**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

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**FORM 10-Q**

 

**(MarkOne)**

 

| **ý**                              |   | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|-----------------------------------------|--------|-----------------------------------------------------------------------------------------------|
|                                    |   |                                                                                          |
| **For the Quarter Ended June 30, 2003** |
|                                    |
| **or**                                  |
|                                    |   |                                                                                          |
| **o**                                   |   | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

**Commission file number 1-14430**

 

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**MAXIMPHARMACEUTICALS, INC.**

(Exact name of registrant asspecified in its charter)

 

| **Delaware**                                               |   | **87-0279983**                     |
|------------------------------------------------------------|--------|------------------------------------|
| (State of  incorporation)                                  |   | (IRS Employer  Identification No.) |
|                                                       |
| **8899 University Center Lane, Suite 400, San  Diego, CA** |   | **92122**                          |
| (Address of  principal executive offices)                  |   | (zip code)                         |
|                                                       |   |                               |
| **(858) 453-4040**                                    |
| (Registrant’s  telephone number, including area code) |

 

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Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports) and (2) has been subject tosuch filing requirements for the past 90 days. Yes ý  No o

 

Indicateby check mark whether the registrant is an accelerated filer (as defined inRule 12b-2 of the Exchange Act).  Yes o No ý

 

As ofAugust 6, 2003, the registrant had 23,394,202 shares of Common Stock, $.001 parvalue, outstanding.

 

 

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**MAXIM PHARMACEUTICALS, INC. ANDSUBSIDIARIES**

*(A Development Stage Company)*

 

**INDEX**

 

| **Part I – Financial Information** |
|-----------------------------------------|
|                                    | Item 1. | Financial Statements |
|                                    |   | Condensed Consolidated Balance Sheets (unaudited)–June 30, 2003 and  September 30, 2002 |
|                                    |   | Condensed Consolidated Statements of  Operations (unaudited)–Three and Nine Months Ended June 30, 2003 and 2002 and  from Inception (October 23, 1989) through June 30, 2003 |
|                                    |   | Condensed Consolidated Statements of Cash Flows (unaudited)–Nine  Months Ended June 30, 2003 and 2002 and from Inception (October 23,  1989) through June 30, 2003 |
|                                    |   | Notes to Condensed Consolidated Financial  Statements (unaudited) |
|                                    | Item 2. | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |
|                                    | Item 3. | Quantitative  and Qualitative Disclosures About Market Risk |
|                                    | Item 4. | Controls  and Procedures |
| **Part II–Other Information**      |
|                                    | Item 1. | Legal Proceedings |
|                                    | Item 6. | Exhibits  and Reports on Form 8-K |
| **SIGNATURES**                          |

 

 

2

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**CONDENSED CONSOLIDATED BALANCE****SHEETS (Unaudited)**

**(in thousands, except share data)**

 

*Maxim Pharmaceuticals, Inc. and Subsidiaries (A DevelopmentStage Company)*

 
|                                                                                                                                                                          |   | **As of June  30  2003** |       | **As of  September 30  2002** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|-------------------------------|--------|
| **ASSETS**                                                                                                                                                                    |   |                     |       |                          |   |
| **Current Assets:**                                                                                                                                                           |   |                     |       |                          |   |
| Cash  and cash equivalents                                                                                                                                                    |   | **$**                    | **9,079**  |                          | $      | 24,775 |   |
| Investments  in marketable securities, available for sale                                                                                                                     |   | **69,249**               |       | 83,216                        |   |
| Accrued  interest and other current assets                                                                                                                                    |   | **1,840**                |       | 3,109                         |   |
| Total  current assets                                                                                                                                                         |   | **80,168**               |       | 111,100                       |   |
|                                                                                                                                                                          |   |                     |       |                          |   |
| Restricted  cash and cash equivalents                                                                                                                                         |   | **3,500**                |       | 3,500                         |   |
| Property  and equipment, net                                                                                                                                                  |   | **4,692**                |       | 5,578                         |   |
| Patents  and licenses, net                                                                                                                                                    |   | **3,332**                |       | 2,893                         |   |
| Note  receivable from officer, net of allowance of $700,000                                                                                                                   |   | **2,287**                |       | 2,409                         |   |
| Deposits  and other assets                                                                                                                                                    |   | **161**                  |       | 164                           |   |
| Total  assets                                                                                                                                                                 |   | **$**                    | **94,140** |                          | $      | 125,644 |   |
|                                                                                                                                                                          |   |                     |       |                          |   |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                                 |   |                     |       |                          |   |
| **Current Liabilities:**                                                                                                                                                      |   |                     |       |                          |   |
| Accounts  payable                                                                                                                                                             |   | **$**                    | **2,110**  |                          | $      | 1,857 |   |
| Accrued  expenses                                                                                                                                                             |   | **4,828**                |       | 2,648                         |   |
| Notes  payable and current portion of long-term debt and obligations under capital  leases                                                                                    |   | **933**                  |       | 1,347                         |   |
| Deferred  revenue                                                                                                                                                             |   | **238**                  |       | 475                           |   |
| Total  current liabilities                                                                                                                                                    |   | **8,109**                |       | 6,327                         |   |
|                                                                                                                                                                          |   |                     |       |                          |   |
| Long-term  debt and obligations under capital leases, excluding current portion                                                                                               |   | **1,038**                |       | 1,684                         |   |
| Provision  for loan guarantee for officer                                                                                                                                     |   | **900**                  |       | 900                           |   |
|                                                                                                                                                                          |   |                     |       |                          |   |
| Commitments  and contingencies                                                                                                                                                |   |                     |       |                          |   |
|                                                                                                                                                                          |   |                     |       |                          |   |
| **Stockholders’ Equity:**                                                                                                                                                |   |                     |       |                          |   |
| Convertible  preferred stock, $.001 par value, 5,000,000 shares authorized; no shares  issued and outstanding at June 30, 2003 and September 30, 2002                         |   | **—**               |       | —                        |   |
| Common  stock, $.001 par value, 40,000,000 shares authorized; 23,390,452 and  23,311,191 shares issued and outstanding at June 30, 2003 and September 30,  2002, respectively |   | **23**                   |       | 23                            |   |
| Additional  paid-in capital                                                                                                                                                   |   | **377,109**              |       | 376,667                       |   |
| Deficit  accumulated during the development stage                                                                                                                             |   | **(293,740**             | **)**      | (261,048                      | )      |
| Accumulated  other comprehensive income                                                                                                                                       |   | **701**                  |       | 1,091                         |   |
| Total  stockholders’ equity                                                                                                                                              |   | **84,093**               |       | 116,733                       |   |
| Total  liabilities and stockholders’ equity                                                                                                                              |   | **$**                    | **94,140** |                          | $      | 125,644 |   |

 

*See Accompanying Notes to Condensed Consolidated FinancialStatements*

 

3

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**CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)**

**(inthousands, except per share amounts)**

 

*MaximPharmaceuticals, Inc. and Subsidiaries (A Development Stage Company)*

 
|                                                                              |   |                            |        |                           |       | **From  Inception  (October 23, 1989)  Through  June 30, 2003** |       |
|-----------------------------------------------------------------------------------|--------|---------------------------------|-------------|--------------------------------|------------|-----------------------------------------------------------------|------------|
|                                                                              |   |                            |        |                           |       |                                                            |
|                                                                              |   | **Three  Months Ended June 30** |        | **Nine  Months Ended June 30** |       |                                                            |
|                                                                              |   | **2003**                        | ** **  | **2002**                       | ** ** | **2003**                                                        | ** ** | **2002** | ** ** |   |
|                                                                              |   |                            |        |                           |       |                                                            |       |   |   |   |   |
| Collaboration  and research revenue                                               |   | **$**                           | **1,300**   | ** **                     | $          | 776                                                             |       | **$** | **2,341** | ** ** | $ | 1,817 |   | $ | 13,329 |   |
|                                                                              |   |                            | ** **  |                           |       |                                                            | ** ** |   |   |   |   |
| Operating  expenses:                                                              |   |                            | ** **  |                           |       |                                                            | ** ** |   |   |   |   |
| Research  and development                                                         |   | **11,583**                      | ** **  | 7,631                          |       | **29,812**                                                      | ** ** | 23,501 |   | 203,064 |   |
| Business  development and marketing                                               |   | **360**                         | ** **  | 885                            |       | **1,078**                                                       | ** ** | 2,268 |   | 21,354 |   |
| General  and administrative                                                       |   | **2,255**                       | ** **  | 1,502                          |       | **6,102**                                                       | ** ** | 4,981 |   | 38,692 |   |
| Amortization  of goodwill and other acquisition-related intangible assets         |   | **—**                      | ** **  | —                         |       | **—**                                                      | ** ** | — |   | 2,955 |   |
| Purchased  in-process technology                                                  |   | **—**                      | ** **  | —                         |       | **—**                                                      | ** ** | — |   | 42,300 |   |
| Provisions  for note receivable and loan guarantee to/for officers                |   | **—**                      | ** **  | —                         |       | **—**                                                      | ** ** | — |   | 1,600 |   |
| Total  operating expenses                                                         |   | **14,198**                      | ** **  | 10,018                         |       | **36,992**                                                      | ** ** | 30,750 |   | 309,965 |   |
|                                                                              |   |                            | ** **  |                           |       |                                                            | ** ** |   |   |   |   |
| Loss  from operations                                                             |   | **(12,898**                     | **)**       | (9,242                         | )          | **(34,651**                                                     | **)**      | (28,933 | ) | (296,636 | ) |
|                                                                              |   |                            | ** **  |                           |       |                                                            | ** ** |   |   |   |   |
| Other  income (expense):                                                          |   |                            | ** **  |                           |       |                                                            | ** ** |   |   |   |   |
| Investment  income                                                                |   | **546**                         | ** **  | 1,132                          |       | **2,038**                                                       | ** ** | 4,015 |   | 29,394 |   |
| Gain  on sale of assets                                                           |   | **—**                      | ** **  | —                         |       | **—**                                                      | ** ** | — |   | 4,435 |   |
| Interest  expense                                                                 |   | **(31**                         | **)**       | (45                            | )          | **(98**                                                         | **)**      | (136 | ) | (2,769 | ) |
| Other  income (expense)                                                           |   | **2**                           | ** **  | (1                             | )          | **19**                                                          | ** ** | 10 |   | 15 |   |
| Total  other income                                                               |   | **517**                         | ** **  | 1,086                          |       | **1,959**                                                       | ** ** | 3,889 |   | 31,075 |   |
|                                                                              |   |                            | ** **  |                           |       |                                                            | ** ** |   |   |   |   |
| Loss  before cumulative effect of accounting change and preferred stock dividends |   | **(12,381**                     | **)**       | (8,156                         | )          | **(32,692**                                                     | **)**      | (25,044 | ) | (265,561 | ) |
|                                                                              |   |                            | ** **  |                           |       |                                                            | ** ** |   |   |   |   |
| Cumulative  effect of accounting change                                           |   | **—**                      | ** **  | —                         |       | **—**                                                      | ** ** | (28,179 | ) | (28,179 | ) |
|                                                                              |   |                            | ** **  |                           |       |                                                            | ** ** |   |   |   |   |
| Net  loss before preferred stock dividends                                        |   | **(12,381**                     | **)**       | (8,156                         | )          | **(32,692**                                                     | **)**      | (53,223 | ) | (293,740 | ) |
| Dividends  on preferred stock                                                     |   | **—**                      | ** **  | —                         |       | **—**                                                      | ** ** | — |   | 5,496 |   |
|                                                                              |   |                            | ** **  |                           |       |                                                            | ** ** |   |   |   |   |
| Net  loss applicable to common stock                                              |   | **$**                           | **(12,381** | **)**                          | $          | (8,156                                                          | )          | **$** | **(32,692** | **)** | $ | (53,223 | ) | $ | (299,236 | ) |
|                                                                              |   |                            | ** **  |                           |       |                                                            | ** ** |   |   |   |   |
| Basic  and diluted net loss per share of common stock                             |   |                            | ** **  |                           |       |                                                            | ** ** |   |   |   |   |
| Excluding  cumulative effect of accounting change                                 |   | **$**                           | **(0.53**   | **)**                          | $          | (0.35                                                           | )          | **$** | **(1.40** | **)** | $ | (1.08 | ) |   |   |
| Cumulative  effect of accounting change                                           |   | **—**                      | ** **  | —                         |       | **—**                                                      | ** ** | (1.21 | ) |   |   |
|                                                                              |   |                            | ** **  |                           |       |                                                            | ** ** |   |   |   |   |
| Basic  and diluted net loss per share of common stock                             |   | **$**                           | **(0.53**   | **)**                          | $          | (0.35                                                           | )          | **$** | **(1.40** | **)** | $ | (2.29 | ) |   |   |
|                                                                              |   |                            | ** **  |                           |       |                                                            | ** ** |   |   |   |   |
| Weighted  average shares outstanding                                              |   | **23,341,034**                  | ** **  | 23,280,137                     |       | **23,327,660**                                                  | ** ** | 23,266,487 |   |   |   |

 

*See Accompanying Notes to Condensed Consolidated FinancialStatements*

 

4

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**CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)**

**(Inthousands)**

 

*MaximPharmaceuticals, Inc. and Subsidiaries (A Development Stage Company)*

 
|                                                                                    |   |                           | ** **  | **From  Inception  (October 23, 1989)  Through  June 30, 2003** |       |
|-----------------------------------------------------------------------------------------|--------|--------------------------------|-------------|-----------------------------------------------------------------|------------|
|                                                                                    |   |                           |        |                                                            |
|                                                                                    |   | **Nine  Months Ended June 30** |        |                                                            |
|                                                                                    |   | **2003**                       | ** **  | **2002**                                                        | ** ** |   |
| **OPERATING ACTIVITIES:**                                                               |   |                           |        |                                                            |       |   |   |
| Net  loss                                                                               |   | **$**                          | **(32,692** | **)**                                                           | $          | (53,223 | ) | $ | (293,740 | ) |
| Adjustments  to reconcile net loss to net cash used in operating activities:            |   |                           |        |                                                            |       |   |   |
| Depreciation  and amortization                                                          |   | **1,762**                      |        | 1,700                                                           |       | 11,986 |   |
| Stock  contributions to 401(k) plan                                                     |   | **46**                         |        | 153                                                             |       | 643 |   |
| Cumulative  effect of accounting change                                                 |   | **—**                     |        | 28,179                                                          |       | 28,179 |   |
| Stock-based  compensation                                                               |   | **78**                         |        | —                                                          |       | 1,352 |   |
| Loss  (gain) on disposal of property and equipment                                      |   | **6**                          |        | (2                                                              | )          | 287 |   |
| Provisions  for note receivable and loan guarantees to/for officers                     |   | **—**                     |        | —                                                          |       | 1,600 |   |
| Purchased  in-process technology                                                        |   | **—**                     |        | —                                                          |       | 44,946 |   |
| Gain  on sale of assets                                                                 |   | **—**                     |        | —                                                          |       | (2,146 | ) |
| Amortization  of premium on investments                                                 |   | **—**                     |        | —                                                          |       | 535 |   |
| Cumulative  effect of reorganization                                                    |   | **—**                     |        | —                                                          |       | 1,153 |   |
| Gain  on sale of subsidiary                                                             |   | **—**                     |        | —                                                          |       | (2,288 | ) |
| Other                                                                                   |   | **—**                     |        | —                                                          |       | 160 |   |
| Changes  in operating assets and liabilities:                                           |   |                           |        |                                                            |       |   |   |
| Accrued  interest and other current assets                                              |   | **1,269**                      |        | 1,569                                                           |       | (245 | ) |
| Deposits  and other assets                                                              |   | **3**                          |        | 206                                                             |       | (657 | ) |
| Accounts  payable                                                                       |   | **253**                        |        | (1,987                                                          | )          | 1,018 |   |
| Accrued  expenses                                                                       |   | **2,180**                      |        | (132                                                            | )          | 3,531 |   |
| Deferred  revenue                                                                       |   | **(237**                       | **)**       | (448                                                            | )          | 238 |   |
| Net  cash used in operating activities                                                  |   | **(27,332**                    | )           | (23,985                                                         | )          | (203,448 | ) |
|                                                                                    |   |                           |        |                                                            |       |   |   |
| **INVESTING ACTIVITIES:**                                                               |   |                           |        |                                                            |       |   |   |
| Purchases  of marketable securities                                                     |   | **(37,768**                    | **)**       | (53,598                                                         | )          | (426,303 | ) |
| Sales  and maturities of marketable securities                                          |   | **51,345**                     | ** **  | 76,800                                                          |       | 358,258 |   |
| Purchases  of property and equipment                                                    |   | **(683**                       | **)**       | (945                                                            | )          | (10,733 | ) |
| Additions  to patents and licenses                                                      |   | **(588**                       | **)**       | (954                                                            | )          | (6,104 | ) |
| Net  proceeds from sale of assets                                                       |   | **—**                     | ** **  | 55                                                              |       | 3,452 |   |
| Cash  acquired in acquisition of business                                               |   | **—**                     | ** **  | —                                                          |       | 1,121 |   |
| Net  cash provided by (used in) investing activities                                    |   | **12,306**                     | ** **  | 21,358                                                          |       | (80,309 | ) |
|                                                                                    |   |                           | ** **  |                                                            |       |   |   |
| **FINANCING ACTIVITIES:**                                                               |   |                           | ** **  |                                                            |       |   |   |
| Net  proceeds from issuance of common stock and exercise of stock options and  warrants |   | **318**                        | ** **  | 53                                                              |       | 253,604 |   |
| Net  proceeds from issuance of preferred stock                                          |   | **—**                     | ** **  | —                                                          |       | 41,298 |   |
| Payment  of preferred stock dividends                                                   |   | **—**                     | ** **  | —                                                          |       | (302 | ) |
| Proceeds  from issuance of notes payable, capital lease and long-term debt              |   | **—**                     | ** **  | 475                                                             |       | 9,318 |   |
| Restricted  cash                                                                        |   | **—**                     | ** **  | —                                                          |       | (3,500 | ) |
| Payments  on notes payable, long-term debt, and capital lease obligations               |   | **(1,110**                     | **)**       | (796                                                            | )          | (8,247 | ) |
| Proceeds  from issuance of notes payable to related parties                             |   | **—**                     | ** **  | —                                                          |       | 4,982 |   |
| Payments  on notes payable to related parties                                           |   | **—**                     | ** **  | —                                                          |       | (1,330 | ) |
| Loan  to officer                                                                        |   | **122**                        | ** **  | (97                                                             | )          | (2,987 | ) |
| Net  cash provided by (used in) financing activities                                    |   | **(670**                       | **)**       | (365                                                            | )          | 292,836 |   |
|                                                                                    |   |                           | ** **  |                                                            |       |   |   |
| Net  increase (decrease) in cash and cash equivalents                                   |   | **(15,696**                    | **)**       | (2,992                                                          | )          | 9,079 |   |
|                                                                                    |   |                           | ** **  |                                                            |       |   |   |
| Cash  and cash equivalents at beginning of period                                       |   | **24,775**                     | ** **  | 20,439                                                          |       | — |   |
|                                                                                    |   |                           | ** **  |                                                            |       |   |   |
| Cash  and cash equivalents at end of period                                             |   | **$**                          | **9,079**   | ** **                                                      | $          | 17,447 |   | $ | 9,079 |   |
|                                                                                    |   |                           | ** **  |                                                            |       |   |   |
| Noncash  investing activities:                                                          |   |                           | ** **  |                                                            |       |   |   |
| Acquisition  of property and equipment under capital lease                              |   | **$**                          | **51**      | ** **                                                      | $          | — |   | $ | 271 |   |
| Increase  (decrease) in fair value of securities available for sale                     |   | **$**                          | **(390**    | **)**                                                           | $          | (499 | ) | $ | 705 |   |

 

*See Accompanying Notes to Condensed Consolidated FinancialStatements*

 

5

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**NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****(Unaudited)**

*Maxim Pharmaceuticals, Inc. and Subsidiaries (A Development StageCompany)*

 

**1.****                                      PRINCIPLESOF INTERIM PERIOD REPORTING**

 

MaximPharmaceuticals, Inc. (the “Company”) has not earned significant revenuesfrom planned principal operations. Accordingly, the Company’s activities havebeen accounted for as those of a “Development Stage Enterprise” as set forth inFinancial Accounting Standards Board Statement No. 7.

 

Theinformation at June 30, 2003 and for the three and nine months ended June 30,2003 and 2002 and from inception (October 23, 1989) through June 30, 2003 isunaudited. In the opinion of the Company, these condensed consolidatedfinancial statements contain all of the adjustments, consisting only of normalrecurring adjustments and accruals, necessary to present fairly the condensedconsolidated financial position of the Company as of June 30, 2003 andSeptember 30, 2002, and the condensed consolidated results of operationsfor the three and nine months ended June 30, 2003 and 2002 and from inception(October 23, 1989) through June 30, 2003. The condensed consolidatedresults of operations for the three and nine months ended June 30, 2003 are notnecessarily indicative of the results to be expected in subsequent periods orfor the year as a whole. For further information, refer to the consolidatedfinancial statements and footnotes thereto in our Annual Report onForm 10-K for the year ended September 30, 2002.

 

**2.****                                      SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES**

 

*Stock Option Plans*-The Company accounts for its stock optionplans under the recognition and measurement principles of APB Opinion No. 25,“Accounting for Stock Issued to Employees”,**andrelated Interpretations.  No stock-basedemployee compensation cost is reflected in net income, as all options grantedunder those plans had an exercise price equal to the market value of theunderlying common stock on the date of grant. The following table illustrates the effect on net income and earnings pershare if the Company had applied the fair value recognition provisions of FASBStatement No. 123, “Accounting for Stock-Based Compensation”,**to stock-based employee compensation.

 
|                                                                                                           |   | **Three  Months Ended** |    | **Nine  Months Ended** |   |
|----------------------------------------------------------------------------------------------------------------|--------|-------------------------|---------|------------------------|--------|
|                                                                                                           |   | **June 30,  2003**      |    | **June 30,  2002**     |   | **June 30,  2003** |   | **June 30,  2002** |   |
| Net loss, as reported                                                                                          |   | $                       | (12,381 | )                      | $      | (8,156 | ) | $ | (32,692 | ) | $ | (53,223 | ) |
| Add: Total stock-based employee compensation expense determined under  fair value based methods for all awards |   | (924                    | )       | (891                   | )      | (2,747 | ) | (3,554 | ) |
| Pro forma net loss                                                                                             |   | $                       | (13,305 | )                      | $      | (9,047 | ) | $ | (35,439 | ) | $ | (56,777 | ) |
|                                                                                                           |   |                    |    |                   |   |   |   |   |   |
| Net loss per share:                                                                                            |   |                    |    |                   |   |   |   |   |   |
| Basic and diluted-as reported                                                                                  |   | $                       | (0.53   | )                      | $      | (0.35 | ) | $ | (1.40 | ) | $ | (2.29 | ) |
| Basic and diluted- pro forma                                                                                   |   | $                       | (0.57   | )                      | $      | (0.39 | ) | $ | (1.52 | ) | $ | (2.44 | ) |

 

6

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The fair value of the stock options were estimated at the date of grantusing the “Black-Scholes” method for option pricing and the followingweighted-average assumptions for the three and nine months ended, June 30, 2003and 2002, respectively:

 
|                         |   | **Three  Months Ended** |   | **Nine  Months Ended** |   |
|------------------------------|--------|-------------------------|--------|------------------------|--------|
|                         |   | **June 30,  2003**      |   | **June 30,  2002**     |   | **June 30,  2003** |   | **June 30,  2002** |   |
| Risk free interest rate      |   | 2.81                    | %      | 2.68                   | %      | 2.81 | % | 2.68 | % |
| Dividend Yield               |   | 0                       |   | 0                      |   | 0 |   | 0 |   |
| Volatility Factor            |   | 75                      | %      | 86                     | %      | 75 | % | 86 | % |
| Expected Life (in years)     |   | 6                       |   | 6                      |   | 6 |   | 6 |   |
| Resulting average fair value |   | $                       | 2.51   |                   | $      | 2.95 |   | $ | 1.58 |   | $ | 3.60 |   |
|                              |        |                         |        |                        |        |  |  |  |  |  |  |  |  |

 

**3.****                                      TOTALOTHER COMPREHENSIVE LOSS**

 

Totalother comprehensive loss for the three months ended June 30, 2003 and 2002 was$12,554,000 and $7,390,000, respectively. Total other comprehensive loss for the nine months ended June 30, 2003and 2002 was $33,082,000 and $53,723,000, respectively.  The difference between total othercomprehensive loss and net loss attributable to common stock was composed ofunrealized gains and losses on available-for-sale securities.

 

**4.****                                      NETLOSS PER SHARE**

 

Netloss per share is calculated in accordance with Statement of FinancialAccounting Standards No. 128 “Earnings per Share.” Basic net loss pershare of common stock is computed by dividing the net loss after deduction ofdividends on preferred stock by the weighted average number of shares of commonstock outstanding during the period. Diluted loss per share is calculated byincluding the additional common shares issuable upon exercise of outstandingoptions and warrants in the basic weighted average share calculation unless theeffect of their inclusion is antidilutive. For the quarters ended June 30, 2003and 2002, outstanding options and warrants totaled 3,991,462 and 3,179,988,respectively. As these securities were antidilutive, diluted loss per shareequaled basic loss per share in each respective period.

 

**5.****                                      ADOPTIONOF NEW ACCOUNTING PRONOUNCEMENT—GOODWILL AND OTHER INTANGIBLE ASSETS**

 

OnJune 16, 2000, the Company acquired all of the outstanding capital stock ofCytovia, Inc. (“Cytovia”), a privately held biopharmaceutical research company.The transaction was accounted for using the purchase method of accounting inaccordance with Accounting Principles Board (APB) Opinion No. 16. The Companyrecorded goodwill and other intangible assets, consisting of assembledworkforce, that combined had an unamortized book value of $28,179,000 atSeptember 30, 2001. Through September 30, 2001, goodwill and assembledworkforce were being amortized over 15 years and five years, respectively.

 

Effective October 1, 2001,the Company adopted the provisions of Statement of Financial AccountingStandard (“SFAS”) No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 142requires that goodwill and intangible assets with indefinite useful lives nolonger be amortized,

 

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but instead be tested for impairment at leastannually. SFAS No. 142 also requires that intangible assets with definiteuseful lives be amortized over their respective estimated useful lives to theirestimated residual values, and reviewed for impairment in accordance with SFASNo. 121, “Accounting for the Impairment of Long-Lived Assets to Be DisposedOf”.

 

Asa result of the adoption of SFAS No. 142, the Company ceased amortizinggoodwill on October 1, 2001, and performed the transitional impairmentassessment of the goodwill related to the Cytovia acquisition for impairment asof October 1, 2001.  Althoughthe goodwill arose from purchase accounting applied to the acquisition of aspecific entity, SFAS No. 142 requires that this test be applied to therelevant “reporting unit” which may differ from the specific entity acquired.Due to the integrated nature of the Company’s operations, the entire Companywas determined to be one single reporting unit. Under the provisions of SFASNo. 142, the Company was required for the first time to determine theimpairment of goodwill by first comparing the fair value of the Company, withthe fair value based on the market price of the Company’s common stock, to thecarrying value of its assets, including goodwill. As this analysis indicated animpairment of goodwill, the Company was required to measure the amount ofimpairment by comparing the “implied” fair value of the goodwill to itscarrying amount.

 

The analyses performed underSFAS No. 142 resulted in an implied fair value of the goodwill of zero.Therefore, a charge of $28,179,000 was recorded during the quarter endedDecember 31, 2001 reflecting the cumulative effect of change in accountingprinciple resulting from the adoption of SFAS No. 142 and the related writedown of goodwill.

 

**6.****                                      RECLASSIFICATIONS**

 

Certainamounts in the prior period financial statements have been reclassified toconform with current period classifications.

 

**7.****                                      RELATEDPARTY TRANSACTIONS**

 

In December 2000,the Company entered into a secured revolving promissory note with an officer ofthe Company. The purpose of the agreement was to allow the repayment of marginloans associated with the exercise of stock options, the payment of incometaxes associated with such exercises and the purchase of a residence.  The Board determined that it was in theCompany’s best interest to provide the loan to the officer to avoid thenecessity of selling personal holdings of the Company’s securities during aperiod of depressed market prices.  Thenote, as amended, bears interest at an annual rate of 4.0% and is secured bythe officer’s outstanding options and shares of common stock. During thequarter ended September 30, 2002, the Company determined that the note to theofficer had become impaired because the Company determined that the officer didnot have the ability to repay the loan in full when due.  Accordingly, the Company has not recordedinterest income of $127,000 on the note subsequent to June 30, 2002 and hasrecorded an allowance on the note in the amount of $700,000.  In December 2002, the officer paid theCompany $122,000 of interest due on the note. The entire outstanding balance of principal and interest was due onDecember 8, 2002.  As of the date thenote came due, the officer did not have the liquid assets necessary to repaythe loan.  The Company is reviewing itsoptions and alternatives and intends to collect the outstanding principal

 

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and interest on the loan.  As ofJune 30, 2003, the recorded outstanding principal and interest balance on thenote was $2,287,000, net of the $700,000 allowance.

 

At June 30, 2003, the Company was a guarantor on $1,800,000 in loansmade by a bank to two officers and one former officer of the Company. Under theguarantor agreement executed in July 2001, the Company granted the bank asecurity interest in a $1,800,000 certificate of deposit as collateral for theloans the bank made to the officers. The purpose of the guarantees was to allowthe payment of income taxes associated with the exercise of stock options.  The Board determined that it was in theCompany’s best interest to provide the guarantees to avoid the necessity of theofficers selling personal holdings of the Company’s securities during a periodof depressed market prices.  These loansare due in July 2004.  The Company doesnot hold any assets as collateral for the guarantees; however, in a case ofdefault the Company would pursue collection from the individuals.  During the fourth quarter of fiscal year2002, the Company determined that it was probable that one of the officerswould not have the ability to repay his loan. Therefore, the Company recorded aliability in the amount of $900,000. The Company intends to collect from the officer any amounts that mayultimately be paid by the Company to the bank as a result of the guarantee onbehalf of the officer.

 

**8.****                                      CONTINGENCIES**

 

On December 14,2000 plaintiff, Blake Martin, on behalf of himself and purportedly on behalf ofa class of others similarly situated, filed a complaint in the United StatesDistrict Court for the Southern District of California against the Company andtwo officers of the Company, alleging violations of federal securities lawsrelated to declines in the Company’s stock price in connection with variousstatements and alleged omissions to the public and to the securities markets,and seeking damages therefore. Thereafter, approximately thirteen similarcomplaints were filed in the Southern District.  The Southern District complaints have been consolidated into asingle action.  No discovery has beenconducted.  The Company successfullybrought motions to dismiss the consolidated complaint and a second amendedcomplaint.  The plaintiff then filed athird amended complaint, and the Company’s motion to dismiss the third amendedcomplaint is currently under consideration by the court.  The complaint has been tendered to the Company’sinsurance carrier.

 

In October 2001 and May2002, certain former shareholders of Cytovia filed complaints in CaliforniaSuperior Court in San Diego against the Company and two of its officers basedon similar facts and circumstances, alleging fraud and negligentmisrepresentation in connection with the Company’s acquisition of Cytovia. TheSuperior Court subsequently issued an order compelling the first lawsuit to abinding arbitration forum, and the second lawsuit has been stayed pendingresolution of the arbitration proceeding. A bindingarbitration proceeding with the American Arbitration Association was held inMay 2003.  In May 2003, the three-memberarbitration panel rejected all of the claims asserted by certain formershareholders of Cytovia, Inc. and determined that Maxim has no liability forsuch claims.  In its interim decisionthe panel also determined that Maxim should be awarded reasonable attorneyfees, costs and expenses in an amount yet to be determined.  The arbitration panel has not yet issued itsfinal award.  No amounts have beenrecorded in the Company’s financial statements related to the recovery of theseexpenses.

 

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The Company believes thatthe claims set forth in the pending complaints are without merit, and itintends to engage in a rigorous defense against such claims.  Noassurances can be made that the Company will be successful in its defense ofthese claims. If the Company is not successful in its defense of such claims,the Company could be forced to make significant payments to its stockholders,the plaintiffs and defense lawyers, and such payments could have a materialadverse effect on the Company’s business, financial condition and results ofoperations if not covered by the Company’s insurance carrier. Even if theCompany’s defense against such claims is successful, the litigation couldresult in substantial costs and divert management’s attention and resources,which could adversely affect the Company’s business.

 

Asdiscussed in Footnote 7, Related Party Transactions, the Company is a guarantoron $1,800,000 in loans made by a bank to two officers and one former officer ofthe Company.

 

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**ITEM2.****  MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

*Maxim Pharmaceuticals, Inc. and Subsidiaries (A DevelopmentStage Company)*

 

*This Management’s Discussion and Analysis of FinancialCondition and Results of Operations contains certain forward-looking statementsthat involve risks and uncertainties. Such forward-looking statements includebut are not limited to statements regarding plans for the development andcommercialization of the Company’s drug candidates and future cash requirements.Such statements are only predictions and the Company’s actual results coulddiffer materially from those anticipated or projected in such forward-lookingstatements. Moreover, the Company assumes no responsibility for the accuracyand completeness of the forward-looking statements.  The Company is under no duty to update any of the forward-lookingstatements after the date hereof to conform such statements to actual resultsor to changes in its expectations. Factors that could cause or contribute to such differences include, butare not limited to, those discussed in the section entitled “Risk Factors”contained in this Quarterly Report. As a result, you are cautioned not to relyon these forward-looking statements.*

 

*This Management’s Discussion and Analysis of FinancialCondition and Results of Operations should be read in conjunction with thecondensed consolidated financial statements, including the related notes,appearing in Item 1 of this Quarterly Report on Form 10-Q as well as theCompany’s Annual Report on Form 10-K for the year ended September 30, 2002.*

 

# **CRITICAL ACCOUNTING POLICIES**

 

The preparation of condensedconsolidated financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires the Company to makeestimates and judgments that affect the reported amounts of assets,liabilities, revenues and expenses as well as related disclosure of contingentassets and liabilities. These estimates include useful lives for fixed assets,useful lives for intellectual property, estimated lives for license agreements,revenue recognition, allowance for note receivable, reserve related to loanguarantees, valuation of intellectual property, and estimates for clinicaltrial expenses incurred but not yet billed. On an on-going basis, the Company evaluates its estimates. The Companybases its estimates on historical experience and various other assumptions thatare believed to be reasonable under the circumstances. Under differentassumptions or conditions these estimates may vary significantly. In addition,actual results may differ materially from these estimates.

 

TheCompany believes the following critical accounting policies affect its moresignificant judgments and estimates used in the preparation of its condensedconsolidated financial statements.

 

*Revenue Recognition.*  TheCompany’s collaborative development agreements generally contain specificpayments for specific activities or elements of the agreements. Up-fronttechnology access fees are recognized over the term of the agreement or ongoingresearch period, as applicable, unless the Company has no further continuingperformance obligations related to the fees. Research funding is recognizedover the applicable research period as research activities are performed.Milestone payments are recognized when earned, as the milestone events aresubstantive and their achievability is not reasonably assured at the inceptionof the agreement.

 

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Amounts received but unearned are recorded asdeferred revenue.  Certain collaborativeagreements provide the Company donated materials and services which arerecorded when used at the fair market value of the material received or theservice provided.

 

*Clinical trial expenses.*  TheCompany accounts for certain study drug, clinical trial site and other clinicaltrial costs by estimating the services incurred but not reported for eachpatient enrolled in each trial. These costs and estimates vary based on thetype of clinical trial, the site of the clinical trial, the length of treatmentperiod for each patient and the length of time required to receive formaldocumentation of the actual expenses incurred. As actual costs become known,the Company may need to revise its estimated accrual, which could alsomaterially affect its results of operations.

 

*Valuation of Intellectual Property.*  TheCompany evaluates its patents and licenses for impairment on an annual basisand whenever indicators of impairment exist. During this process, the Companyreviews its portfolio of pending domestic and international patentapplications, domestic and international issued patents, and licenses theCompany has acquired from other parties. To determine if any impairment ispresent, the Company considers challenges or potential challenges to itsexisting patents, the likelihood of applications being issued, the scope of itsissued patents and its experience. In the event that it is determined that animpairment exists where the Company had previously determined that one did notexist, it may result in a material adjustment to the Company’s financialstatements.

 

**RESULTSOF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2003 AND 2002**

 

*Collaboration and Research Revenue–*Forthe quarter ended June 30, 2003, collaboration and research revenue was$1,300,000, an increase of $524,000 over the same period in the prioryear.  Collaboration and researchrevenue for the nine-month period ended June 30, 2003 totaled $2,341,000, anincrease of $524,000 over the same period in the prior year.  These increases were primarily attributableto the increase in donated drugs and services which we receive from ScheringPlough for our Phase 2 triple-drug combination therapy for the treatment ofpatients infected with Hepatitis C who failed to respond to prior therapytrial, offset by a decrease in contract research income from Shire BioChem asthe agreement was completed in the prior year.

 

*Research and Development Expenses*–Research anddevelopment expenses for the quarter ended June 30, 2003 totaled $11,583,000,an increase of $3,952,000, or 52%, over the same period in the prior year.  For the nine months ended June 30, 2003,research and development expenses were $29,812,000, an increase of $6,311,000or 27% over the same period in the prior year. These increases were primarily due to increased expenses associated withour ongoing Phase 3 clinical trial of Cepleneäfor the treatment of patients with advanced metastatic melanoma with livermetastases, and our Phase 2 triple-drug combination therapy trial for thetreatment of patients infected with Hepatitis C, as well as an increase inexpenses related to development of an oral formulation of histamine, the activeagent underlying Ceplene.  Theseincreases were offset by a decrease in expenses related to completednon-clinical development studies which included chronic toxicology studies forCeplene.

 

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*Business Development and Marketing Expenses–*Businessdevelopment and marketing expenses for the quarter ended June 30, 2003 were$360,000, a decrease of $525,000, or 59%, from the same period of the prioryear. Business development and marketing expenses for the nine months endedJune 30, 2003 were $1,078,000, a decrease of $1,190,000, or 53%, from the sameperiod of the prior year.  Thesedecreases were due to a decrease in sales and marketing personnel during thefirst quarter of fiscal year 2003.

 

*General and Administrative Expenses–*Forthe quarter ended June 30, 2003, general and administrative expenses were$2,255,000, an increase of $753,000, or 50% from the quarter ended June 30,2002.  General and administrativeexpenses for the nine months ended June 30, 2003 were $6,102,000 an increase of$1,121,000 or 23%, over the same period in the prior year.  These increases were primarily a result ofincreased legal expenses related to the shareholder litigation and the May 2003state arbitration proceedings.

 

*Other Income–*Investmentincome was $546,000 for the quarter ended June 30, 2003, a decrease of$586,000, or 52%, from the same period in the prior year. Investment income forthe nine months ended June 30, 2003 was $2,038,000, a decrease of $1,977,000 or49% from the same period in the prior year. These decreases were a result of the decrease in investment balances andthe rate of earnings due to reductions in interest rates.

 

*Cumulative Effect of Change in AccountingPrinciple*—The non-cash $28,179,000 charge recordedduring the nine months ended June 30, 2002 reflects the write down of thecarrying value of goodwill associated with the Cytovia acquisition recorded asa result of the adoption, effective October 1, 2001, of SFAS No. 142,“Accounting for Goodwill and Other Intangible Assets”.

 

*Net Loss Applicable to Common Stock–*Netloss applicable to common stock for the quarter ended June 30, 2003 totaled$12,381,000, an increase of $4,225,000, or 52%, from the same period in theprior year. This increase was primarily due to the increase in research anddevelopment expenses and general and administrative expenses, as well as thedecrease in investment income, partially offset by the decrease in businessdevelopment and marketing expenses and the increase in collaboration revenue,as described above.  Net loss applicableto common stock for the nine months ended June 30, 2003 totaled $32,692,000, adecrease of $20,531,000, or 39%, from the same period in the prior year.  The decrease was primarily a result of thecumulative effect of change in accounting principle which occurred in October2001, partially offset by the increase in research and development expenses, asdescribed above.

 

#### **LIQUIDITY AND CAPITAL RESOURCES**

 

The Companyhas financed its operations primarily through the sale of its equitysecurities, including an initial public offering in 1996, an internationalfollow-on public offering in 1997, private offerings of preferred stock in Julyand November 1999 and a follow-on public offering in February 2000, thatprovided total net proceeds of approximately $294 million.

 

Untilrequired for operations, the Company’s policy under established guidelines isto keep its cash reserves in bank deposits, corporate debt securities, UnitedStates government

 

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instrumentsand other readily marketable debt instruments, all of which areinvestment-grade quality.  As of June30, 2003, the Company had cash, cash equivalents and investments (includingrestricted cash) totaling approximately $81.8 million compared with $111.5 millionat September 30, 2002.  As of June 30,2003, the Company had working capital of approximately $72.1 million comparedwith $104.8 million at September 30, 2002. The decrease in the Company’s cash, cash equivalents and investments,and working capital was primarily due to day-to-day operating expenses relatingto research and development activities.

 

In December 2000, the Company entered into a securedrevolving promissory note with an officer of the Company.  The note, as amended, bears interest at anannual rate of 4.0% and is secured by the officer’s outstanding options andshares of common stock.  The Companydetermined that the note to the officer is impaired because the officer did nothave the ability to repay the loan in full when due.  Accordingly, the Company has not recorded interest income of$127,000 on the note subsequent to June 30, 2002, and has recorded an allowanceon the note in the amount of $700,000. In December 2002, the officer paid the Company $122,000 of interest dueon the note.  The entire outstandingbalance of principal and interest was due on December 8, 2002.  The Company is reviewing its options andalternatives and intends to collect the outstanding principal and interest onthe loan.  As of June 30, 2003, therecorded outstanding principal and interest balance on the note was $2,287,000,net of the $700,000 allowance.

 

The Company isa guarantor on $1,800,000 in loans made by a bank to two officers and oneformer officer of the Company. Under the guarantor agreement executed in July2001, the Company granted the bank a security interest in a $1,800,000certificate of deposit as collateral for the loans the bank made to theofficers.  These loans are due in July2004.  The Company does not hold anyassets as collateral for the guarantees; however, in a case of default theCompany would pursue collection from the officers or former officer.  During the fourth quarter of fiscal year2002, the Company determined that it was probable that one of the officerswould not have the ability to repay his loan. Therefore, the Company recorded a liability in the amount of  $900,000. The Company intends to collect from the officer any amounts that mayultimately be paid by the Company to the bank as a result of the guarantee onbehalf of the officer.

 

TheCompany has term loans with a bank totaling $1,839,000 at June 30, 2003, theproceeds of which were used to finance capital expenditures.  The loans require the Company to maintain aminimum aggregate balance of $3,500,000 at the institution, including the$1,800,000 certificate of deposit held under the loan guarantees, as describedabove.

 

TheCompany, as a development stage enterprise, anticipates incurring substantialadditional losses at least in the near future as it continues to expendsubstantial amounts on its ongoing and planned clinical trials and its expandedefforts related to its other research and development efforts, including theapoptosis modulator program.  Inaddition, the Company’s cash

 

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requirements may fluctuate infuture periods as it conducts additional research and development activitiesincluding clinical trials, other research and development activities, andefforts associated with the commercial launch of any products that are approvedfor sale by government regulatory bodies. Among the activities that may result in an increase in cash requirementsare the scope and timing of the Phase 3 and Phase 2 Ceplene cancer andhepatitis C clinical trials currently underway, and earlier-stage clinicaltrials and other research related to liver disease and the apoptosis modulatorand topical histamine technologies. Other factors that may impact the Company’scash requirements include the results of clinical trials, the scope of otherresearch and development activities, the time required to obtain regulatoryapprovals, costs associated with defending certain lawsuits currently pendingagainst the Company, the costs of filing, prosecuting, defending and enforcingpatent claims and other intellectual property rights, and the ability toestablish marketing alliances and collaborative arrangements. As a result ofthese factors, it is difficult to predict accurately the timing and amount offuture cash requirements.

 

TheCompany may pursue the issuance of additional equity securities and corporatecollaborative agreements, as required, to meet its cash requirements. TheCompany is currently pursuing a pharmaceutical collaboration regarding themarketing of Ceplene and is pursuing the out-licensing of its apoptosismodulator technology.  There can be noassurance that the Company will be able to enter into agreements on acceptableterms, if at all.  The issuance ofadditional equity securities, if any, could result in substantial dilution tothe Company’s stockholders. There can be no assurance that additional fundingwill be available on terms acceptable to the Company, if at all. The failure tofund the Company’s capital requirements would have a material adverse effect onits business, financial condition and results of operations.

 

Webelieve that our available cash, cash equivalents and investments at June 30,2003 will be sufficient to satisfy our funding needs for at least the next 24months.

 

TheCompany has never paid a cash dividend on its common stock and such paymentsare prohibited by the terms of the Company’s bank loan. The Company does notcontemplate the payment of cash dividends on its common stock in theforeseeable future.

 

**IMPACT OF INFLATION**

 

The impact of inflation onthe operations of the Company for the three and nine months ended June 30, 2003and 2002 was not material.

 

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**RISK FACTORS**

 

You should carefully consider thefollowing risk factors and the other information included herein as well as theinformation included in our Annual Report on Form 10-K for the year endedSeptember 30, 2002, and other reports and filings made with the Securities andExchange Commission before investing in our common stock. If any of thefollowing risks actually occurs, our business, financial condition or resultsof operations could be harmed. The trading price of our common stock coulddecline due to any of these risks, and you may lose part or all of yourinvestment.

 

**The development of our drug candidates is subject touncertainties, many of which are beyond our control. If we fail to successfullydevelop our drug candidates, our ability to generate revenues will besubstantially impaired.**

 

Potential products based onour Ceplene, apoptosis modulator and MaxDermTM technologies will require,dependent upon the current specific drug candidate, extensive research anddevelopment, preclinical testing, clinical testing, regulatory approval andsubstantial additional investment before we can market them. We cannot assureyou that any of our drug candidates will:

 

•                  be successfully developed;

 

•                  prove to be safe and effective in clinicaltrials;

 

•                  meet applicable United States andinternational regulatory standards;

 

•                  be capable of being produced in commercialquantities at acceptable costs;

 

•                  be commercially viable;

 

•                  be eligible for third party reimbursementfrom governmental or private insurers; or

 

•                  be successfully marketed or achieve marketacceptance.

 

We have not completed finaltesting for efficacy or safety in humans for the diseases we propose to treatwith Ceplene and our other drug candidates. Failure to ultimately obtainapproval for Ceplene and our other drug candidates, any delay in our expectedtesting and development schedules, or any elimination of a product developmentprogram in its entirety, will negatively impact our ability to generaterevenues in the future from the sale of our products.

 

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

 

Ceplene and our other drugcandidates are subject to extensive government regulations related todevelopment, clinical trials, manufacturing and commercialization. The processof obtaining Federal Drug Administration (“FDA”) and other governmental andsimilar

 

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international regulatory approvals is costly,time consuming, uncertain and subject to unanticipated delays. Even if webelieve that preclinical and clinical data are sufficient to support regulatoryapproval for a drug candidate, the FDA and similar international regulatoryauthorities may not ultimately approve the candidate for commercial sale in anyjurisdiction. The FDA or similar international regulators may refuse to approvean application for approval of a drug candidate if they believe that applicableregulatory criteria are not satisfied. The FDA or similar internationalregulators may also require additional testing for safety and efficacy. For example,in 2000, we submitted an New Drug Application (“NDA”) to the FDA seekingapproval to market Ceplene based on the data from our first Phase 3 clinicalstudy in advanced metastatic melanoma. In January 2001, the FDA determinedthat a second study was required to support approval. In response to the FDArequest, in January 2002 we commenced another Phase 3 trial. Although webelieve that this additional Phase 3 trial, in combination with the results ofthe first Phase 3 trial, will support approval in the United States and othercountries, we have no assurance that (i) the results from this additionalPhase 3 trial will confirm the results from the first Phase 3 trial,(ii) the FDA will not require additional Phase 3 trials, or (iii) theFDA will approve our NDA.

 

In addition, manufacturingfacilities operated by the third party manufacturers with whom we contract tomanufacture Ceplene and our other drug candidates may not pass an FDA orsimilar international regulatory preapproval inspection. Moreover, if the FDAgrants regulatory approval of a product, the approval may be limited tospecific indications or limited with respect to its distribution. Similarinternational regulatory authorities may apply similar limitations or mayrefuse to grant any approval.

 

Any failure or delay inobtaining these approvals could prohibit or delay us from marketing Ceplene andour other drug candidates. If Ceplene and our other drug candidates do not meetapplicable regulatory requirements for approval, we may not have the financialresources to continue research and development of these candidates, and we maynot generate revenues from the commercial sale of any products.

 

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

 

We may encounter problemswith any of our completed, ongoing or planned clinical studies. For example, wemay encounter delays in commencing studies or enrolling volunteers, lower thananticipated retention rate of volunteers in a trial, or serious side effectsexperienced by study participants relating to the drug candidate. Factors thatcould affect patient enrollment include the size of the patient enrollmentpopulation for the targeted disease, eligibility criteria, proximity ofeligible patients to clinical sites, clinical trial protocols, and theexistence of competing protocols, including competitive financial incentivesfor patients and clinicians, and

 

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existingapproved drugs. If we encounter any delay in the commencement, conduct orcompletion of our clinical studies for Ceplene or our other drug candidates, wemay experience the following consequences:

 

•                  the analysis of data from our clinicalstudies and the reporting of results may be delayed;

 

•                  the submission of our applications forregulatory approval of Ceplene and other drug candidates with regulatoryauthorities in North America, Europe, and elsewhere in the world may bedelayed;

 

•                  regulatory approval of our drug candidates maybe delayed and may not occur on a timely basis, delaying the generation ofrevenues from the commercial sale of any of our marketed products;

 

•                  we may not have the financial resources tocontinue and complete research and development of any of our productcandidates; and

 

•                  we may not be able to enter intocollaborative arrangements relating to any product as a result of the delay inclinical development or regulatory filings.

 

**We have been named as a defendant in securities class actionand other litigation that could result in substantial costs and divertmanagement’s attention and resources.**

 

On December14, 2000 plaintiff, Blake Martin, on behalf of himself and purportedly onbehalf of a class of others similarly situated, filed a complaint in the UnitedStates District Court for the Southern District of California against us andtwo officers of our Company, alleging violations of federal securities lawsrelated to declines in the Company’s stock price in connection with variousstatements and alleged omissions to the public and to the securities markets,and seeking damages therefore. Thereafter, approximately thirteen similarcomplaints were filed in the Southern District.  The Southern District complaints have been consolidated into asingle action.  No discovery has beenconducted.  We successfully broughtmotions to dismiss the consolidated complaint and a second amendedcomplaint.  The plaintiff then filed athird amended complaint, and our motion to dismiss the third amended complaintis currently under consideration by the court. The complaint has been tendered to our insurance carrier.

 

In October 2001 andMay 2002, certain former shareholders of Cytovia filed complaints inCalifornia Superior Court in San Diego, against us and two of our officersbased on similar facts and circumstances, alleging fraud and negligentmisrepresentation in connection with our acquisition of Cytovia. The SuperiorCourt subsequently issued an order compelling the first lawsuit to a bindingarbitration forum, and the second lawsuit has been stayed pending theresolution of the arbitration proceeding. A binding arbitration proceeding with theAmerican Arbitration Association was held in May 2003.  The three-member arbitration panel rejectedall of the claims asserted by certain former shareholders of Cytovia, Inc. anddetermined that we

 

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have no liability for such claims. In its interim decision the panel also determined that Maxim should beawarded reasonable attorney fees, costs and expenses in an amount yet to bedetermined.  The arbitration panel hasnot yet issued its final award.

 

No assurances can be madethat we will be successful in our defense of the pending claims. If we are notsuccessful in our defense of such claims, we could be forced to makesignificant payments to our stockholders, the plaintiffs and defense lawyers,and such payments could have a material adverse effect on our business,financial condition and results of operations if not covered by our insurancecarrier. Even if our defense against such claims is successful, the litigationcould result in substantial costs and divert management’s attention andresources, which could adversely affect our business.

 

**Because we are dependent on clinical research centers andother contractors for clinical testing and for certain research and developmentactivities, the results of our clinical trials and such research activitiesare, to a certain extent, beyond our control.**

 

The nature of clinicaltrials and our business strategy requires us to rely on clinical researchcenters and our other contractors to assist us with clinical testing andcertain research and development activities. As a result, our success isdependent upon the success of these outside parties in performing theirresponsibilities. Although we believe our contractors are economicallymotivated to perform on their contractual obligations, we cannot directlycontrol the adequacy and timeliness of the resources and expertise applied tothese activities by our contractors. If our contractors do not perform theiractivities in an adequate or timely manner, the development andcommercialization of our drug candidates could be delayed.

 

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

 

We expect to rely oncollaborative arrangements for research and development and commercializationof certain drug candidates discovered and developed by us, such as ouragreement with Schering Corporation related to our Phase 2 Ceplene clinicaltrial in nonresponder hepatitis C patients. We cannot be certain that we willbe able to maintain these collaborations or enter into any future collaborativearrangements, that any of our collaborations will be successful or that we willreceive revenues from any of these collaborations. The success of these and anyfuture collaborations will depend, in significant part, on our partners’development and strategic considerations, including the relative advantages ofalternative products being developed or marketed by competitors. If ourpartners fail to conduct their activities in a timely manner, or at all,preclinical or clinical development of drug candidates under thosecollaborations could be delayed or terminated. The suspension or termination ofour collaborations, the failure of our collaborations to be successful or thedelay in the development or commercialization of drug candidates pursuant toour collaborations could harm our business.

 

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**Our planned business may expose us to product, clinical trialand other liability claims.**

 

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

 

**Our products may not be accepted, purchased or used bydoctors, patients or payors.**

 

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

 

•                  the scope of regulatory approvals;

 

•                  the establishment and demonstration of theclinical efficacy, safety and advantages of our products by clinical trialresults, and the acceptance of such results by the medical community;

 

•                  the potential advantages of our products overexisting treatment methods; and

 

•                  reimbursement policies of government andother third-party payors.

 

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

 

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

 

We may co-market Ceplene inthe United States, if it is approved by the FDA. Maxim has never beforemarketed or sold any pharmaceutical product. In order to co-market Ceplene orcertain other drug candidates, we will need to hire a significant number ofpeople with relevant pharmaceutical experience to staff our sales force andmarketing group, and possibly also to make appropriate arrangements with strategicpartners. If we cannot develop the required marketing and sales expertise bothinternally and through our partnering arrangements, our ability to generaterevenue from product sales will likely suffer.

 

In addition to a possiblecollaborative partner in the United States, we expect to rely on collaborativepartners to market and sell Ceplene in international markets, and sucharrangements may be sought to market certain other drug candidates in allmarkets. We have not yet entered into any collaborative arrangement withrespect to marketing or selling Ceplene with the exception of agreementsrelating to Australia, New Zealand and Israel, and have not entered into

 

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any agreements regarding the marketing orselling of our other drug candidates with the exception of a license agreementrelating to our MX2105 series of anti-cancer compounds. We cannot guaranteethat we will be able to enter into any such arrangements on terms favorable tous, or at all. If we are able to enter into marketing and selling arrangementswith collaborative partners, we cannot assure you that such marketingcollaborators will apply adequate resources and skills to theirresponsibilities, or that their marketing efforts will be successful.

 

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

 

We do not intend to acquireor establish our own dedicated manufacturing facilities for Ceplene and ourother drug candidates in the foreseeable future. We have contracted and expectto continue to contract with established pharmaceutical manufacturers for theproduction of Ceplene. If we are unable to continue to contract withthird-party manufacturers on acceptable terms or our manufacturers do notcomply with applicable regulatory requirements, our ability to conduct clinicaltesting and to produce commercial quantities of Ceplene and other products willbe adversely affected. If we cannot adequately manufacture our products, itcould result in delays in submissions for regulatory approval and in commercialproduct launches, which in turn could materially impair our competitiveposition and the possibility of achieving profitability. We cannot guaranteethat we will be able to maintain our existing contract manufacturingrelationships, or acquire or establish new, satisfactory third-partyrelationships 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 ouroperations.**

 

We are a development-stageenterprise. We have experienced net losses every year since our inception. Thenet loss applicable to common stock for the nine months ended June 30, 2003 and2002 was approximately $32.7 million and $53.2 million, respectively.  As of June 30, 2003, we had an accumulateddeficit of approximately $293.7 million. We anticipate incurringsubstantial additional losses over at least the next several years related todeveloping and testing our drug candidates and preparing for commercializationand 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 todiscontinue our operations. We may never generate sufficient product revenue tobecome profitable. We expect to have quarter-to-quarter fluctuations inrevenues, expenses, and losses, some of which could be significant.

 

**We will need to raise additional funds in the future. If weare unable to obtain the funds necessary to continue our operations, we will berequired to delay, scale back or eliminate one or more of our drug developmentprograms.**

 

We have already spentsubstantial funds developing our potential products and business. We expect tocontinue to have negative cash flow from our operations for at least the nextseveral years. We will have to raise additional funds to complete thedevelopment of our drug

 

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candidates and to bring them to market. Ourfuture capital requirements will depend on numerous factors, including:

 

•                  the results of our clinical trials;

 

•                  the timing and scope of any additionalclinical trials undertaken;

 

•                  the scope and results of our research anddevelopment programs;

 

•                  the time required to obtain regulatoryapprovals;

 

•                  our ability to establish marketing alliancesand collaborative agreements;

 

•                  the cost of our internal marketingactivities; and

 

•                  the cost of filing, prosecuting and, ifnecessary, enforcing patent claims.

 

Additional financing may notbe available on acceptable terms, if at all. If adequate funds are notavailable, we will be required to delay, scale back or eliminate one or more ofour drug development programs or obtain funds through arrangements withcollaborative partners or others that may require us to relinquish rights tocertain of our technologies or products that we would not otherwise relinquish.

 

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

 

There are many companies,both publicly and privately held, including well-known pharmaceutical companiesand academic and other research institutions, engaged in developingpharmaceutical products for the treatment of life-threatening cancers and liverdiseases. Products developed by any of these companies or institutions maydemonstrate greater safety or efficacy than our drug candidates or be morewidely accepted by doctors, patients or third-party payors. Many of ourcompetitors and potential competitors have substantially greater capitalresources, research and development capabilities and human resources than wedo. Many of these competitors also have significantly greater experience thanwe do in undertaking preclinical testing and clinical trials of newpharmaceutical products and obtaining FDA and other regulatory approvals. Ifany of our drug candidates are approved for commercial sale, we will also becompeting with companies that have greater resources and experience inmanufacturing, marketing and selling pharmaceutical products. To the extentthat any of our competitors succeed in developing products that are moreeffective, less costly or have better side effect profiles than our products,then our future potential market share could decrease which may have a negativeimpact on our business.

 

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**If we fail to secure adequate protection of our intellectualproperty or the right to use certain intellectual property of others, we maynot be able to protect our products and technologies from competitors.**

 

Our success depends in largepart on our ability to obtain, maintain and protect patents, trademarks, andtrade secrets and to operate without infringing upon the proprietary rights ofothers. If we are unable to do so, our products and technologies may notprovide us with any competitive advantage.

 

The patent positions ofbiotechnology and pharmaceutical companies are highly uncertain and involvecomplex legal and factual questions, and the breadth of claims allowed inbiotechnology and pharmaceutical patents cannot be predicted. As a result,patents may not issue from any of our patent applications. Patents currentlyheld by us or issued to us in the future, or to licensors from whom we havelicensed technology rights, may be challenged, invalidated or circumvented sothat our intellectual property rights may not protect our technologies orprovide commercial advantage to us. In addition, we also rely on unpatentedtrade secrets and proprietary know-how, and we cannot be sure that others willnot obtain access to or independently develop such trade secrets and know-how.Enforcement of our intellectual property rights against any infringers of ourpatents relating to Ceplene and our other technologies will be costly andtime-consuming. Because of the nature of those patents, we could be required tobring 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 industryhas experienced extensive litigation regarding patent and other intellectualproperty rights. Although, to date, we are not aware of any intellectualproperty claims against us, in the future we could be forced to incursubstantial costs in defending ourselves in lawsuits that are brought againstus claiming that we have infringed on the patent rights of others or inasserting our patent rights in lawsuits against other parties. We may also berequired to participate in interference proceedings declared by the UnitedStates Patent and Trademark Office or international patent authorities for thepurpose of determining the priority of inventions in connection with our patentapplications or other parties’ patent applications. Adverse determinations inlitigation or interference proceedings could require us to seek licenses thatmay not be available on commercially reasonable terms or subject us tosignificant liabilities to third parties.

 

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

 

We are engaged in thepharmaceutical field, which is characterized by extensive research efforts andrapid technological progress. New developments in oncology, cancer therapy,medicinal pharmacology, biochemistry and other fields are expected to continueat a rapid pace. Research and discoveries by others may render some or all ofour proposed programs or products noncompetitive or obsolete. Our businessstrategy is subject to the risks inherent in the development of new productsusing new technologies and approaches. Unforeseen problems may develop withthese technologies or applications, and we may not be able to successfullyaddress

 

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technological challenges we encounter in ourresearch and development programs. This may result in our inability to developcommercially feasible products.

 

**Our future success depends on our ability to attract andretain key personnel.**

 

Our success will depend, toa great extent, upon the experience, abilities and continued services of ourexecutive officers and key research and development personnel. If we lose theservices of any of these officers or key research and development personnel,our business could be harmed. Our success also will depend upon our ability toattract and retain other highly qualified research and development, managerial,manufacturing and sales personnel and our ability to develop and maintainrelationships with qualified clinical researchers. Competition for thesepersonnel and relationships is intense and we compete with numerouspharmaceutical and biotechnology companies as well as with universities andnon-profit research organizations. We may not be able to continue to attractand retain qualified personnel or develop and maintain relationships withclinical researchers.

 

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

 

Our success may depend, inpart, on the extent to which reimbursement for the costs of therapeuticproducts and related treatments will be available from third-party payors suchas United States and similar international government health administrationauthorities, private health insurers, managed care programs and otherorganizations. Over the past decade, the cost of health care has risensignificantly, and there have been numerous proposals by legislators, regulatorsand third-party health care payors to curb these costs. Some of these proposalshave involved limitations on the amount of reimbursement for certain products.We cannot guarantee that similar United States federal or state or similarinternational health care legislation will not be adopted in the future or thatany products sought to be commercialized by us will be consideredcost-effective or that adequate third-party insurance coverage will beavailable for us to establish and maintain price levels sufficient forrealization of an appropriate return on our investment in product development.Moreover, the existence or threat of cost control measures could have anadverse effect on the willingness of potential collaborators to pursue researchand development programs related to our products.

 

**We may engage in strategic transactions, which couldadversely affect our business.**

 

From time to time weconsider strategic transactions and alternatives with the goal of maximizingstockholder value.  We evaluatepotential strategic transactions and alternatives which we believe have thepotential to enhance stockholder value. These potential transactions mayinclude a variety of different business arrangements, including spin-offs,acquisitions, strategic partnerships, joint ventures, restructurings,divestitures, business combinations and investments. We cannot assure you thatany such transactions will be consummated on favorable terms or at all, will infact enhance stockholder value, or will not adversely affect our business orthe trading price of our stock. Any such transaction may require us to incurnon-recurring or other charges and may pose significant integration challengesand/or management and business disruptions, any of which could materially and adverselyaffect our business and financial results.

 

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**Our stock price may be highly volatile due to externalfactors.**

 

Our common stock currentlytrades on the Nasdaq National Market and on the OM Stockholm Exchange.Historically, our common stock has generally experienced relatively low dailytrading volumes in relation to the aggregate number of shares outstanding.Sales of substantial amounts of our common stock in the public market couldadversely affect the prevailing market prices of our common stock and ourability to raise equity capital in the future.

 

Factors that may have asignificant impact on the market price or the liquidity of our common stockalso include:

 

•                  actual or potential clinical trial resultsrelating to drug candidates under development by us or our competitors;

 

•                  delays in our clinical testing anddevelopment schedules;

 

•                  events or announcements relating to ourcollaborative relationships;

 

•                  announcements of technological innovations ornew products by us or our competitors;

 

•                  developments or disputes concerning patentsor proprietary rights;

 

•                  regulatory developments in both the UnitedStates and other countries;

 

•                  economic and other external factors,disasters or crisis, as well as period-to-period fluctuations in our financialresults;

 

•                  market conditions for pharmaceutical andbiotechnology stocks, whether or not related to results or news regarding us orour competitors; and

 

•                  publicity regarding actual or potential medicalresults relating to products under development by us or our competitors.

 

External factors may alsoadversely affect the market price for our common stock. The price and liquidityof our common stock may be significantly affected by the overall tradingactivity and market factors on the Nasdaq National Market and the OM StockholmExchange, and these factors may differ between the two markets. In addition,the securities markets have from time to time experienced significant price andvolume fluctuations that may be unrelated to the operating performance ofparticular companies. The market prices of the common stock of many publiclytraded pharmaceutical or biotechnology companies have in the past been, and canin the future be expected to be, especially volatile.

 

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**Certain anti-takeover provisions in our charter, by-laws,shareholder rights plan and under Delaware law may deter a third party fromacquiring us, even though such acquisition may be beneficial to ourstockholders.**

 

Certain provisions of ourcharter and by-laws may make it more difficult for a third party to acquirecontrol of us, even though such acquisition may be beneficial to ourstockholders. These provisions include:

 

•                  a staggered or classified board;

 

•                  the inability of stockholders to act bywritten consent; and

 

•                  no right to remove directors other than forcause.

 

We have also adopted ashareholder rights plan or “poison pill.” Our shareholder rights plan isdesigned to protect our shareholders in the event of an unsolicited bid toacquire the company. In general terms, the rights plan imposes a significantpenalty upon any person or group that acquires 15% or more of our outstandingcommon stock without the approval of our board of directors. Our shareholderrights plan could discourage a third party from attempting to acquire usthrough an acquisition of our outstanding voting stock, even though suchacquisition may be beneficial to our stockholders.

 

Our board of directors alsohas 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 connectionwith our shareholder rights plan. Any issuance of preferred stock coulddiscourage a third party from acquiring a majority of our outstanding votingstock.

 

Furthermore, we are subject to the provisions ofSection 203 of the Delaware General Corporations Law, an anti-takeover law,which may also dissuade a potential acquiror of our common stock, even thoughsuch acquisition may be beneficial to our stockholders.

 

#### **ITEM3.** QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

TheCompany’s exposure to market risk is principally confined to its cashequivalents and investments that have maturities of less than three years. TheCompany maintains a non-trading investment portfolio of investment grade,liquid debt securities that limits the amount of credit exposure to any one issue,issuer or type of instrument. The securities in its investment portfolio arenot leveraged, are classified as available-for-sale and are therefore subjectto interest rate risk. The Company currently does not hedge interest rateexposure. A hypothetical ten percent change in interest rates during thequarter ended June 30, 2003 would have resulted in approximately a $51,000change in net loss.  The Company has notused derivative financial instruments in its investment portfolio. There havebeen no significant changes in the types or maturities of investments held fromSeptember 30, 2002.

 

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###### **ITEM 4**. CONTROLS ANDPROCEDURES

 

The Company carried out an evaluation, underthe supervision and with the participation of the Company’s management,including the Company’s President and Chief Executive Officer and ChiefFinancial Officer, of the effectiveness of the design and operation of theCompany’s disclosure controls and procedures, as defined in Exchange Act Rule13a-15(e) as of the end of the period covered by this report.  Based upon that evaluation, the Company’sPresident and Chief Executive Officer and Chief Financial Officer concludedthat the Company’s disclosure controls and procedures are effective in enablingthe Company to record, process, summarize and report information required to beincluded in the Company’s periodic SEC filings within the required timeperiod.  There have been no significantchanges in the Company’s internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date the Companycarried out its evaluation.

 

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**PART II–OTHER INFORMATION**

 

*Item 1.  Legal Proceedings*

 

On December14, 2000 plaintiff, Blake Martin, on behalf of himself and purportedly onbehalf of a class of others similarly situated, filed a complaint in the UnitedStates District Court for the Southern District of California against theCompany and two officers of the Company, alleging violations of federalsecurities laws related to declines in the Company’s stock price in connectionwith various statements and alleged omissions to the public and to thesecurities markets, and seeking damages therefore. Thereafter, approximatelythirteen similar complaints were filed in the Southern District.  The Southern District complaints have beenconsolidated into a single action.  Nodiscovery has been conducted.  TheCompany successfully brought motions to dismiss the consolidated complaint anda second amended complaint. The plaintiff then filed a third amended complaint,and the Company’s motion to dismiss the third amended complaint is currentlyunder consideration by the court.  Thecomplaint has been tendered to the Company’s insurance carrier.

 

In October2001 and May 2002, certain former shareholders of Cytovia filed complaints inCalifornia Superior Court in San Diego against the Company and two of itsofficers based on similar facts and circumstances, alleging fraud andmisrepresentation in connection with the Company’s acquisition of Cytovia. TheSuperior Court subsequently issued an order compelling the first lawsuit to abinding arbitration forum, and the second lawsuit has been stayed pending theresolution of the arbitration proceeding A binding arbitration proceeding with the American ArbitrationAssociation was held in May 2003.  Thethree-member arbitration panel rejected all of the claims asserted by certainformer shareholders of Cytovia, Inc. and determined that Maxim has no liabilityfor such claims.  In its interimdecision the panel also determined that Maxim should be awarded reasonableattorney fees, costs and expenses in an amount yet to be determined.  The arbitration panel has not yet issued itsfinal award.

 

No assurancescan be made that the Company will be successful in its defense of the pendingclaims. If it is not successful in its defense of such claims, the Companycould be forced to make significant payments to its stockholders, theplaintiffs and defense lawyers, and such payments could have a material adverseeffect on the Company’s business, financial condition and results ofoperations, if not covered by the Company’s insurance carrier. Even if theCompany’s defense against such claims is successful, the litigation couldresult in substantial costs and divert management’s attention and resources,which could adversely affect the Company’s business.

 

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*Item 6**. Exhibits and Reports on Form 8-K*

 
|   | *a)**           Exhibits* |
|--------|-----------------------------------------------------------------------------|
| 31.1   |                                                                        | Certification  by Larry G. Stambaugh, Chief Executive Officer, Pursuant to 18 U.S.C. Section  1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2   |                                                                        | Certification  by Anthony E. Altig, Chief Financial Officer, Pursuant to 18 U.S.C. Section  1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32     |                                                                        | Certification  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002. |

 

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*b) Reports on Form 8-K*

 
| **Date of Report** |   | **Description  of Exhibit**                                                                         |   | **Financial  Statements Filed** |
|--------------------|--------|-----------------------------------------------------------------------------------------------------|--------|---------------------------------|
| May 7, 2003        |   | Press Release: “Maxim Pharmaceuticals  Announces 2003  Second  Quarter Financial Results” |   | No                              |
|               |   |                                                                                                |   |

 

Pursuant tothe requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 

 
|                  | MAXIM  PHARMACEUTICALS, INC. |
|-----------------------|------------------------------|
|                  | By:                          | /s/ ANTHONY E. ALTIG |
|                  |                         | Anthony E. Altig, |
|                  |                         | *Vice President, Finance and Chief Financial Officer  (Principal Financial and Accounting Officer duly authorized to  sign on behalf of the registrant)* |
|                  |                         |   |
| Date:  August 7, 2003 |                         |   |

 

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