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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(Mark One)

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the Quarter Ended March 31, 2001

or

|/ / | 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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MAXIM PHARMACEUTICALS, INC.(Exact name of registrant as specified in its charter)

Delaware(State of incorporation)

87-0279983(IRS Employer Identification No.)8899 University Center Lane, Suite 400, San Diego, CA(Address of principal executive offices)

92122(zip code)


(858) 453-4040(Registrant's telephone number, including area code)

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

As
of May 7, 2001, the registrant had 23,234,520 shares of Common Stock, $.001 par value, outstanding.

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MAXIM PHARMACEUTICALS, INC. AND SUBSIDIARIES(A Development Stage Company)

INDEX

|                             |  |                                                                                                                                                                                    |  | Page
|---------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Part IFinancial Information |  |                                                                                                                                                                                   
|Item 1.                      |  | Financial Statements                                                                                                                                                               |  |     
|                             |  | Condensed Consolidated Balance Sheets (unaudited)March 31, 2001 and September 30, 2000                                                                                            |  | 1   
|                             |  | Condensed Consolidated Statements of Operations (unaudited)Three Months and Six Months Ended March 31, 2001 and 2000 and from Inception (October 23, 1989) through March 31, 2001 |  | 2   
|                             |  | Condensed Consolidated Statements of Cash Flows (unaudited)Six Months Ended March 31, 2001 and 2000 and from Inception (October 23, 1989) through March 31, 2001                  |  | 3   
|                             |  | Notes to Condensed Consolidated Financial Statements                                                                                                                               |  | 4   
|Item 2.                      |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                                                                              |  | 6   
|Item 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                         |  | 8   
|Part IIOther Information    |  |                                                                                                                                                                                   
|Item 1.                      |  | Legal Proceedings                                                                                                                                                                  |  | 9   
|Item 2.                      |  | Changes in Securities and Use of Proceeds                                                                                                                                          |  | 9   
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                                                                                                                |  | 9   
|Item 6.                      |  | Exhibits and Reports on Form 8-K                                                                                                                                                   |  | 10  
|SIGNATURE                    |  | 10                                                                                                                                                                                

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)Maxim Pharmaceuticals, Inc. and Subsidiaries (A Development Stage Company)

|                                                                 |                                                                                                                                                                             | As of March 31
2001        |                                            | As of September 30
2000 |            
|---------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ----------------------- | -----------
|ASSETS                                                           |                                                                                                                                                                             |                            |                                            |                         |            
|Current Assets:                                                  |                                                                                                                                                                             |                            |                                            |                         |            
|                                                                 | Cash and cash equivalents                                                                                                                                                   |                            | $                                          | 42,970,834              |            
|                                                                 | Short-term investments in marketable securities, available for sale                                                                                                         |                            |                                            | 119,227,087             |            
|                                                                 | Note receivable from officer                                                                                                                                                |                            |                                            | 2,927,460               |            
|                                                                 | Accrued interest and other current assets                                                                                                                                   |                            |                                            | 5,384,070               |            
|                                                                 |                                                                                                                                                                             |                            |                                            |                         |            
|                                                                 |                                                                                                                                                                             |                            | Total current assets                       |                         |            
|Property and equipment, net                                      |                                                                                                                                                                             |                            | 4,884,888                                  |                         |            
|Patents and licenses, net                                        |                                                                                                                                                                             |                            | 1,647,992                                  |                         |            
|Goodwill and intangible assets, net                              |                                                                                                                                                                             |                            | 29,453,840                                 |                         |            
|Deposits and other assets                                        |                                                                                                                                                                             |                            | 396,820                                    |                         |            
|                                                                 |                                                                                                                                                                             |                            |                                            |                         |            
|                                                                 |                                                                                                                                                                             |                            | Total assets                               |                         | $          
|                                                                 |                                                                                                                                                                             |                            |                                            |                         |            
|LIABILITIES AND STOCKHOLDERS' EQUITY                             |                                                                                                                                                                             |                            |                                            |                         |            
|Current Liabilities:                                             |                                                                                                                                                                             |                            |                                            |                         |            
|                                                                 | Accounts payable                                                                                                                                                            |                            | $                                          | 4,069,038               |            
|                                                                 | Accrued expenses                                                                                                                                                            |                            |                                            | 5,570,001               |            
|                                                                 | Note payable                                                                                                                                                                |                            |                                            | 81,233                  |            
|                                                                 | Current installments of obligations under capital leases                                                                                                                    |                            |                                            | 410,055                 |            
|                                                                 | Deferred revenue                                                                                                                                                            |                            |                                            | 1,291,665               |            
|                                                                 |                                                                                                                                                                             |                            |                                            |                         |            
|                                                                 |                                                                                                                                                                             |                            | Total current liabilities                  |                         |            
|Deferred revenue                                                 |                                                                                                                                                                             |                            | 281,250                                    |                         |            
|Obligations under capital leases, excluding current installments |                                                                                                                                                                             |                            | 495,811                                    |                         |            
|Commitments and contingencies                                    |                                                                                                                                                                             |                            |                                            |                         |            
|Stockholders' Equity:                                            |                                                                                                                                                                             |                            |                                            |                         |            
|                                                                 | Convertible preferred stock, $.001 par value, 5,000,000 shares authorized, zero shares issued and outstanding at March 31, 2001 and September 30, 2000                      |                            |                                            |                        |            
|                                                                 | Common stock, $.001 par value, 40,000,000 shares authorized; 23,234,036 and 23,115,749 shares issued and outstanding at March 31, 2001 and September 30, 2000, respectively |                            |                                            | 23,234                  |            
|                                                                 | Additional paid-in capital                                                                                                                                                  |                            |                                            | 376,103,212             |            
|                                                                 | Deficit accumulated during the development stage                                                                                                                            |                            |                                            | (182,127,175            | )          
|                                                                 | Accumulated other comprehensive income (loss)                                                                                                                               |                            |                                            | 694,667                 |            
|                                                                 |                                                                                                                                                                             |                            |                                            |                         |            
|                                                                 |                                                                                                                                                                             | Total stockholders' equity |                                            |                         | 194,693,938
|                                                                 |                                                                                                                                                                             |                            |                                            |                         |            
|                                                                 |                                                                                                                                                                             |                            | Total liabilities and stockholders' equity |                         | $          
|                                                                 |                                                                                                                                                                             |                            |                                            |                         |            

See Notes to Condensed Consolidated Financial Statements

1

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)Maxim Pharmaceuticals, Inc. and Subsidiaries (A Development Stage Company)

|                                                     |                                                                          |   |                          |           |   |             |           |   |             | From Inception
(October 23, 1989)
Through
March 31, 2001 |  
|---------------------------------------------------- | ------------------------------------------------------------------------ | - | ------------------------ | --------- | - | ----------- | --------- | - | ----------- | -------------------------------------------------------- | -
|
|
|Collaboration and research revenue                   |                                                                          | $ | 871,499                  |           | $ | 147,500     |           | $ | 1,700,928   |                                                          | $
|Operating expenses:                                  |                                                                          |   |                          |           |   |             |           |   |             |                                                          |  
|                                                     | Research and development                                                 |   |                          | 8,318,652 |   |             | 9,732,472 |   |             | 19,136,820                                               |  
|                                                     | Marketing and business development                                       |   |                          | 2,343,213 |   |             | 635,047   |   |             | 6,004,231                                                |  
|                                                     | General and administrative                                               |   |                          | 2,082,894 |   |             | 1,013,036 |   |             | 3,821,119                                                |  
|                                                     | Amortization of goodwill and other acquisition-related intangible assets |   |                          | 553,496   |   |             |          |   |             | 1,116,490                                                |  
|                                                     | Purchased in-process technology                                          |   |                          |          |   |             |          |   |             |                                                         |  
|                                                     |                                                                          |   |                          |           |   |             |           |   |             |                                                          |  
|                                                     |                                                                          |   | Total operating expenses |           |   | 13,298,255  |           |   | 11,380,555  |                                                          |  
|                                                     |                                                                          |   |                          |           |   |             |           |   |             |                                                          |  
|Loss from operations                                 |                                                                          |   | (12,426,756              | )         |   | (11,233,055 | )         |   | (28,377,732 | )                                                        |  
|Other income (expense):                              |                                                                          |   |                          |           |   |             |           |   |             |                                                          |  
|                                                     | Investment income                                                        |   |                          | 2,668,629 |   |             | 1,201,976 |   |             | 5,719,130                                                |  
|                                                     | Gain on sale of assets                                                   |   |                          |          |   |             |          |   |             |                                                         |  
|                                                     | Interest expense                                                         |   |                          | (6,739    | ) |             | (18,434   | ) |             | (67,838                                                  | )
|                                                     | Other income (expense)                                                   |   |                          | 6,804     |   |             |          |   |             | 1,285                                                    |  
|                                                     |                                                                          |   |                          |           |   |             |           |   |             |                                                          |  
|                                                     |                                                                          |   | Total other income       |           |   | 2,668,694   |           |   | 1,183,542   |                                                          |  
|                                                     |                                                                          |   |                          |           |   |             |           |   |             |                                                          |  
|Net loss before preferred stock dividends            |                                                                          |   | (9,758,062               | )         |   | (10,049,513 | )         |   | (22,725,155 | )                                                        |  
|                                                     | Dividends on preferred stock                                             |   |                          |          |   |             | 2,599,967 |   |             |                                                         |  
|                                                     |                                                                          |   |                          |           |   |             |           |   |             |                                                          |  
|Net loss applicable to common stock                  |                                                                          | $ | (9,758,062               | )         | $ | (12,649,480 | )         | $ | (22,725,155 | )                                                        | $
|                                                     |                                                                          |   |                          |           |   |             |           |   |             |                                                          |  
|Basic and diluted net loss per share of common stock |                                                                          | $ | (0.42                    | )         | $ | (0.77       | )         | $ | (0.98       | )                                                        | $
|                                                     |                                                                          |   |                          |           |   |             |           |   |             |                                                          |  
|Weighted average shares outstanding                  |                                                                          |   | 23,219,833               |           |   | 16,506,555  |           |   | 23,200,189  |                                                          |  
|                                                     |                                                                          |   |                          |           |   |             |           |   |             |                                                          |  

See Notes to Condensed Consolidated Financial Statements

2

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)Maxim Pharmaceuticals, Inc. and Subsidiaries (A Development Stage Company)

|                                                                                      |                                                         | Six Months Ended March 31                 |                                                     | From Inception
(October 23, 1989)
Through
March 31, 2001 |           
|------------------------------------------------------------------------------------- | ------------------------------------------------------- | ----------------------------------------- | --------------------------------------------------- | -------------------------------------------------------- | ----------
|
|OPERATING ACTIVITIES:                                                                 |                                                         |                                           |                                                     |                                                          |           
|Net loss                                                                              |                                                         | $                                         | (22,725,155                                         | )                                                        | $         
|Adjustments to reconcile net loss to net cash used in operating activities:           |                                                         |                                           |                                                     |                                                          |           
|                                                                                      | Depreciation and amortization                           |                                           |                                                     | 2,016,668                                                |           
|                                                                                      | Stock contributions to 401(k) plan                      |                                           |                                                     | 96,655                                                   |           
|                                                                                      | Stock-based compensation                                |                                           |                                                     | 19,816                                                   |           
|                                                                                      | Loss on disposal of property and equipment              |                                           |                                                     |                                                         |           
|                                                                                      | Loss on write-off of patents                            |                                           |                                                     |                                                         |           
|                                                                                      | Amortization of premium on investments                  |                                           |                                                     |                                                         |           
|                                                                                      | Other                                                   |                                           |                                                     |                                                         |           
|                                                                                      | Purchased in-process technology                         |                                           |                                                     |                                                         |           
|                                                                                      | Cumulative effect of reorganization                     |                                           |                                                     |                                                         |           
|                                                                                      | Gain on sale of subsidiary                              |                                           |                                                     |                                                         |           
|                                                                                      | Gain on sale of assets                                  |                                           |                                                     |                                                         |           
|                                                                                      | Changes in operating assets and liabilities:            |                                           |                                                     |                                                          |           
|                                                                                      |                                                         | Accrued interest and other current assets |                                                     |                                                          | (187,428  
|                                                                                      |                                                         | Deposits and other assets                 |                                                     |                                                          | (8,385    
|                                                                                      |                                                         | Accounts payable                          |                                                     |                                                          | (2,896,651
|                                                                                      |                                                         | Accrued expenses                          |                                                     |                                                          | 272,171   
|                                                                                      |                                                         | Deferred revenue                          |                                                     |                                                          | (812,502  
|                                                                                      |                                                         |                                           |                                                     |                                                          |           
|                                                                                      |                                                         |                                           | Net cash used in operating activities               |                                                          |           
|INVESTING ACTIVITIES:                                                                 |                                                         |                                           |                                                     |                                                          |           
|Purchases of marketable securities                                                    |                                                         |                                           | (41,285,695                                         | )                                                        |           
|Sales and maturities of marketable securities                                         |                                                         |                                           | 40,638,000                                          |                                                          |           
|Purchases of property and equipment                                                   |                                                         |                                           | (1,674,097                                          | )                                                        |           
|Additions to patents and licenses                                                     |                                                         |                                           | (339,627                                            | )                                                        |           
|Net proceeds from sale of assets                                                      |                                                         |                                           |                                                    |                                                          |           
|Cash acquired in acquisition of business                                              |                                                         |                                           |                                                    |                                                          |           
|                                                                                      |                                                         |                                           |                                                     |                                                          |           
|                                                                                      |                                                         |                                           | Net cash used in investing activities               |                                                          |           
|FINANCING ACTIVITIES:                                                                 |                                                         |                                           |                                                     |                                                          |           
|Net proceeds from issuance of common stock and exercise of stock options and warrants |                                                         |                                           | 511,418                                             |                                                          |           
|Net proceeds from issuance of preferred stock                                         |                                                         |                                           |                                                    |                                                          |           
|Payment of preferred stock dividends                                                  |                                                         |                                           |                                                    |                                                          |           
|Proceeds from issuance of notes payable and long-term debt                            |                                                         |                                           |                                                    |                                                          |           
|Payments on notes payable and long-term debt                                          |                                                         |                                           | (354,044                                            | )                                                        |           
|Proceeds from issuance of notes payable to related parties                            |                                                         |                                           |                                                    |                                                          |           
|Payments on notes payable to related parties                                          |                                                         |                                           |                                                    |                                                          |           
|Loan to officer                                                                       |                                                         |                                           | (2,927,460                                          | )                                                        |           
|                                                                                      |                                                         |                                           |                                                     |                                                          |           
|                                                                                      |                                                         |                                           | Net cash (used in) provided by financing activities |                                                          |           
|Effect of exchange rate changes on cash                                               |                                                         |                                           | 61                                                  |                                                          |           
|                                                                                      |                                                         |                                           |                                                     |                                                          |           
|Net increase (decrease) in cash and cash equivalents                                  |                                                         |                                           | (29,656,255                                         | )                                                        |           
|Cash and cash equivalents at beginning of period                                      |                                                         |                                           | 72,627,089                                          |                                                          |           
|                                                                                      |                                                         |                                           |                                                     |                                                          |           
|Cash and cash equivalents at end of period                                            |                                                         | $                                         | 42,970,834                                          |                                                          | $         
|                                                                                      |                                                         |                                           |                                                     |                                                          |           
|Noncash investing activities:                                                         |                                                         |                                           |                                                     |                                                          |           
|                                                                                      | Increase in fair value of securities available for sale |                                           | $                                                   | 841,652                                                  |           
|                                                                                      |                                                         |                                           |                                                     |                                                          |           

See Notes to Condensed Consolidated Financial Statements.

3

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)Maxim Pharmaceuticals, Inc. and Subsidiaries (A Development Stage Company)

1.  PRINCIPLES OF INTERIM PERIOD REPORTING

Maxim Pharmaceuticals, Inc. (the "Company") has not earned significant revenues from planned principal operations. Accordingly, the Company's activities
have been accounted for as those of a "Development Stage Enterprise" as set forth in Financial Accounting Standards Board Statement No. 7.

The
information at March 31, 2001 and for the three and six months ended March 31, 2001 and 2000 is unaudited. In the opinion of the Company, these condensed
consolidated financial statements contain all of the adjustments, consisting only of normal recurring adjustments and accruals, necessary to present fairly the condensed consolidated financial
position of the Company as of March 31, 2001 and September 30, 2000, and the condensed consolidated results of operations for the three months and six months ended March 31, 2001
and 2000 and from inception (October 23, 1989) through March 31, 2001. The condensed consolidated results of operations for the three months and six months ended March 31, 2001
are not necessarily indicative of the results to be expected in subsequent periods or for the year as a whole. For further information, refer to the consolidated financial statements and footnotes
thereto in our Annual Report on Form 10-K/A for the year ended September 30, 2000.

2.  TOTAL OTHER COMPREHENSIVE LOSS

Total other comprehensive losses for the three months ended March 31, 2001 and 2000 were $9,321,940 and $12,801,524, respectively. Total other
comprehensive losses for the six months ended March 31, 2001 and 2000 were $21,883,442 and $25,235,680, respectively. The difference between total other comprehensive losses and net losses
attributable to common stock was composed of unrealized gains and losses on available-for-sale securities and foreign translation gains and losses.

3.  NET LOSS PER SHARE

Net loss per share is calculated in accordance with Statement of Financial Accounting Standards No. 128 "Earnings per Share." Basic net loss per share
of common stock is computed by dividing the net loss after deduction of dividends on preferred stock by the weighted average number of shares of
common stock outstanding during the period. Diluted loss per share is calculated by including the additional common shares issuable upon exercise of outstanding options and warrants in the basic
weighted average share calculation unless the effect of their inclusion is antidilutive. For the quarters ended March 31, 2001 and 2000, outstanding options and warrants totaled 3,140,821 and
3,389,918, respectively. As these securities were antidilutive, diluted loss per share equaled the basic loss per share calculation in each respective period.

4.  PRO FORMA RESULTS

On June 16, 2000, the Company acquired all of the outstanding capital stock of Cytovia, Inc. ("Cytovia") and assumed the outstanding stock
options of Cytovia. Cytovia was a privately held biopharmaceutical research company focused on the discovery and development of caspase inhibitors and activators, novel drugs that modulate programmed
cell death. The transaction was accounted for using the purchase method of accounting.

The
condensed consolidated financial statements include the operating results of Cytovia from the date of acquisition. Unaudited pro forma operating results for the Company, assuming
the acquisition

4

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of Cytovia had been made at the beginning of the three- and six-month periods ended March 31, 2000, excluding the impact of the in-process research and development charge, are as
follows:

Three Months Ended
March 31, 2000

Six Months Ended
March 31, 2000Collaboration and research revenue

$
147,500

$
287,500Net loss applicable to common stock


(15,364,688
)

(30,956,181
)Net loss per share


(0.85
)

(2.00
)Shares used in calculating net loss per share


18,040,045


15,473,548


These
pro forma results have been prepared for comparative purposes only and may not be indicative of the results of operations which actually would have occurred had the combination
been in effect at the beginning of the respective year or of future results of operations of the consolidated entities.

5.  RECLASSIFICATIONS

Certain amounts in the prior years' financial statements have been reclassified to conform with current year classifications.

6.  COMMITMENTS AND CONTINGENCIES

On December 14, 2000, plaintiff Blake Martin, on behalf of himself and purportedly on behalf of a class of others similarly situated, filed a complaint
in the United States District Court for the Southern District of California against the Company and two officers of the Company, alleging violations of federal securities laws related to declines in
the Company's stock price. The complaint alleges securities fraud in connection with various statements and alleged omissions to the public and to the securities markets. The Company believes that the
claims set forth in this complaint are without merit, and it intends to engage in a rigorous defense of such claims. The Company has been served with at least 13 substantially similar lawsuits arising
from the same facts and circumstances, and these lawsuits are being consolidated into a single proceeding.

7.  SUBSEQUENT EVENT

On April 11, 2001, the Company entered into an agreement under which the Company guaranteed the repayment of $1,200,000 in loans made by a bank to three
officers of the Company. Under the agreement, the Company granted the bank a security interest in a $1,200,000 certificate of deposit as collateral for loans the bank made to the officers.

5

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONSMaxim Pharmaceuticals, Inc. and Subsidiaries (A Development Stage Company)

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains certain forward-looking statements
that involve risks and uncertainties. Such forward-looking statements include statements regarding plans for the development and commercialization of the Company's Ceplene,
MaxDerm and caspase modulator technologies, and future cash requirements. Such statements are only predictions and the Company's actual results could differ materially from those
anticipated or projected in such forward-looking statements. Factors that could cause or contribute to differences include the risk that the Company will not obtain approval to market its products,
the risk that products that appeared promising in early research and clinical trials do not demonstrate efficacy in larger-scale clinical trials, the risk that planned clinical trials may not start
when anticipated, the need for additional funds and the uncertainty of additional funding, and dependence on collaborative partners. These factors and others are more fully described in the Company's
Annual Report on Form 10-K/A for the fiscal year ended September 30, 2000.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2001
AND 2000

Research and Collaboration RevenueFor the quarter ended March 31, 2001, collaboration and
research revenue totaled $871,000, an increase of $724,000, or 491%, from the same period in the prior year. Research and collaboration revenue for the six-month period ended
March 31, 2001 totaled $1,701,000 compared to $288,000 for the six months ended March 31, 2000. These increases were related to license fees and research revenues associated with the
licensing of the Company's CV2105 series of caspase-inducer anti-cancer compounds.

Research and Development ExpensesResearch and development expenses for the quarter ended March 31, 2001 totaled
$8,319,000, a decrease of $1,414,000 or 15%, from the same period in the prior year. The decrease was primarily attributable to lower clinical trial costs associated with Ceplene (histamine
dihydrochloride, formerly Maxamine®) as a result of the completion of our U.S. Phase 3 trial for the treatment of advanced metastatic melanoma and our Phase 2 clinical trial for the
treatment of hepatitis C. The lower clinical trial costs were partially offset by an increase in research expenses associated with the caspase modulator technology acquired in June 2000 in the
purchase of Cytovia, Inc. and costs associated with expanded manufacturing development, regulatory, and quality assurance activities.

For
the six months ended March 31, 2001, research and development expenses were $19,137,000, an increase of $353,000 or 2%, over the same period of the prior year. The increase
resulted primarily
from research associated with the caspase modulator technology offset by lower clinical trial costs described above.

Marketing and Business DevelopmentMarketing and business development expenses for the quarter ended March 31, 2001
were $2,343,000, an increase of $1,708,000, or 269%, over the same period of the prior year. For the six months ended March 31, 2001, marketing and business development expenses were
$6,004,000, an increase of $4,811,000 or 403% over the same period in the prior year. These increases were due to the build up of marketing and sales management personnel and other
pre-marketing activities associated with the potential market launch of Ceplene, originally anticipated for the first half of 2001. This potential market launch has been delayed to a
future period.

General and Administrative ExpensesFor the quarter ended March 31, 2001, general and administrative expenses were
$2,083,000, an increase of $1,070,000, or 106%, over the same period in the prior year. For the six months ended March 31, 2001, general and administrative expenses were $3,821,000, an increase
of $1,964,000 or 106% over the same period in the prior year. These increases

6

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were due primarily to the expansion of information systems and additional support personnel associated with the Company's potential market launch and expanded operations, and increased corporate
communication requirements associated with the release of key clinical data and regulatory events during these periods.

Amortization of Goodwill and Other Acquisition-Related Intangible AssetsAmortization of goodwill and other acquisition
related intangible assets for the three and six months ended March 31, 2001 totaled $553,000 and $1,116,000, respectively. There was no such amortization for the same periods in the prior year.
The amortization relates to intangible assets recorded in connection with the acquisition of Cytovia, Inc. in June 2000, a transaction accounted for as a purchase.

Other IncomeInvestment income was $2,669,000 for the quarter ended March 31, 2001, an increase of $1,467,000, or
122%, from the same period in the prior year. For the six months ended March 31, 2001, investment income totaled $5,719,000, an increase of $4,213,000 or 280% over the same period in the prior
year. These increases were a result of interest earned on the proceeds of the follow-on public offering completed in February 2000.

Net Loss Applicable to Common StockNet loss applicable to common stock for the quarter ended March 31, 2001 totaled
$9,758,000, a decrease of $2,891,000 or 23%, from the same period in the prior year. Net loss applicable to common stock for the six months ended March 31, 2001 totaled $22,725,000, a decrease
of $2,367,000 or 9%, from the same period in the prior year. These decreases were primarily due to an increase in collaboration and research revenue and investment income, and the fact that
prior-period results include dividends accrued on preferred stock which was converted to common stock
prior to commencement of the current fiscal year, partially offset by the higher operating expenses described above.

LIQUIDITY AND CAPITAL RESOURCES

The Company, as a development stage enterprise, anticipates incurring substantial additional losses at least in the near future as it continues to expend
substantial amounts on its ongoing and planned clinical trials and its expanded efforts related to its other research and development efforts, including the caspase modulator program acquired as part
of the Cytovia purchase. The Company has financed its operations primarily through the sale of its equity securities, including an initial public offering in 1996, an international
follow-on public offering in 1997, private offerings of preferred stock in July and November 1999 and a follow-on public offering in February 2000 that provided
total net proceeds of approximately $294 million.

As
of March 31, 2001, the Company had cash, cash equivalents and investments totaling approximately $162.2 million. For the six months ended March 31, 2001, net
cash used in the Company's operating activities was approximately $24.2 million, as compared to $15.1 million in the same period in the prior year. The Company's cash requirements may
fluctuate in future periods as it conducts additional research and development activities including clinical trials, other research and development activities, and efforts associated with the
commercial launch of any products that are approved for sale by government regulatory bodies. Among the activities that may result in an increase in cash requirements are the scope and timing of the
Phase 3 and Phase 2 Ceplene cancer and hepatitis C clinical trials currently underway or planned, and research related to the caspase modulator and other earlier-stage programs.

The
Company's cash requirements may vary materially from those now planned because of the results and scope of clinical trials and other research and development activities, the time required to
obtain regulatory approvals, the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights, its ability to establish marketing alliances and
collaborative arrangements and the cost of internal marketing activities. As a result of these factors, it is difficult to predict accurately the timing and amount of future cash requirements. In
January 2001, the U.S. Food and

7

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Drug Administration (FDA) declined to approve the use of Ceplene for its most advanced development program, the treatment of patients with advanced metastatic melanoma that have liver metastases.
Thus, the U.S. market launch of Ceplene, originally anticipated for the first half of 2001, will be delayed to a future period. The Company has been working with the FDA in the current quarter to
develop a strategy to support the approvability of this drug candidate.

The
Company may pursue the issuance of additional equity securities, and pursue corporate collaborative agreements, as required, to meet its cash requirements. The issuance of additional equity
securities, if any, could result in substantial dilution to the Company's stockholders. There can be no assurance that additional funding will be available on terms acceptable to the Company, if at
all. The failure to fund the Company's capital requirements would have a material adverse effect on its business, financial condition and results of operations.

The
Company has never paid a cash dividend on its common stock and does not contemplate the payment of cash dividends on its common stock in the foreseeable future.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's exposure to market risk is principally confined to its cash equivalents and investments. The Company 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
are not leveraged, are classified as available-for-sale and are therefore subject to interest rate risk. The Company currently does not hedge interest rate exposure. A
hypothetical 10 percent change in interest rates during the quarter ended March 31, 2001 would have resulted in approximately a $275,000 change in net loss. The Company has not used
derivative financial instruments in its investment portfolio. There have been no significant changes in the types or maturities of investments held from September 30, 2000.

IMPACT OF INFLATION

The impact of inflation on the operations of the Company for the three months and six months ended March 31, 2001 and 2000 was not material.

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PART IIOTHER INFORMATION

Item 1.  Legal Proceedings

On December 14, 2000, plaintiff Blake Martin, on behalf of himself and purportedly on behalf of a class of others similarly situated, filed a complaint
in the United States District Court for the Southern District of California against the Company and two officers of the Company, alleging violations of federal securities laws related to declines in
the Company's stock price. The complaint alleges securities fraud in connection with various statements and alleged omissions to the public and to the securities markets. The Company believes that the
claims set forth in this complaint are without merit, and it intends to engage in a rigorous defense of such claims. The Company has been served with at least 13 substantially similar lawsuits arising
from the same facts and circumstances, and these lawsuits are being consolidated into a single proceeding.

While
the Company is defending itself vigorously in these matters, no assurances can be made that we will be successful in our defense of such claims. If we are not successful in our
defense of such claims, we could be forced to make significant payments to these plaintiffs, and such payments could have a material adverse effect on our business, financial condition and results of
operations if not covered by our insurance carrier. Even if our defense against such claims is successful, the litigation could result in substantial costs and divert management's attention and
resources, which could adversely affect our business.

Item 2.  Changes in Securities and Use of Proceeds

(d) Of
the net offering proceeds to the Company of $36,316,000, including $18,220,000 received at the time of the initial public offering and $18,096,000 received upon
subsequent exercises of Redeemable Warrants, through March 31, 2001, the following payments have been made:

(A)

(B)Purchase and installation of machinery and equipment




$
1,323,000Repayment of indebtedness

$
289,000

$
2,227,000Interest earning bonds and securities





Research and development expenses




$
26,780,000Business development expenses




$
1,627,000General and administrative




$
3,091,000Intellectual property




$
979,000


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Item 4.  Submission of Matters to a Vote of Security Holders

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Item 6.  Exhibits and Reports on Form 8-K



|Exhibit
Number |  | Description of Exhibit                                                                                                                  
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|10.1           |  | Assignment of Deposit Account dated April 11, 2001 between the Registrant, Silicon Valley Bank and Geoffrey B. Altman.*                 
|10.2           |  | Assignment of Deposit Account dated April 11, 2001 between the Registrant, Silicon Valley Bank and Kurt R. Gehlsen.*                    
|10.3           |  | Assignment of Deposit Account dated April 11, 2001 between the Registrant, Silicon Valley Bank and Dale A. Sander and Denise M. Sander.*
|10.4           |  | Loan Modification Agreement dated March 21, 2001 between the Registrant and Silicon Valley Bank.                                        
|10.5           |  | Loan Modification Agreement dated April 25, 2001 between the Registrant and Silicon Valley Bank.                                        
|10.6           |  | Registrant's 2001 Incentive Stock Option Plan.                                                                                          
|10.7           |  | Form of Stock Option Agreement used under Registrant's 2001 Incentive Stock Option Plan.                                                

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*
Management contract or compensatory plan or arrangement required to be filed as an exhibit to this form pursuant to Item 601 of Regulation S-K.



No
reports on Form 8-K were filed during the quarter ended March 31, 2001.

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.

|                   | MAXIM PHARMACEUTICALS, INC.                                                                                                                                                     
|------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Date: May 14, 2001 | /s/DALE A. SANDERDale A. Sander Chief Financial Officer
(Principal Financial and Accounting Officer and Officer duly authorized to sign this report on behalf of the registrant)

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