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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 December 31, 2000
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 February 5, 2001, the registrant had 23,217,094 shares of Common Stock, $.001 par value, outstanding.

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

INDEX

|Part I  Financial Information |         | Page                                                                                                                                                                       
|------------------------------ | ------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                               | Item 1. |                                                                                                                                                                            
|                               |         | Condensed Consolidated Balance Sheets 
December 31, 2000 (unaudited) and September 30, 2000                                                                               
|                               |         | Condensed Consolidated Statements of Operations (unaudited) 
Three Months Ended December 31, 2000 and 1999
and from Inception (October 23, 1989) through December 31, 2000
|                               |         | Condensed Consolidated Statements of Cash Flows (unaudited)  Three Months Ended December 31, 2000 and 1999 and from Inception (October 23, 1989) through December 31, 2000
|                               |         | Notes to Condensed Consolidated Financial Statements                                                                                                                       
|                               | Item 2. |                                                                                                                                                                            
|                               | Item 3. |                                                                                                                                                                            
|Part II  Other Information    |         |                                                                                                                                                                            
|                               | Item 1. |                                                                                                                                                                            
|                               | Item 2. |                                                                                                                                                                            
|                               | Item 6. |                                                                                                                                                                            
|SIGNATURE                      |         | 11                                                                                                                                                                         

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CONDENSED CONSOLIDATED BALANCE SHEETS

Maxim Pharmaceuticals, Inc. and Subsidiaries (A Development Stage Company)

|                                                                 |                                                                                                                                                                                | As of December 31
2000                                              |                                            | As of September 30
2000   |            
|---------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------- | ------------------------------------------ | ------------------------- | -----------
|ASSETS                                                           |                                                                                                                                                                                |                                                                     |                                            |                           |            
|Current Assets:                                                  |                                                                                                                                                                                |                                                                     |                                            |                           |            
|                                                                 |                                                                                                                                                                                | Cash and cash equivalents                                           |                                            | $                         | 53,125,715 
|                                                                 |                                                                                                                                                                                | Short-term investments in marketable securities, available for sale |                                            |                           | 120,540,038
|                                                                 |                                                                                                                                                                                | Note receivable from officer                                        |                                            |                           | 2,859,742  
|                                                                 |                                                                                                                                                                                | Accrued interest and other current assets                           |                                            |                           | 4,810,696  
|                                                                 |                                                                                                                                                                                |                                                                     |                                            |                           |            
|                                                                 |                                                                                                                                                                                |                                                                     |                                            | Total current assets      |            
|Property and equipment, net                                      |                                                                                                                                                                                |                                                                     | 4,874,482                                  |                           |            
|Patents and licenses, net                                        |                                                                                                                                                                                |                                                                     | 1,546,831                                  |                           |            
|Goodwill and intangible assets, net                              |                                                                                                                                                                                |                                                                     | 30,535,636                                 |                           |            
|Deposits and other assets                                        |                                                                                                                                                                                |                                                                     | 370,524                                    |                           |            
|                                                                 |                                                                                                                                                                                |                                                                     |                                            |                           |            
|                                                                 |                                                                                                                                                                                |                                                                     |                                            | Total assets              |            
|                                                                 |                                                                                                                                                                                |                                                                     |                                            |                           |            
|LIABILITIES AND STOCKHOLDERS' EQUITY                             |                                                                                                                                                                                |                                                                     |                                            |                           |            
|Current Liabilities:                                             |                                                                                                                                                                                |                                                                     |                                            |                           |            
|                                                                 |                                                                                                                                                                                | Accounts payable                                                    |                                            | $                         | 4,077,221  
|                                                                 |                                                                                                                                                                                | Accrued expenses                                                    |                                            |                           | 7,490,518  
|                                                                 |                                                                                                                                                                                | Note payable                                                        |                                            |                           | 185,438    
|                                                                 |                                                                                                                                                                                | Current installments of obligations under capital leases            |                                            |                           | 408,907    
|                                                                 |                                                                                                                                                                                | Deferred revenue                                                    |                                            |                           | 1,416,666  
|                                                                 |                                                                                                                                                                                |                                                                     |                                            |                           |            
|                                                                 |                                                                                                                                                                                |                                                                     |                                            | Total current liabilities |            
|Deferred revenue                                                 |                                                                                                                                                                                |                                                                     | 562,500                                    |                           |            
|Obligations under capital leases, excluding current installments |                                                                                                                                                                                |                                                                     | 596,690                                    |                           |            
|Commitments and contingencies                                    |                                                                                                                                                                                |                                                                     |                                            |                           |            
|Stockholders' Equity:                                            |                                                                                                                                                                                |                                                                     |                                            |                           |            
|                                                                 | Convertible preferred stock, $.001 par value, 5,000,000 shares authorized, zero shares issued and outstanding at December 31, 2000 and September 30, 2000                      |                                                                     |                                            |                          |            
|                                                                 | Common stock, $.001 par value, 40,000,000 shares authorized; 23,214,754 and 23,115,749 shares issued and outstanding at December 31, 2000 and September 30, 2000, respectively |                                                                     |                                            | 23,215                    |            
|                                                                 | Additional paid-in capital                                                                                                                                                     |                                                                     |                                            | 376,013,077               |            
|                                                                 | Deficit accumulated during the development stage                                                                                                                               |                                                                     |                                            | (172,369,113              | )          
|                                                                 | Accumulated other comprehensive income (loss)                                                                                                                                  |                                                                     |                                            | 258,545                   |            
|                                                                 |                                                                                                                                                                                |                                                                     |                                            |                           |            
|                                                                 |                                                                                                                                                                                | Total stockholders' equity                                          |                                            |                           | 203,925,724
|                                                                 |                                                                                                                                                                                |                                                                     |                                            |                           |            
|                                                                 |                                                                                                                                                                                |                                                                     | 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)

|                                                     |                                                                          | Three Months Ended
December 31, |             | From Inception
(October 23, 1989)
Through
December 31, |  
|---------------------------------------------------- | ------------------------------------------------------------------------ | ------------------------------- | ----------- | ------------------------------------------------------ | -
|
|Collaboration and research revenue                   |                                                                          | $                               | 829,429     |                                                        | $
|Operating expenses:                                  |                                                                          |                                 |             |                                                        |  
|                                                     | Research and development                                                 |                                 |             | 10,818,168                                             |  
|                                                     | Marketing and business development                                       |                                 |             | 3,661,019                                              |  
|                                                     | General and administrative                                               |                                 |             | 1,738,225                                              |  
|                                                     | Amortization of goodwill and other acquisition-related intangible assets |                                 |             | 562,994                                                |  
|                                                     | Purchased in-process technology                                          |                                 |             |                                                       |  
|                                                     |                                                                          |                                 |             |                                                        |  
|                                                     |                                                                          |                                 |             | Total operating expenses                               |  
|                                                     |                                                                          |                                 |             |                                                        |  
|Loss from operations                                 |                                                                          |                                 | (15,950,977 | )                                                      |  
|                                                     |                                                                          |                                 |             |                                                        |  
|Other income (expense):                              |                                                                          |                                 |             |                                                        |  
|                                                     | Investment income                                                        |                                 |             | 3,050,502                                              |  
|                                                     | Gain on sale of assets                                                   |                                 |             |                                                       |  
|                                                     | Interest expense                                                         |                                 |             | (61,099                                                | )
|                                                     | Other income (expense)                                                   |                                 |             | (5,519                                                 | )
|                                                     |                                                                          |                                 |             |                                                        |  
|                                                     |                                                                          |                                 |             | Total other income                                     |  
|                                                     |                                                                          |                                 |             |                                                        |  
|Net loss before preferred stock dividends            |                                                                          |                                 | (12,967,093 | )                                                      |  
|                                                     |                                                                          |                                 |             |                                                        |  
|                                                     |                                                                          | Dividends on preferred stock    |             |                                                        | 
|                                                     |                                                                          |                                 |             |                                                        |  
|Net loss applicable to common stock                  |                                                                          | $                               | (12,967,093 | )                                                      | $
|                                                     |                                                                          |                                 |             |                                                        |  
|Basic and diluted net loss per share of common stock |                                                                          | $                               | (0.56       | )                                                      | $
|                                                     |                                                                          |                                 |             |                                                        |  
|Weighted average shares outstanding                  |                                                                          |                                 | 23,180,966  |                                                        |  
|                                                     |                                                                          |                                 |             |                                                        |  

See Notes to Condensed Consolidated Financial Statements

2

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Maxim Pharmaceuticals, Inc. and Subsidiaries (A Development Stage Company)

|                                                                                      |                                                         | Three Months Ended
December 31,           |                                       |            |           
|------------------------------------------------------------------------------------- | ------------------------------------------------------- | ----------------------------------------- | ------------------------------------- | ---------- | ----------
|
|
|OPERATING ACTIVITIES:                                                                 |                                                         |                                           |                                       |            |           
|Net loss                                                                              |                                                         | $                                         | (12,967,093                           | )          | $         
|Adjustments to reconcile net loss to net cash used in operating activities:           |                                                         |                                           |                                       |            |           
|                                                                                      | Depreciation and amortization                           |                                           |                                       | 977,839    |           
|                                                                                      | Stock contributions to 401(k) plan                      |                                           |                                       | 47,351     |           
|                                                                                      | Stock based compensation                                |                                           |                                       |           |           
|                                                                                      | 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 |                                       |            | 385,946   
|                                                                                      |                                                         | Deposits and other assets                 |                                       |            | 17,911    
|                                                                                      |                                                         | Accounts payable                          |                                       |            | (2,888,468
|                                                                                      |                                                         | Accrued expenses                          |                                       |            | 1,664,389 
|                                                                                      |                                                         | Deferred revenue                          |                                       |            | (406,251  
|                                                                                      |                                                         |                                           |                                       |            |           
|                                                                                      |                                                         |                                           | Net cash used in operating activities |            |           
|                                                                                      |                                                         |                                           |                                       |            |           
|INVESTING ACTIVITIES:                                                                 |                                                         |                                           |                                       |            |           
|Purchases of marketable securities                                                    |                                                         |                                           | (7,002,712                            | )          |           
|Sales and maturities of marketable securities                                         |                                                         |                                           | 4,603,000                             |            |           
|Purchases of property and equipment                                                   |                                                         |                                           | (1,217,657                            | )          |           
|Additions to patents and licenses                                                     |                                                         |                                           | (199,168                              | )          |           
|Net proceeds from sale of assets                                                      |                                                         |                                           |                                      |            |           
|Cash acquired in acquisition of business                                              |                                                         |                                           |                                      |            |           
|Proceeds from sale of diagnostic division                                             |                                                         |                                           |                                      |            |           
|                                                                                      |                                                         |                                           |                                       |            |           
|                                                                                      | Net cash used in investing activities                   |                                           |                                       | (3,816,537 | )         
|                                                                                      |                                                         |                                           |                                       |            |           
|FINANCING ACTIVITIES:                                                                 |                                                         |                                           |                                       |            |           
|Net proceeds from issuance of common stock and exercise of stock options and warrants |                                                         |                                           | 490,384                               |            |           
|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                                          |                                                         |                                           | (150,108                              | )          |           
|Proceeds from issuance of notes payable to related parties                            |                                                         |                                           |                                      |            |           
|Payments on notes payable to related parties                                          |                                                         |                                           |                                      |            |           
|Loan to officer                                                                       |                                                         |                                           | (2,859,742                            | )          |           
|                                                                                      |                                                         |                                           |                                       |            |           
|                                                                                      | Net cash (used in) provided by financing activities     |                                           |                                       | (2,519,466 | )         
|                                                                                      |                                                         |                                           |                                       |            |           
|Effect of exchange rate changes on cash                                               |                                                         |                                           | 3,005                                 |            |           
|                                                                                      |                                                         |                                           |                                       |            |           
|Net increase (decrease) in cash and cash equivalents                                  |                                                         |                                           | (19,501,374                           | )          |           
|Cash and cash equivalents at beginning of period                                      |                                                         |                                           | 72,627,089                            |            |           
|                                                                                      |                                                         |                                           |                                       |            |           
|Cash and cash equivalents at end of period                                            |                                                         | $                                         | 53,125,715                            |            | $         
|                                                                                      |                                                         |                                           |                                       |            |           
|Noncash investing activities:                                                         |                                                         |                                           |                                       |            |           
|                                                                                      | Increase in fair value of securities available for sale |                                           | $                                     | 402,586    |           
|                                                                                      |                                                         |                                           |                                       |            |           

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 ("SFAS 7").

The
information at December 31, 2000, and for the three months ended December 31, 2000 and 1999 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
December 31, 2000 and September 30, 2000, and the condensed consolidated results of operations for the three months ended December 31, 2000 and 1999 and from inception
(October 23, 1989) through December 31, 2000. The condensed consolidated results of operations for the three months ended December 31, 2000 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.  ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In
October 2000, the Company implemented SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No.'s 137 and 138. This Statement established
accounting and reporting standards requiring that every derivative instrument, including certain derivative instruments imbedded in other contracts, be recorded in the balance sheet as either an asset
or liability measured at its fair value. The Statement also requires that changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. The
adoption of this standard did not have an impact on the Company's condensed consolidated financial statements.

3.  TOTAL OTHER COMPREHENSIVE LOSS

Total
other comprehensive loss for the three months ended December 31, 2000 and 1999 was $12,708,548 and $12,503,492, respectively. The difference between total other comprehensive loss and
net loss attributable to common stock was composed of unrealized losses on available-for-sale securities and foreign translation gain.

4.  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 convertible preferred stock, options and warrants in the weighted average share calculation. For the three months ended
December 31, 2000 and 1999, options, warrants and convertible preferred stock totaled 3,297,526 and 8,067,570, respectively. As these securities were antidilutive for the respective period then
ended, diluted loss per share equaled the basic loss per share calculation in each respective period.

4

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5.  PROFORMA 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.

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
of Cytovia had been made at the beginning of the period ended December 31, 1999, excluding the impact of the in process research and development charge, are as follows:

1999Collaboration and research revenue

$
140,000Net loss applicable to common stock


(15,721,493
)Net loss per share


(1.22
)Shares used in calculating net loss per share


12,934,947


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.

6.  RECLASSIFICATIONS

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

7.  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.

5

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Maxim 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 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 MONTHS ENDED DECEMBER 31, 2000 AND 1999

Research and Collaboration RevenueFor the quarter ended December 31, 2000, collaboration and research revenue totaled $829,000, an
increase of $689,000, or 492%, from the same period in the prior year. The increase was related to license fees and research revenues associated with the licensing of the Company's
CV2105 series of caspase-inducer anti-cancer compounds. For the quarter ended December 31, 1999, collaboration and research revenue consisted of collaborative support for our
clinical trials.

Research and Development ExpensesResearch and development expenses for the quarter ended December 31, 2000 totaled $10,818,000, an
increase of $1,767,000 or 20%, from the same period in the prior year. The increase was primarily attributable to research associated with the caspase modulator technology acquired in June 2000 in the
purchase of Cytovia, Inc.

Marketing and Business DevelopmentMarketing and business development expenses for the quarter ended December 31, 2000 were
$3,661,000, an increase of $3,103,000, or 556%, over the same period of the prior year. This increase was due to the build up of marketing and sales management personnel and other premarketing
activities associated with the potential market launch of Ceplene, originally anticipated for the first half of 2001. This potential market launch has likely been delayed to a future period.

General and Administrative ExpensesFor the quarter ended December 31, 2000, general and administrative expenses were $1,738,000, an
increase of $894,000, or 106%, over the same period in the prior year. This increase was 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 the quarter.

Amortization of Goodwill and Other Acquisition-Related Intangible AssetsAmortization of goodwill and other acquisition related intangible
assets for the quarter ended December 31, 2000 totaled $563,000. There was no such amortization for the same period 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 $3,051,000 for the quarter ended December 31, 2000, an increase of $2,747,000, or 904%, from the
same period in the prior year. This increase was a result of interest earned on the proceeds of the follow-on public offering completed in February 2000.

6

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Net Loss Applicable to Common StockNet loss applicable to common stock for the quarter ended December 31, 2000 totaled $12,967,000,
an increase of $525,000 or 4%, over the same period in the prior year. The increase was primarily due to the increase in research and development expenses and expenses for expanded operations related
to the Company's potential market launch of Ceplene, offset by the increase of collaboration and research revenue and investment income, as 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 December 31, 2000, the Company had cash, cash equivalents and investments totaling approximately $173.7 million. For the quarters ended December 31, 2000, and 1999, net cash
used in the Company's operating activities was approximately $13.2 million, and $7.2 million, respectively. 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. As a result of the delay of the U.S. market launch of Ceplene, a decrease
in cash requirements may occur due to the elimination in January and February 2000 of activities and personnel associated with the Company's U.S. sales force and related promotion activities.

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 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. The Company will work with the FDA to develop a strategy, which may include an additional study in melanoma patients with liver metastases, to support
the approvability of this drug candidate. However, these events suggest that the U.S. market launch of Ceplene, originally anticipated for the first half of 2001, will likely be delayed to a future
period.

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.

7

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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 December 31, 2000 would have resulted in approximately a $310,000 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 quarters ended December 31, 2000, and 1999 was not material.

8

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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.

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 December 31, 2000, the following payments have been made:

|                                                     |  |   | (A      | ) |   | (B         | )
|---------------------------------------------------- |  | - | ------- | - | - | ---------- | -
|Purchase and installation of machinery and equipment |  |   |         |   | $ | 1,323,000  |  
|Repayment of indebtedness                            |  | $ | 289,000 |   | $ | 2,227,000  |  
|Interest earning bonds and securities                |  |   |         |   |   |           |  
|Research and development expenses                    |  |   |         |   | $ | 26,780,000 |  
|Business development expenses                        |  |   |         |   | $ | 1,627,000  |  
|General and administrative                           |  |   |         |   | $ | 3,091,000  |  
|Intellectual property                                |  |   |         |   | $ | 979,000    |  

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9

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Item 6.  Exhibits and Reports on Form 8-K

a)  Exhibits

|Exhibit Number |  | Description of Exhibit                                                                           
|-------------- |  | -------------------------------------------------------------------------------------------------
|10.1           |  | Employment Agreement dated November 17, 2000 between the Registrant and Kurt Gehlsen.*           
|10.2           |  | Employment Agreement dated November 17, 2000 between the Registrant and Dale A. Sander.*         
|10.3           |  | Employment Agreement dated November 17, 2000 between the Registrant and Larry G. Stambaugh.*     
|10.4           |  | Employment Agreement dated November 17, 2000 between the Registrant and Geoffrey B. Altman.*     
|10.5           |  | Loan and Security Agreement dated October 9, 2000 between the Registrant and Silicon Valley Bank.

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b)  Reports on Form 8-K

|Date of Report    |  | Description of Exhibit                                           |  | Financial Statements Filed
|----------------- |  | ---------------------------------------------------------------- |  | --------------------------
|December 15, 2000 |  | FDA Advisory Committee declines to recommend approval of Ceplene |  | No                        

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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: February 13, 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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