identified during the screening process. The agreement
calls for Celera to perform the preclinical work for such compounds. Under the agreement we have the option to elect, at our sole discretion, to jointly develop with Celera any compounds that are
taken into clinical trials and to share equally the development costs and commercial revenues.

We
will also seek other collaborative relationships for the further development of our apoptosis modulator and MaxDerm technologies in 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.

Marketing and Sales

Assuming FDA approval of Ceplene, we plan to directly market the drug in the United States. The treatment of cancer is a highly specialized activity in which
the approximately 10,000 practicing oncologists in the United States tend to be concentrated in approximately 1,500 major medical centers. Marketing Ceplene directly in the United States requires us
to build a marketing and sales infrastructure, including sales representatives, through the recruitment of qualified personnel.

In
international markets, we expect to establish alliances with pharmaceutical companies for the marketing of Ceplene. In 1999, we entered into an agreement granting F. H.
Faulding & Co., Ltd. the right to market Ceplene in Australia and New Zealand. Also during 1999, we entered into an agreement granting MegaPharm, Ltd. the right to market Ceplene
in Israel.

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Our marketing strategies for the apoptosis modulator and MaxDerm technologies will be developed over time based upon, among other factors, the specific indications targeted for
therapy. For example, our CV2105 series of anti-cancer compounds was licensed to Shire-BioChem under an agreement that calls for Shire-BioChem to market any products within this series
attaining regulatory approval.

Manufacturing

We do not intend to acquire or establish our own dedicated manufacturing facilities for Ceplene in the foreseeable future. There are a number of facilities in
compliance with FDA Good Manufacturing Practice available for contract manufacturing, and we have contracted with established pharmaceutical manufacturers for the production of Ceplene. These
manufacturers are supplying the Ceplene required for our current clinical trial activities, and have demonstrated the capability to supply commercial quantities of the product for any potential market
launch.

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. We are currently establishing relationships with additional manufacturers to provide alternate sources of supply for Ceplene. We currently rely upon similar
relationships for the manufacturing of our apoptosis modulator and MaxDerm drug candidates, and expect to continue to rely upon such relationships in the future.

Patents, Licenses and Proprietary Rights

We own or have the rights to 26 issued or allowed U.S. patents and 44 U.S. patent applications. Corresponding patent applications have been filed, and in a
number of instances patents have been issued, in major international markets, including Europe, Australia and Japan. 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 and resources to our patent and license portfolio. Maintaining patents and
licenses and conducting an assertive patent prosecution strategy is a priority for us.

Key Granted Patents and Pending Applications

We own or have rights to 14 U.S. patents or allowed applications related to Ceplene, a technology platform based upon histamine, a naturally occurring
H2 receptor agonist. These patents encompass various topics relating to:



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A
number of corresponding patents have also issued in international markets.

We
also own or have rights to 14 patent applications in the United States relating to the use of Ceplene with other cytokines and immunotherapies, mechanisms, rates and routes of
administration, and other proprietary claims that have also been filed internationally.

We
hold two issued U.S. patents related to dipeptide caspases inhibitors and the use thereof. We also hold one additional U.S. patent and 28 U.S. patent applications related to the
apoptosis modulator technology. Some corresponding patent applications related to the above have also been filed internationally.

We
own or have rights to a worldwide, exclusive license to Professional Pharmaceuticals, Inc.'s (PPI) six issued or allowed U.S. patents and two U.S. patent applications for
material compositions and other rights underlying the MaxDerm technology. Some corresponding patents for the above have also been filed internationally.

Technology Rights

In 1993, we entered into a technology transfer agreement under which we purchased certain intellectual property and patent rights related to our Ceplene
technology. The technology transfer agreement required 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. In October 1999, we entered into a new royalty agreement with the remaining inventor under which we agreed to pay $1 million over three years in
exchange for a reduced royalty rate. We have also filed a large number of
additional patent applications and received a substantial number of additional patents encompassing the Ceplene technology as described above.

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.

In
2000, we acquired Cytovia, Inc., a privately held biopharmaceutical research company whose technology base includes proprietary drug candidates in the areas of oncology,
cardiovascular disease, and other degenerative diseases, and a proprietary high-throughput screening process for other apoptosis-targeted drug candidates. The technology rights associated
with our caspase modulator program were acquired in this transaction.

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 us 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

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preclinical and clinical testing and other approval procedures of the 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 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 1, 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 body. In Phase 2, 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 3, 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. Monitoring of all aspects of the study to minimize risks is a continuing process. Reports of all adverse events
must be made to the FDA.

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 NDA for approval prior to
commencement of commercial sales. In responding to a NDA, 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.

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 regulatory authorities in the European Union
countries and other developed countries have lengthy approval processes for pharmaceutical products. The process for gaining 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.

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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.

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 United States, 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 United States 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 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 United States 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, we cannot assure you that these products will be considered cost effective and that reimbursement to the consumer will be available 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 diseases. 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 in cancer and 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 immunotherapy, the impact of competition for Ceplene may be reduced by the fact that the drug may be complementary to many other immunotherapeutic agents. Our current
clinical testing of Ceplene combines the administration of Ceplene with the administration of cytokines, certain

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immunotherapeutic agents. Accordingly, Ceplene and these immunotherapeutic 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 immunotherapy may create new opportunities for Ceplene.

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.

Employees and Consultants

As of December 15, 2001, Maxim had 132 employees, all but five 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 2002 to, among other things, address the
requirements of the expansion of clinical trials and other drug development efforts.

In
addition to our employees, we have engaged a number of experienced consultants in North America, Europe, Israel and Australia with pharmaceutical and business backgrounds to assist
in 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.

Risk Factors

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

The development of our drug candidates is subject to uncertainties, many of which are beyond our control. If we fail to successfully develop our drug candidates, our ability to
generate revenues will be substantially impaired.

Potential
products based on our Ceplene, apoptosis modulator and MaxDerm technologies will require, dependent upon the current specific drug candidate, extensive research and
development, preclinical testing, clinical testing, regulatory approval and substantial additional investment before we can market them. We cannot assure you that any of our drug candidates will:



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We
have not completed final testing for efficacy or safety in humans for the diseases we propose to treat with Ceplene and our other drug candidates. Failure to ultimately obtain
approval for Ceplene and our other drug candidates, any delay in our expected testing and development schedules, or any elimination of a product development program in its entirety, will negatively
impact our ability to generate revenues in the future from the sale of our products.

We may not obtain regulatory clearance to market Ceplene or our other drug candidates on a timely basis, or at all.

Ceplene and our other drug candidates are subject to extensive government regulations related to development, clinical trials, manufacturing and
commercialization. The process of obtaining FDA and other regulatory approvals is costly, time consuming, uncertain and subject to unanticipated delays. Even if we believe that preclinical and
clinical data are sufficient to support regulatory approval for a drug candidate, the FDA and foreign regulatory authorities may not ultimately approve the candidate for commercial sale in any
jurisdiction. The FDA may refuse to approve an application for approval of a drug candidate if it believes that applicable regulatory criteria are not satisfied. The FDA may also require additional
testing for safety and efficacy. For example, in 2000, we submitted an NDA to the FDA seeking approval to market Ceplene based on the data from our Phase 3 clinical study. In January 2001, the
FDA determined that this single study was not adequate to support approval.

In
addition, manufacturing facilities operated by the third party manufacturers with whom we contract to manufacture Ceplene and our other drug candidates may not pass an FDA
preapproval inspection. Moreover, if the FDA grants regulatory approval of a product, the approval may be limited to specific indications or limited with respect to its distribution. Foreign
regulatory authorities may apply similar limitations or may refuse to grant any approval.

Any
failure or delay in obtaining these approvals could prohibit or delay us from marketing Ceplene and our other drug candidates. If Ceplene and our other drug candidates do not meet
applicable regulatory requirements for approval, we may not have the financial resources to continue research and development of these candidates, and we may not generate revenues from the commercial
sale of any products.

Delays in the commencement, conduct or completion of our clinical trials would negatively impact our business.

We may encounter problems with any of our completed, ongoing or planned clinical studies. For example, we may encounter delays in commencing studies or
enrolling volunteers, lower than anticipated retention rate of volunteers in a trial, or serious side effects experienced by study participants relating to the drug candidate. If we encounter any
delay in the commencement, conduct or completion of our clinical studies for Ceplene or our other drug candidates, we may experience the following consequences:



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We have been named as a defendant in a securities class action litigation that could result in substantial costs and divert management's attention and resources.

In December 2000, plaintiff Blake Martin, on behalf of himself and purportedly on behalf of a class of others similarly situated, filed a complaint in
the United States District Court for the Southern District of California against Maxim and two of our officers, alleging violations of federal securities laws related to declines in our stock price.
In September 2001, this complaint, and similar complaints based on the same facts and circumstances, were consolidated into a single action. This complaint alleges claims in connection with
various alleged statements and omissions to the public and to the securities markets. In
October 2001, certain former shareholders of Cytovia, Inc. filed a complaint in California Superior Court in San Diego, against Maxim and two of our officers based on similar facts and
circumstances, alleging fraud and negligent misrepresentation in connection with the Maxim's acquisition of Cytovia, Inc. We believe that the claims being brought against us and our officers
are without merit, and we intend to engage in a rigorous defense of such claims. No assurances can be made that we will be successful in our defense of such claims. If we are not successful in our
defense of such claims, we could be forced to make significant payments to our shareholders and their lawyers, and such payments could have a material adverse effect on our business, financial
conditions and results of operations if not covered by our insurance carrier. Even if such claims are not successful, the litigation could result in substantial costs and divert management's attention
and resources, which could adversely affect our business.

Because we are dependent on clinical research centers and other contractors for clinical testing and for certain research and development activities, the results of our
clinical trials and such research activities are, to a certain extent, beyond our control.

The nature of clinical trials and our business strategy requires us to rely on clinical research centers and our other contractors to assist us with clinical
testing and certain research and development activities. As a result, our success is dependent upon the success of these outside parties in performing their responsibilities. Although we believe our
contractors are economically motivated to perform on their contractual obligations, we cannot directly control the adequacy and timeliness of the resources and expertise applied to these activities by
our contractors. If our contractors do not perform their activities in an adequate or timely manner, the development and commercialization of our drug candidates could be delayed.

We expect to rely on collaborative partners for research, development and commercialization of certain potential products.

We expect to rely on collaborative arrangements for research and development and commercialization of certain drug candidates discovered and developed by us,
such as the license agreement with Shire-BioChem for the MX2105 series of anti-cancer compounds, and our agreement with Schering Corporation related to our Phase 2 Ceplene clinical trial
in nonresponder hepatitis C patients. We cannot be certain that we will be able to maintain these collaborations or enter into any future collaborative arrangements, that any of our collaborations
will be successful or that we will receive revenues from any of these collaborations. The success of these and any future collaborations will depend, in significant part, on our partners' development
and strategic considerations, including the relative advantages of alternative products being developed or marketed by competitors. If our partners fail to conduct their activities in a timely manner,
or at all, preclinical or clinical development of drug candidates under those collaborations could be delayed or terminated. The suspension or termination

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of our collaborations, the failure of our collaborations to be successful or the delay in the development or commercialization of drug candidates pursuant to our collaborations could harm our
business.

Our planned business may expose us to product, clinical trial and other liability claims.

Our
design, testing, and development of products involves an inherent risk of exposure to clinical trial and product liability claims and related adverse publicity. Insurance coverage
is expensive and difficult to obtain, and we may be unable to obtain coverage in the future on acceptable terms, if at all. Although we currently maintain clinical trial insurance for our drug
candidates in the amounts we believe to be commercially reasonable, we cannot be certain that the coverage limits of our insurance policies or those of our strategic partners will be adequate. If we
are unable to obtain sufficient insurance at an acceptable cost or if a claim is brought against us, whether fully covered by insurance or not, our business, results of operations and financial
condition could be materially adversely affected.

Our products may not be accepted, purchased or used by doctors, patients or payors.

Ceplene,
and any of our other drug candidates in development, may not achieve market acceptance even if they are approved by the FDA and similar international regulatory agencies. The
degree of market acceptance of our products will depend on a number of factors, including:



We
cannot guarantee that physicians, patients, payors or the medical community in general will accept and utilize any products that we develop.

We have yet to market or sell any of our products.

Although we currently intend to market Ceplene in the United States, if approved by the FDA, through the recruitment of experienced marketing and sales
personnel, Maxim has never before marketed or sold any pharmaceutical product. In order to market or co-market Ceplene or certain other drug candidates, we will need to hire a significant
number of people with relevant pharmaceutical experience to staff our sales force and marketing group, and possibly also to make appropriate arrangements with strategic partners. If we cannot develop
the required marketing and sales expertise both internally and through our partnering arrangements, our ability to generate revenue from product sales will likely suffer.

We
may rely on collaborative partners to market and sell Ceplene in international markets, and such arrangements may be sought to market certain other drug candidates in all markets.
We have not yet entered into any collaborative arrangement with respect to marketing or selling Ceplene with the exception of agreements relating to Australia, New Zealand and Israel, and have not
entered into any agreements regarding the marketing or selling of our other drug candidates with the exception of a license agreement relating to our CV2105 series of anti-cancer
compounds. We cannot guarantee that we will be able to enter into any such arrangements on terms favorable to us, or at all. If we are able to enter into marketing and selling arrangements with
collaborative partners, we cannot assure you that such marketing collaborators will apply adequate resources and skills to their responsibilities, or that their marketing efforts will be successful.

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We will be dependent on third party manufacturers of our products. Our ability to sell our products may be harmed if adequate quantities of our products are not manufactured on
a timely basis.

We
do not intend to acquire or establish our own dedicated manufacturing facilities for Ceplene and our other drug candidates in the foreseeable future. We have contracted and expect
to continue to contract with established pharmaceutical manufacturers for the production of Ceplene. If we are unable to continue to contract with third-party manufacturers on acceptable terms or our
manufacturers do not comply with applicable regulatory requirements, our ability to conduct clinical testing and to produce commercial quantities of Ceplene and other products will be adversely
affected. If we cannot adequately manufacture our products, it 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 in the future.

We are not profitable and expect to continue to incur losses. If we do not become profitable, we may ultimately be forced to discontinue our operations.

We are a development-stage enterprise. We have experienced net losses every year since our inception and, as of September 30, 2001, had an accumulated
deficit of approximately $197 million. We anticipate incurring substantial additional losses over at least the next several years related to developing and testing our drug candidates and
preparing for commercialization and planned market launches of our products. If we do not become profitable, our stock price will be negatively affected, and we may ultimately be forced to discontinue
our operations.

We may need to raise additional funds in the future. If we are unable to obtain the funds necessary to continue our operations, we may be required to delay, scale back or
eliminate one or more of our drug development programs.

We have already spent substantial funds developing our products and business. We expect to continue to have negative cash flow from our operations for at least
the next several years. We may have to raise additional funds to complete the development of our drug candidates and to bring them to market. Our future capital requirements will depend on numerous
factors, including:



Additional
financing may not be available on acceptable terms, if at all. If adequate funds are not available, we may be required to delay, scale back or eliminate one or more of our
drug 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.

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We compete against many companies and research institutions that are developing products to treat the same diseases as our drug candidates. To the extent these competitors are
successful in developing and marketing such products, our future potential market share and revenues could be reduced.

There are many companies, both publicly and privately held, including well-known pharmaceutical companies and academic and other research
institutions, engaged in developing pharmaceutical products for the treatment of cancer and hepatitis. Products developed by any of these companies or institutions may demonstrate greater safety or
efficacy than our drug candidates or be more widely accepted by doctors, patients or payors. Many of our competitors and potential competitors have substantially greater capital, research and
development capabilities and human resources than we do. Many of these competitors also have significantly greater experience than we do in undertaking preclinical testing and clinical trials of new
pharmaceutical products and obtaining FDA and other regulatory approvals. If any of our drug candidates are approved for commercial sale, we will also be competing with companies that have greater
resources and experience in manufacturing, marketing and selling pharmaceutical products. To the extent that any of our competitors succeed in developing products that are more effective, less costly
or have better side effect profiles than our products, then our future potential market share could decrease which may have a negative impact on our business.

If we fail to secure adequate protection of our intellectual property or the right to use certain intellectual property of others, we may not be able to protect our products
and technologies from competitors.

Our success depends in large part on our ability to obtain, maintain and protect patents and trade secrets and to operate without infringing upon the
proprietary rights of others. If we are unable to do so, our products and technologies may not provide us with any competitive advantage.

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. As a result, patents may not issue from any of our patent applications. Further, at this time most patent applications in the United
States are secret until a patent issues. Under recent statutory changes, some, but not all U.S. patent applications will be published, but only 18 months after filing. Thus, 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 this technology. 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 so that our intellectual
property rights may not protect our technologies or provide commercial advantage to us. In addition, we also rely on unpatented trade secrets and proprietary know-how, and we cannot be
sure that others will not obtain access to or independently develop such trade secrets and know-how. Enforcement of our intellectual property rights against any infringers of our patents
relating to Ceplene and our other technologies will be costly and time-consuming. Because of the nature of those patents, we could be required to bring lawsuits against many different
entities such as hospitals or clinics. This would have the effect of increasing the costs of enforcing our rights.

The
pharmaceutical industry has experienced extensive litigation regarding patent and other intellectual property rights. Although, to date, we are not aware of any intellectual
property claims against us, in the future we could be forced to incur substantial costs in defending ourselves in lawsuits that are brought against us claiming that we have infringed the patent rights
of others or in asserting our patent rights in lawsuits against other parties. We may also be required to participate in interference proceedings declared by the U.S. 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.

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The technology in our sector is developing rapidly, and our future success depends on our ability to keep abreast of technological change.

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. 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. This may result in our inability to develop
commercially feasible products.

The marketability of our products may depend on reimbursement and reform measures in the health care industry.

Our
success may depend, in part, on the extent to which reimbursement for the costs of therapeutic products and related treatments will be available from third-party payors such as
government health administration authorities, private health insurers, managed care programs and other organizations. Over the past decade, the cost of health care has risen significantly, and there
have been numerous proposals by legislators, regulators and third-party health care payors to curb these costs. Some of these proposals have involved limitations on the amount of reimbursement for
certain products. We cannot guarantee that similar federal or state health care legislation will not be adopted in the future or that any products sought to be commercialized by us will be considered
cost-effective or that adequate third-party insurance coverage will be available for us to establish and maintain price levels sufficient for realization of an appropriate return on our
investment in product development. Moreover, the existence or threat of cost control measures could have an adverse effect on the willingness of potential collaborators to pursue research and
development programs related to our products.

We may engage in strategic transactions, which could adversely affect our business.

From
time to time we consider strategic transactions and alternatives with the goal of maximizing stockholder value. For example, in June 2000 we completed the acquisition of
Cytovia, Inc. We will continue to evaluate other potential strategic transactions and alternatives which we believe have the potential to enhance stockholder value. These additional potential
transactions may include a variety of different business arrangements, including spin-offs, acquisitions, strategic partnerships, joint ventures, restructurings, divestitures, business
combinations and investments. We cannot assure you that any such transactions will be consummated on favorable terms or at all, will in fact enhance stockholder value, or will not adversely affect our
business or the trading price of our stock. Any such transaction may require us to incur non-recurring or other charges and may pose significant integration challenges and/or management
and business disruptions, any of which could materially and adversely affect our business and financial results.

Our stock price may be highly volatile due to external factors.

Our common stock currently trades on the Nasdaq National Market and on the OM Stockholm 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 of our common stock and our ability to raise equity capital in the future.

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



External
factors may also adversely affect the market price 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 Nasdaq National Market and the OM Stockholm Exchange, 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.

Certain of our charter and by-law provisions may deter a third party from acquiring us.

Certain
provisions of our charter and by-laws may make it more difficult for a third party to acquire control of us. These provisions include:



We
have also adopted a shareholder rights plan or "poison pill." Our shareholder rights plan is designed to protect our shareholders in the event of an unsolicited bid to acquire the
company. In general terms, the rights plan imposes a significant penalty upon any person or group that acquires 15% or more of our outstanding common stock without the approval of our board of
directors. Our shareholder rights plan could discourage a third party from attempting to acquire us through an acquisition of our outstanding voting stock.

Our
board of directors also has the authority to issue, at any time, without further stockholder approval, up to 5,000,000 shares of preferred stock, and to determine the price,
rights, privileges and preferences of those shares. We have used shares in connection with our shareholder rights plan. Any issuance of preferred stock could discourage a third party from acquiring a
majority of our outstanding voting stock.

Furthermore,
we are subject to the provisions of Section 203 of the DGCL, an anti-takeover law, which may also dissuade a potential acquiror of our common stock.

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ITEM 2. PROPERTIES

We currently lease approximately 69,175 square feet of laboratory and office space in three facilities in San Diego, California. Approximately 7,222 square
feet of laboratory and office space is subleased to third parties. We believe that our existing facilities will be adequate to accommodate the implementation of our current business strategies.

ITEM 3. LEGAL PROCEEDINGS

In December 2000, plaintiff, Blake Martin, on behalf of himself and purportedly on behalf of a class of Company stockholders, filed a complaint in the
United States District Court for the Southern District of California against the Company and two of its officers, alleging violations of federal securities laws
related to declines in the Company's stock price. Thereafter, approximately thirteen similar complaints were filed in the same court (collectively "Southern District Complaints"). In
October 2001, a state court action was filed in the Superior Court in San Diego County, California, alleging fraud and misrepresentation in connection with the Company's acquisition of Cytovia.
The Southern District Complaints have been consolidated into a single action. The complaints allege claims in connection with various alleged statements and omissions to the public and to the
securities markets. In November 2001, the Company filed a petition to compel arbitration of the state court action. In December 2001, the Company filed a motion to dismiss the Southern
District Complaints. No assurances can be made that the Company will be successful in its defense of these claims. If it is not successful in its defense of such claims, the Company could be forced to
make significant payments to its stockholders and their lawyers, and such payments could have a material adverse effect on the Company's business, financial condition and results of operations if not
covered by the Company's insurance carrier. Even if the Company's defense against such claims is successful, the litigation could result in substantial costs and divert management's attention and
resources, which could adversely affect the Company's business.

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, 2001.

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PART II

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



ITEM 6. SELECTED FINANCIAL DATA

The information required by this Item 6 is incorporated herein by reference to the information set forth in our Annual Report to Stockholders for the fiscal
year ended September 30, 2001, 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 of Financial Condition and Results of Operations" in our Annual Report to Stockholders for the fiscal year ended September 30, 2001, filed as Exhibit 13.1 hereto.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The information required by this Item 7A is incorporated herein by reference to the information contained under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in our Annual Report to Stockholders for the fiscal year ended September 30, 2001, filed as Exhibit 13.1 hereto.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item 8 is incorporated herein by reference to the information set forth in our Annual Report to Stockholders for the fiscal
year ended September 30, 2001, filed as Exhibit 13.1 hereto.

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

None.

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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,
2001, for our Annual Meeting of Stockholders to be held on March 1, 2002.

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, 2001,
for our Annual Meeting of Stockholders to be held on March 1, 2002.

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, 2001, for our Annual Meeting of Stockholders to be held on
March 1, 2002.

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, 2001, for our Annual Meeting of
Stockholders to be held on March 1, 2002.

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, 2001, for our Annual Meeting of Stockholders to be held on March 1,
2002.

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PART IV

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



1.Consolidated Financial Statements

The
following financial statements, including the Notes thereto, are incorporated herein by reference to our Annual Report to Stockholders for the fiscal year ended September 30, 2001 filed as Exhibit
13.1 hereto:

Consolidated
Balance Sheets as of September 30, 2001 and 2000

Consolidated
Statements of Operations for the years ended September 30, 2001, 2000, and 1999, and from inception (October 23, 1989) through September 30, 2001

Consolidated
Statements of Stockholders' Equity from inception (October 23, 1989) through September 30, 2001

Consolidated
Statements of Cash Flows for the years ended September 30, 2001, 2000, and 1999, and from inception (October 23, 1989) through September 30, 2001

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.

3.Exhibits



INDEX

|Exhibit Number |  | Description                                                                                                                                                                                                                     
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            |  | Agreement and Plan of Merger and Reorganization dated June 2, 2000 (between the Registrant, M-80 Acquisition Corp. and Cytovia Inc.). (8)                                                                                       
|2.2            |  | Form of Lock-up Agreement dated as of June 16, 2000. (8)                                                                                                                                                                        
|3.1            |  | Amended and Restated Certificate of Incorporation of Registrant. (1)                                                                                                                                                            
|3.2            |  | Certificate of Amendment of Amended and Restated Certificate of Incorporation. (7)                                                                                                                                              
|3.3            |  | Certificate of Designations, Preferences and Relative, Participating, Optional and Other Special Rights of Preferred Stock and Qualifications, Limitations and Restrictions Thereof of Series A Convertible Preferred Stock. (5)
|3.4            |  | Certificate of Designations, Preferences and Relative, Participating, Optional and Other Special Rights of Preferred Stock and Qualifications, Limitations and Restrictions Thereof of Series B Convertible Preferred Stock. (6)
|3.5            |  | Rights Agreement, dated as of June 15, 2000, between the Registrant and American Stock Transfer & Trust Company, as Rights Agents. (9)                                                                                          

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|3.6   |  | Bylaws of Registrant. (1)                                                                                                                                   
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.1   |  | Reference is made to Exhibits 3.1, 3.2, 3.3, 3.4, 3.5, and 3.6.                                                                                             
|10.1  |  | Form of Indemnification Agreement for directors and officers of the Registrant. (1)                                                                         
|10.2  |  | Option to Buy Technology and Rights Agreement, dated March 30, 1993, between the Registrant and Estero Anstalt. (1)                                        
|10.3  |  | Security Agreement, dated July 27,1993, between the Registrant and Estero Anstalt. (1)                                                                     
|10.4  |  | Exclusive License Agreement dated June 14, 1995, among the Registrant, Jan Holmgren, M.D., Ph.D., Cecil Czerkinsky, Duotol AB and Triotol Ltd. (1)         
|10.5  |  | Agreement, dated December 2, 1995, among the Registrant, Syntello Vaccine Development AB and Estero Anstalt. (1)                                           
|10.6  |  | Agreement, dated April 23, 1996, among the Registrant, Anders Vahlne, M.D., Ph.D. and Syntello Vaccine Development AB. (1)                                 
|10.7  |  | Amended and Restated 1993 Long-Term Incentive Plan and forms of stock option agreements. (2)                                                                
|10.8  |  | Employment Agreement dated November 17, 2000 between the Registrant and Kurt R. Gehlsen* (12)                                                               
|10.9  |  | Employment Agreement dated November 17, 2000 between the Registrant and Dale A. Sander* (12)                                                                
|10.10 |  | Employment Agreement dated November 17, 2000 between the Registrant and Larry G. Stambaugh.* (12)                                                           
|10.11 |  | Lease dated May 28, 1998 between Del Mar Capital Group/Ridgeview, LLC, as Landlord, and the Registrant.                                                     
|10.12 |  | Lease dated July 2, 1998 between British Pacific Properties, a California Corporation, as Landlord, and the Registrant. (3)                                 
|10.13 |  | Employment Agreement dated November 17, 2000 between the Registrant and Geoffrey B. Altman.* (12)                                                           
|10.14 |  | License Agreement dated November 6, 1998 among the Registrant, Professional Pharmaceutical, Inc., Bruce A. Jack, D.D.S. and B. Thomas White, R.PH. (4)      
|10.15 |  | Common Stock Purchase Warrant, No. #99AR-1, to purchase 200,000 shares of the Registrant's common stock, issued to The Kriegsman Group on March 3, 1999. (5)
|10.16 |  | Research and License Agreement effective July 10, 2000 with BIOCHEM Pharma Inc. (11)                                                                       
|10.17 |  | Registrant's Collaboration Agreement with Hoffman-LaRoche, Inc. and F. Hoffman-LaRoche Ltd., dated August 7, 2000. (10)                                    
|10.18 |  | Registrant's 2000 Nonstatutory Stock Option Plan. (11)                                                                                                      
|10.19 |  | Secured Revolving Promissory Note dated December 8, 2000 between Larry G. Stambaugh and the Registrant. (11)                                                

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|10.20 |  | Loan and Security Agreement dated October 9, 2000 between the Registrant and Silicon Valley Bank. (12)                                      
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|10.21 |  | Assignment of Deposit Account dated April 11, 2001 between the Registrant, Silicon Valley Bank and Geoffrey B. Altman. (13)                 
|10.22 |  | Assignment of Deposit Account dated April 11, 2001 between the Registrant, Silicon Valley Bank and Kurt R. Gehlsen. (13)                    
|10.23 |  | Assignment of Deposit Account dated April 11, 2001 between the Registrant, Silicon Valley Bank and Dale A. Sander and Denise M. Sander. (13)
|10.24 |  | Loan Modification Agreement dated March 21, 2001 between the Registrant and Silicon Valley Bank. (13)                                       
|10.25 |  | Loan Modification Agreement dated April 25, 2001 between the Registrant and Silicon Valley Bank. (13)                                       
|10.26 |  | Registrant's 2001 Incentive Stock Option Plan. (13)                                                                                         
|10.27 |  | Employment Agreement dated June 30, 2001 between the Registrant and Karl-Hermann Bremeyer.* (14)                                            
|13.1  |  | Registrant's Annual Report to Stockholders for the fiscal year ended September 30, 2001.                                                    
|23.1  |  | Consent of KPMG LLP, Independent Auditors.                                                                                                  
|24.1  |  | Power of Attorney. Reference is made to page 35.                                                                                            

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\

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:                        
| |  |                            

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.

|Signature                                   |  | Title                                                                                                                      |  | Date             
|------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------- |  | -----------------
|                                            |  |                                                                                                                            |  |                  
|/s/LARRY G. STAMBAUGHLarry G. Stambaugh     |  | Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)                                 |  | December 21, 2001
|/s/DALE A. SANDERDale A. Sander             |  | Senior Vice President, Finance, and Chief Financial Officer (Principal Accounting Officer and Principal Financial Officer) |  | December 21, 2001
|/s/THEODOR H. HEINRICHSTheodor H. Heinrichs |  | Director                                                                                                                   |  | December 21, 2001

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|/s/GARY E. FRASHIERGary E. Frashier       |  | Director |  | December 21, 2001
|----------------------------------------- |  | -------- |  | -----------------
|/s/PER-OLOF MÅRTENSSONPer-Olof Mårtensson |  | Director |  | December 21, 2001
|/s/F. DUWAINE TOWNSENF. Duwaine Townsen   |  | Director |  | December 21, 2001

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