MAXIM PHARMACEUTICALS INC - 10-Q Quarterly Report

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)

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 ý No o

As of August 2, 2002, the registrant had 23,292,393 shares of Common Stock, $.001 par value, outstanding.

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

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 June 30, 2002 and for the three and nine months ended June 30, 2002 and 2001 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 June 30, 2002 and September 30, 2001, and the condensed consolidated results of operations for the three months and nine months ended June 30, 2002 and 2001 and from inception (October 23, 1989) through June 30, 2002. The condensed consolidated results of operations for the three months and nine months ended June 30, 2002 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 for the year ended September 30, 2001.

Total other comprehensive loss for the three months ended June 30, 2002 and 2001 was $7,389,899 and $6,607,188, respectively. Total other comprehensive loss for the nine months ended June 30, 2002 and 2001 was $53,722,549 and $28,490,630, respectively. The difference between total other comprehensive loss and net loss attributable to common stock was composed of unrealized gains and losses on available-for-sale securities and foreign translation gains and losses.

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 June 30, 2002 and 2001, outstanding options and warrants totaled 3,179,988 and 3,190,060, respectively. As these securities were antidilutive, diluted loss per share equaled basic loss per share in each respective period.

4. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT—GOODWILL AND OTHER INTANGIBLE ASSETS

On June 16, 2000, the Company acquired all of the outstanding capital stock of Cytovia, Inc. ("Cytovia"), a privately held biopharmaceutical research company. The transaction was accounted for using the purchase method of accounting in accordance with Accounting Principles Board (APB) Opinion No. 16. The Company recorded goodwill and other intangible assets, consisting of assembled workforce, that combined had an unamortized book value of $28,179,466 at September 30, 2001. Through September 30, 2001, goodwill and assembled workforce were being amortized over 15 years and five years, respectively.

Effective October 1, 2001, the Company adopted the provisions of Statement of Financial Accounting Standard ("SFAS") No. 142, "Goodwill and Other Intangible Assets". SFAS No. 142

requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually. SFAS No. 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets to Be Disposed Of".

As a result of the adoption of SFAS No. 142, the Company ceased amortizing goodwill on October 1, 2001, and performed the transitional impairment assessment of the goodwill related to the Cytovia acquisition for impairment as of October 1, 2001. Although the goodwill arose from purchase accounting applied to the acquisition of a specific entity, SFAS No. 142 requires that this test be applied to the relevant "reporting unit" which may differ from the specific entity acquired. Due to the integrated nature of the Company's operations, the entire Company was determined to be one single reporting unit. Under the provisions of SFAS No. 142, the Company was required for the first time to determine the impairment of goodwill by first comparing the fair value of the Company, with the fair value based on the market price of the Company's common stock, to the carrying value of its assets, including goodwill. As this analysis indicated an impairment of goodwill, the Company was required to measure the amount of impairment by comparing the "implied" fair value of the goodwill to its carrying amount.

The analyses performed under SFAS No. 142 resulted in an implied fair value of the goodwill of zero. Therefore, a charge of $28,179,466 was recorded during the quarter ended December 31, 2001 reflecting the cumulative effect of change in accounting principle resulting from the adoption of SFAS No. 142 and the related write down of goodwill.

Had the Company accounted for its goodwill under the provisions of SFAS No. 142 beginning October 1, 2000, the Company's net loss applicable to common stock and net loss per share would have been as follows for the three and nine months ended June 30, 2001:

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

the Southern District of California was dismissed by the court, but the plaintiff was given 30 days to file an amended complaint. In May 2002, the plaintiff filed an amended complaint, and the Company filed a motion to dismiss the amended complaint in June 2002. A hearing on the Company's motion to dismiss the amended complaint is scheduled to take place on August 26, 2002.

In October 2001 and May 2002, certain former shareholders of Cytovia filed complaints in California Superior Court in San Diego, against the Company and two of its officers based on similar facts and circumstances, alleging fraud and negligent misrepresentation in connection with the Company's acquisition of Cytovia. The Superior Court subsequently issued an order compelling the first lawsuit to an arbitration forum and the second lawsuit has been stayed pending resolution of the arbitration proceeding.

The Company believes that the claims set forth in each of these complaints are without merit, and it intends to engage in a rigorous defense of such claims.

On July 29, 2002, the Company amended our credit agreement which increased our available line of credit to $3,800,000, providing the Company an additional $600,000 of borrowing capacity. The Company can access the line for equipment and other capital assets purchased between the date of the amendment through September 30, 2002. The agreement continues to contain customary affirmative and negative covenants, including financial covenants requiring the maintenance of specified liquidity terms and minimum tangible net worth. In addition, the Company is required to maintain its principal depository and operating accounts with the bank. The Company can choose to maintain a minimum aggregate balance of $3,500,000 at the institution or pay to the bank a fee in the amount of $2,500 quarterly in arrears. Payments on the line of credit are to be paid in equal monthly installments commencing November 1, 2002 through April 1, 2006 at an interest rate of prime plus ..75%.

On July 23, 2002, the Company increased its guarantee to $1,800,000 on loans made by a bank to two officers of the Company and one former officer of the Company. Under the guarantor agreement, the Company granted the bank a security interest in a $1,800,000 certificate of deposit as collateral for the loans the bank made to the individual parties.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 drug candidates 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 such differences include, but are not limited to, those discussed in the section entitled "Risk Factors" following in this Report. As a result, you are cautioned not to rely on these forward-looking statements.

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2002 AND 2001

Collaboration and Research Revenue—For the quarter ended June 30, 2002, collaboration and research revenue totaled $776,000, a decrease of $50,000, or 6%, from the same period in the prior year. Collaboration and research revenue for the nine months ended June 30, 2002 totaled $1,818,000 compared to $2,528,000 for the nine months ended June 30, 2001. These decreases were primarily related to a decrease in research revenues associated with the licensing of the Company's MX2105 series of caspase-inducer anti-cancer compounds, a transaction that occurred shortly before the start of the prior fiscal year.

Research and Development Expenses—Research and development expenses for the quarter ended June 30, 2002 totaled $7,631,000, an increase of $1,502,000, or 24%, over the same period in the prior year. This increase was due to increased expenses associated with the apoptosis modulator technology platform as well as an increase in research expenses related to the start of a Phase 3 clinical trial of Ceplene™ for the treatment of patients with advanced metastatic melanoma, and our Phase 2 triple-drug combination therapy trial for the treatment of patients infected with Hepatitis C. For the nine months ended June 30, 2002, research and development expenses were $23,501,000, a decrease of $1,929,000, or 8%, from the same period of the prior year. This decrease was primarily due to the completion of three large Ceplene™ clinical trials, and the advancement of several other clinical trials to the follow-up stage where ongoing costs were less than in the prior period.

Marketing and Business Development Expenses—Marketing and business development expenses for the quarter ended June 30, 2002 were $886,000, a decrease of $472,000, or 35%, from the same period of the prior year. For the nine months ended June 30, 2002, marketing and business development expenses were $2,268,000, a decrease of $4,930,000, or 68%, from the same period in the prior year. These decreases were due to a decrease in marketing and sales management personnel and other premarketing activities that were incurred in preparation for the potential U.S. market launch of Ceplene. The market launch of Ceplene was originally anticipated for the first half of 2001; therefore, increased marketing preparation costs were incurred during the prior year periods. The potential launch was delayed to a future period after the 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, until a second Phase 3 clinical trial is completed.

General and Administrative Expenses—For the quarter ended June 30, 2002, general and administrative expenses were $1,502,000, an increase of $119,000, or 9%, over the same period in the prior year, primarily as a result of the increased legal and other related fees due to the shareholder litigation. For the nine months ended June 30, 2002, general and administrative expenses were consistent with the same period in the prior year.

Amortization of Goodwill and Other Acquisition-Related Intangible Assets—There was no amortization of goodwill and other acquisition related intangible assets for the three and nine months ended June 30, 2002, compared to the $551,000 and 1,667,000 for the three and nine months ended June 30, 2001. These decreases were due to the adoption, effective October 1, 2001, of SFAS No. 142, "Accounting for Goodwill and Other Intangible Assets", which ceased the amortization of goodwill and identified intangible assets with indefinite lives.

Other Income—Investment income was $1,132,000 for the quarter ended June 30, 2002, a decrease of $1,063,000, or 48%, from the same period in the prior year. For the nine months ended June 30, 2002, investment income totaled $4,015,000, a decrease of $3,899,000 or 49% from the same period in the prior year. These decreases were a result of the decrease in investment balances and the rate of earnings due to reductions in interest rates.

Cumulative Effect of Change in Accounting Principle—The non-cash $28,179,000 charge recorded during the nine months ended June 30, 2002 reflects the write down of the carrying value of goodwill associated with the Cytovia acquisition recorded as a result of the adoption, effective October 1, 2001, of SFAS No. 142, "Accounting for Goodwill and Other Intangible Assets".

Net Loss Applicable to Common Stock—Net loss applicable to common stock for the quarter ended June 30, 2002 totaled $8,156,000, an increase of $1,727,000 or 27%, from the same period in the prior year. This increase was primarily due to the decrease in investment income and the slight increase in operating expenses, as described above. Net loss applicable to common stock for the nine months ended June 30, 2002 totaled $53,223,000, an increase of $24,069,000 or 83%, from the same period in the prior year. The increase was primarily due to the cumulative effect of the change in accounting principle and the decrease in investment income, partially offset by the decrease in operating expenses, as described above.

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 apoptosis 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.

Until required for operations, the Company's policy under established guidelines is to keep its cash reserves in bank deposits, certificates of deposit, commercial paper, corporate notes, United States government instruments and other readily marketable debt instruments, all of which are investment-grade quality.

As of June 30, 2002, the Company had cash, cash equivalents and investments totaling approximately $119.9 million. For the nine months ended June 30, 2002, net cash used in the Company's operating activities was approximately $24.0 million, as compared to $30.6 million during the same period in the prior year, primarily due to lower research and development and marketing and business development expenditures. 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, and earlier-stage clinical trials and other research related

to liver disease and the apoptosis modulator and MaxDerm™ technologies. Other factors that may impact the Company's cash requirements include the results of clinical trials, the scope of other research and development activities, the time required to obtain regulatory approvals, costs associated with defending certain lawsuits currently pending against the Company, the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights, the 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.

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.

The impact of inflation on the operations of the Company for the three months and nine months ended June 30, 2002 and 2001 was not material.

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses as well as related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to clinical trials and research and license agreements. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. Under different assumptions or conditions these estimates may vary significantly. In addition, actual results may differ materially from these estimates.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its condensed consolidated financial statements.

Revenue Recognition. The Securities and Exchange Commission's Staff Accounting Bulletin No. 101, Revenue Recognition (SAB No. 101), provides guidance on the application of generally accepted accounting principles to selected revenue recognition issues. The Company believes that its revenue recognition policy is appropriate and in accordance with generally accepted accounting principles and SAB No. 101, as noted below.

The Company's collaborative development agreements generally contain specific payments for specific activities or elements of the agreements. Up-front technology access fees are recognized over the term of the agreement or ongoing research period, as applicable, unless the Company has no further continuing performance obligations related to the fees. Research funding is recognized over the applicable research period as research activities are performed. Milestone payments are recognized when earned, as the milestone events are substantive and their achievability is not reasonably assured at the inception of the agreement. Amounts received but unearned are recorded as deferred revenue.

Certain collaborative agreements provide the Company donated materials and services which are recorded when used at the fair market value of the material received or the service provided.

Clinical trial expenses. The Company accounts for certain study drug, clinical trial site and other clinical trial costs by estimating the services incurred but not reported for each patient enrolled in each trial. These costs vary based on the type of clinical trial, the site of the clinical trial, the length of treatment period for each patient and the length of time required to receive formal documentation of the actual expenses incurred. As actual costs become known to it, the Company may need to make a material change in its estimated accrual, which could also materially affect its results of operations.

Valuation of Intellectual Property. The Company evaluates its licenses and patent assets for impairment on an annual basis, and whenever indicators of impairment exist. During this process, the Company reviews its portfolio of pending domestic and international patent applications, domestic and international issued patents, and licenses the Company has acquired from other parties. To determine if any impairment is present, the Company considers challenges or potential challenges to its existing patents, the likelihood of applications being issued, the scope of its issued patents and its experience. In the event that it is determined that an impairment exists where the Company had previously determined that one did not exist, it may result in a material adjustment to the Company's financial statements.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations", which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and for the associated asset retirement costs. The standard applies to tangible long-lived assets that have a legal obligation associated with their retirement that results from the acquisition, construction or development or normal use of the asset. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the remaining life of the asset. The liability is accreted at the end of each period through charges to operating expense. This Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. The adoption of this statement is not expected to have a material impact on the Company's consolidated financial statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. While SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", it retains many of the fundamental provisions of SFAS No. 121, including the recognition and measurement of the impairment of long-lived assets to be held and used, and the measurement of long-lived assets to be disposed of by sale. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The adoption of this statement is not expected to have a material impact on the Company's consolidated financial statements.

In April 2002, FASB issued SFAS No. 145 "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS No. 145 rescinds FASB Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that Statement, SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements and SFAS No. 44, Accounting for Intangible Assets of Motor Carriers. It also amends SFAS No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. The provisions of this Statement related to the rescission of Statement 4 are applicable in fiscal years beginning after May 15, 2002. The provisions of this Statement related to Statement 13 are effective for transactions occurring after May 15, 2002. All other provisions of this Statement are effective for financial statements issued on or

after May 15, 2002. The adoption of this statement is not expected to have a material impact on the Company's consolidated financial statements.

In July 2002, SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" was issued. SFAS No. 146 provides guidance on the recognition and measurement of liabilities associated with exit and disposal activities. Under SFAS No. 146, liabilities for costs associated with exit or disposal activities should be recognized when the liabilities are incurred and measured at fair value. This statement is effective prospectively for exit or disposal activities initiated after December 31, 2002. It is not anticipated that the financial impact of this statement will have a material effect on the Company's consolidated financial statements.

You should carefully consider the following risk factors and the other information included herein as well as the information included in our Annual Report on Form 10-K for the year ended September 30, 2001, and other reports and filing made with the Securities and Exchange Commission before investing in our common stock. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. The trading price of our common stock could decline due to any of these risks, and you may lose part or all of your investment.

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

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

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

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

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

In addition, manufacturing facilities operated by the third party manufacturers with whom we contract to manufacture Ceplene and our other drug candidates may not pass an FDA preapproval inspection. Moreover, if the FDA grants regulatory approval of a product, the approval may be limited

to specific indications or limited with respect to its distribution. Foreign regulatory authorities may apply similar limitations or may refuse to grant any approval.

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

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

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

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

In December 2000, plaintiff Blake Martin, on behalf of himself and purportedly on behalf of a class of our stockholders, filed a complaint in the United States District Court for the Southern District of California against us and certain of our officers, alleging violations of federal securities laws related to declines in our stock price. Thereafter, approximately thirteen similar complaints were filed in the same court (collectively "Southern District Complaints"). The Southern District Complaints have been consolidated into a single action. All complaints allege claims in connection with various alleged statements and omissions to the public and to the securities markets relating to our drug candidate, Ceplene. In December 2001, we filed a motion to dismiss the Southern District Complaints, which was heard in February 2002. On April 22, 2002, the court granted our motion to dismiss but gave the plaintiff 30 days to file an amended complaint. In May 2002, the plaintiff filed an amended complaint, and we filed a motion to dismiss the amended complaint in June 2002. A hearing on our motion to dismiss the amended complaint is scheduled to take place on August 26, 2002.

In October 2001 and May 2002, a state court action was filed by former Cytovia shareholders in the Superior Court in San Diego County, California, alleging fraud and misrepresentation in connection with our acquisition of Cytovia. In November 2001, we filed a petition to compel arbitration of one state court action, and such motion was granted in January 2002. The second lawsuit has been stayed

pending the resolution of the arbitration proceeding. No arbitration demand has yet been served on the Company.

No assurances can be made that we will be successful in our defense of these claims. If we are not successful in our defense of such claims, we could be forced to make significant payments to our stockholders and the plaintiff and defense lawyers, and such payments could have a material adverse effect on our business, financial condition and results of operations if not covered by our 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.

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

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

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

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

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

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

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

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

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

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

We may rely on collaborative partners to market and sell Ceplene in international markets, and such arrangements may be sought to market certain other drug candidates in all markets. We have not yet entered into any collaborative arrangement with respect to marketing or selling Ceplene with the exception of agreements relating to Australia, New Zealand and Israel, and have not entered into any agreements regarding the marketing or selling of our other drug candidates with the exception of a license agreement relating to our MX2105 series of anti-cancer compounds. We cannot guarantee that we will be able to enter into any such arrangements on terms favorable to us, or at all. If we are able to enter into marketing and selling arrangements with collaborative partners, we cannot assure you that such marketing collaborators will apply adequate resources and skills to their responsibilities, or that their marketing efforts will be successful.

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

We do not intend to acquire or establish our own dedicated manufacturing facilities for Ceplene and our other drug candidates in the foreseeable future. We have contracted and expect to continue to contract with established pharmaceutical manufacturers for the production of Ceplene. If we are unable to continue to contract with third-party manufacturers on acceptable terms or our manufacturers do not comply with applicable regulatory requirements, our ability to conduct clinical testing and to produce commercial quantities of Ceplene and other products will be adversely affected. If we cannot adequately manufacture our products, it could result in delays in submissions for regulatory approval and in commercial product launches, which in turn could materially impair our competitive position and the possibility of achieving profitability. We cannot guarantee that we will be able to maintain our existing contract manufacturing relationships, or acquire or establish new, satisfactory third-party relationships to provide adequate manufacturing capabilities in the future.

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

We are a development-stage enterprise. We have experienced net losses every year since our inception and, as of June 30, 2002, had an accumulated deficit of approximately $250 million. We anticipate incurring substantial additional losses over at least the next several years related to developing and testing our drug candidates and preparing for commercialization and planned market launches of our products. If we do not become profitable, our stock price will be negatively affected, and we may ultimately be forced to discontinue our operations.

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

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

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

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

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

products that are more effective, less costly or have better side effect profiles than our products, then our future potential market share could decrease which may have a negative impact on our business.

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

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

The patent positions of biotechnology and pharmaceutical companies are highly uncertain and involve complex legal and factual questions, and the breadth of claims allowed in biotechnology and pharmaceutical patents cannot be predicted. As a result, patents may not issue from any of our patent applications. Further, at this time most patent applications in the United States are secret until a patent issues. Under recent statutory changes, some, but not all U.S. patent applications will be published, but only 18 months after filing. Thus, we cannot be certain that others have not filed patent applications for technology covered by our pending applications or that we were the first to file patent applications for this technology. In addition, patents currently held by us or issued to us in the future, or to licensors from whom we have licensed technology rights, may be challenged, invalidated or circumvented so that our intellectual property rights may not protect our technologies or provide commercial advantage to us. In addition, we also rely on unpatented trade secrets and proprietary know-how, and we cannot be sure that others will not obtain access to or independently develop such trade secrets and know-how. Enforcement of our intellectual property rights against any infringers of our patents relating to Ceplene and our other technologies will be costly and time-consuming. Because of the nature of those patents, we could be required to bring lawsuits against many different entities such as hospitals or clinics. This would have the effect of increasing the costs of enforcing our rights.

The pharmaceutical industry has experienced extensive litigation regarding patent and other intellectual property rights. Although, to date, we are not aware of any intellectual property claims against us, in the future we could be forced to incur substantial costs in defending ourselves in lawsuits that are brought against us claiming that we have infringed on the patent rights of others or in asserting our patent rights in lawsuits against other parties. We may also be required to participate in interference proceedings declared by the U.S. Patent and Trademark Office for the purpose of determining the priority of inventions in connection with our patent applications or other parties' patent applications. Adverse determinations in litigation or interference proceedings could require us to seek licenses that may not be available on commercially reasonable terms or subject us to significant liabilities to third parties.

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

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

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

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

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

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

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

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

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

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

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

The Company's exposure to market risk is principally confined to its cash equivalents and investments that have maturities of less than three years. 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 June 30, 2002 would have resulted in approximately a $112,000 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, 2001.

In December 2000, plaintiff Blake Martin, on behalf of himself and purportedly on behalf of a class of Company stockholders, filed a complaint in the United States District Court for the Southern District of California against the Company and certain of its officers, alleging violations of federal securities laws related to declines in the Company's stock price. Thereafter, approximately thirteen similar complaints were filed in the same court (collectively "Southern District Complaints"). The Southern District Complaints have been consolidated into a single action. All complaints allege claims in connection with various alleged statements and omissions to the public and to the securities markets relating to the Company's drug candidate, Ceplene. In December 2001, the Company filed a motion to dismiss the Southern District Complaints, which was heard in February 2002. On April 22, 2002, the court granted the Company's motion to dismiss but gave the plaintiff 30 days to file an amended complaint. In May 2002, the plaintiff filed an amended complaint, and the Company filed a motion to dismiss the amended complaint in June 2002. A hearing on the Company's motion to dismiss the amended complaint is scheduled to take place on August 26, 2002.

In October 2001 and May 2002, a state court action was filed by former Cytovia shareholders in the Superior Court in San Diego County, California, alleging fraud and misrepresentation in connection with the Company's acquisition of Cytovia. In November 2001, the Company filed a petition to compel arbitration of one state court action, and such motion was granted in January 2002. The second lawsuit has been stayed pending the resolution of the arbitration proceeding. No arbitration demand has yet been served on the Company.

No assurances can be made that the Company will be successful in its defense of these claims. If it is not successful in its defense of such claims, the Company could be forced to make significant payments to its stockholders and the plaintiff and defense lawyers, and such payments could have a material adverse effect on the Company's business, financial condition and results of operations, if not covered by the Company's insurance carrier. Even if the Company's defense against such claims is successful, the litigation could result in substantial costs and divert management's attention and resources, which could adversely affect the Company's business.

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.

			Page
Part I—Financial Information
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets (unaudited)—June 30, 2002 and September 30, 2001	1
		Condensed Consolidated Statements of Operations (unaudited)—Three Months and Nine Months Ended June 30, 2002 and 2001 and from Inception (October 23, 1989) through June 30, 2002	2
		Condensed Consolidated Statements of Cash Flows (unaudited)—Nine Months Ended June 30, 2002 and 2001 and from Inception (October 23, 1989) through June 30, 2002	3
		Notes to Condensed Consolidated Financial Statements (unaudited)	4
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	7
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Part II—Other Information
	Item 1.	Legal Proceedings	20
	Item 6.	Exhibits and Reports on Form 8-K	21
SIGNATURE			22

				As of June 30 2002			As of September 30 2001
ASSETS
Current Assets:
	Cash and cash equivalents			$	17,447,294		$	20,438,726
	Short-term investments in marketable securities, available for sale				98,419,476			122,121,280
	Accrued interest and other current assets				3,033,307			4,602,335

		Total current assets			118,900,077			147,162,341
Restricted cash and cash equivalents					4,000,000			4,000,000
Property and equipment, net					5,399,112			6,071,664
Patents and licenses, net					2,776,648			1,957,502
Note receivable from officer					3,108,922			3,011,709
Goodwill and intangible assets, net					—			28,179,466
Deposits and other assets					167,355			373,656

		Total assets		$	134,352,114		$	190,756,338

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
	Accounts payable			$	739,246		$	2,726,643
	Accrued expenses				3,649,194			3,781,078
	Notes payable				—			214,008
	Current installments of obligations under capital leases				305,913			389,127
	Current portion of long-term debt				663,000			395,464
	Deferred revenue				395,833			843,750

		Total current liabilities			5,753,186			8,350,070
Long-term debt					1,381,250			1,450,036
Obligations under capital leases, excluding current installments					87,270			309,631
Commitments and contingencies
Stockholders' Equity:
	Convertible preferred stock, $.001 par value, 5,000,000 shares authorized, zero shares issued and outstanding at June 30, 2002 and September 30, 2001				—			—
	Common stock, $.001 par value, 40,000,000 shares authorized; 23,292,393 and 23,252,457 shares issued and outstanding at June 30, 2002 and September 30, 2001, respectively				23,293			23,253
	Additional paid-in capital				376,616,892			376,410,576
	Deficit accumulated during the development stage				(249,948,533	)		(196,725,305	)
	Accumulated other comprehensive income				438,756			938,077

		Total stockholders' equity			127,130,408			180,646,601

			Total liabilities and stockholders' equity	$	134,352,114		$	190,756,338

			Three Months Ended June 30						Nine Months Ended June 30						From Inception (October 23, 1989) Through June 30, 2002
			2002			2001			2002			2001			From Inception (October 23, 1989) Through June 30, 2002
Collaboration and research revenue			$	776,296		$	826,715		$	1,817,831		$	2,527,643		$	10,653,619
Operating expenses:
	Research and development			7,631,218			6,129,592			23,501,071			25,430,092			164,669,375
	Marketing and business development			885,792			1,357,574			2,268,222			7,198,125			19,401,632
	General and administrative			1,501,805			1,383,058			4,980,825			5,204,177			31,283,848
	Amortization of goodwill and other acquisition-related intangible assets			—			550,929			—			1,667,419			2,955,435
	Purchased in-process technology			—			—			—			—			42,300,000

		Total operating expenses		10,018,815			9,421,153			30,750,118			39,499,813			260,610,290

Loss from operations				(9,242,519	)		(8,594,438	)		(28,932,287	)		(36,972,170	)		(249,956,671	)

Other income (expense):
	Investment income			1,131,731			2,195,013			4,014,672			7,914,143			26,379,660
	Gain on sale of assets			—			—			—			—			4,434,976
	Interest expense			(44,898	)		(27,631	)		(135,832	)		(95,469	)		(2,620,982	)
	Other income (expense)			(521	)		(2,182	)		9,685			(897	)		(6,050	)

		Total other income		1,086,312			2,165,200			3,888,525			7,817,777			28,187,604

Loss before cumulative effect of accounting change and preferred stock dividends				(8,156,207	)		(6,429,238	)		(25,043,762	)		(29,154,393	)		(221,769,067	)
	Cumulative effect of accounting change			—			—			(28,179,466	)		—			(28,179,466	)

Net loss before preferred stock dividends				(8,156,207	)		(6,429,238	)		(53,223,228	)		(29,154,393	)		(249,948,533	)
	Dividends on preferred stock			—			—			—			—			5,495,683

Net loss applicable to common stock			$	(8,156,207	)	$	(6,429,238	)	$	(53,223,228	)	$	(29,154,393	)	$	(255,444,216	)

Basic and diluted net loss per share of common stock
	Before cumulative effect of accounting change		$	(0.35	)	$	(0.28	)	$	(1.08	)	$	(1.26	)
	Cumulative effect of accounting change			—			—			(1.21	)		—

	Basic and diluted net loss per share of common stock		$	(0.35	)	$	(0.28	)	$	(2.29	)	$	(1.26	)

Weighted average shares outstanding				23,280,137			23,235,198			23,266,487			23,211,857

				Nine Months Ended June 30						From Inception (October 23, 1989) Through June 30, 2002
				2002			2001			From Inception (October 23, 1989) Through June 30, 2002
OPERATING ACTIVITIES:
Net loss				$	(53,223,228	)	$	(29,154,393	)	$	(249,948,533	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization				1,699,405			3,078,725			9,650,477
	Stock contributions to 401(k) plan				153,117			145,697			548,135
	Cumulative effect of accounting change				28,179,466			—			28,179,466
	Stock-based compensation				—			60,262			1,272,687
	Loss (gain) on disposal of property and equipment				(2,212	)		3,545			281,191
	Loss on write-off of patents				—			—			444,241
	Amortization of premium on investments				—			—			535,285
	Other				—			—			(283,658	)
	Purchased in-process technology				—			—			44,946,166
	Cumulative effect of reorganization				—			—			1,152,667
	Gain on sale of subsidiary				—			—			(2,288,474	)
	Gain on sale of assets				—			(3,958	)		(2,146,502	)
	Changes in operating assets and liabilities:
		Accrued interest and other current assets			1,569,028			1,491,201			(1,793,024	)
		Deposits and other assets			206,301			18,893			(663,445	)
		Accounts payable			(1,987,397	)		(4,575,968	)		(351,998	)
		Accrued expenses			(131,884	)		(422,436	)		2,351,407
		Deferred revenue			(447,917	)		(1,218,753	)		395,833

			Net cash used in operating activities		(23,985,321	)		(30,577,185	)		(167,718,079	)
INVESTING ACTIVITIES:
Purchases of marketable securities					(53,597,518	)		(66,356,717	)		(375,591,116	)
Sales and maturities of marketable securities					76,800,000			72,193,000			278,112,951
Purchases of property and equipment					(944,780	)		(3,407,971	)		(9,404,487	)
Additions to patents and licenses					(953,602	)		(550,447	)		(5,347,750	)
Net proceeds from sale of assets					54,596			36,186			3,506,151
Cash acquired in acquisition of business					—			—			1,121,297

			Net cash provided by (used in) investing activities		21,358,696			1,914,051			(107,602,954	)
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock and exercise of stock options and warrants					53,239			511,743			253,285,615
Net proceeds from issuance of preferred stock					—			—			41,298,008
Payment of preferred stock dividends					—			—			(302,361	)
Proceeds from issuance of notes payable and long-term debt					475,000			1,553,500			8,752,578
Restricted cash					—			—			(4,000,000	)
Payments on notes payable, long-term debt, and capital lease obligations					(795,833	)		(537,410	)		(6,808,937	)
Proceeds from issuance of notes payable to related parties					—			—			4,982,169
Payments on notes payable to related parties					—			—			(1,329,885	)
Loan to officer					(97,213	)		(2,975,496	)		(3,108,922	)

			Net cash (used in) provided by financing activities		(364,807	)		(1,447,663	)		292,768,265
Effect of exchange rate changes on cash					—			61			62

Net increase (decrease) in cash and cash equivalents					(2,991,432	)		(30,110,736	)		17,447,294
Cash and cash equivalents at beginning of period					20,438,726			72,627,089			—

Cash and cash equivalents at end of period				$	17,447,294		$	42,516,353		$	17,447,294

Noncash investing activities:
	Increase (decrease) in fair value of securities available for sale			$	(499,321	)	$	663,703

	Three Months Ended June 30, 2001			Nine Months Ended June 30, 2001
Reported net loss applicable to common stock	$	(6,429,238	)	$	(29,154,393	)
Add back goodwill amortization		550,929			1,667,419

Adjusted net loss applicable to common stock	$	(5,878,309	)	$	(27,486,974	)

Basic and diluted net loss per share of common stock:
Reported net loss per share of common stock	$	(0.28	)	$	(1.26	)
Goodwill amortization		0.03			0.08

Adjusted basic and diluted net loss per share of common stock	$	(0.25	)	$	(1.18	)

10.1		Amended and Restated Employment Agreement dated June 1, 2002 between the Registrant and Dale A. Sander.*
10.2		Employment Agreement dated June 1, 2002 between the Registrant and Pam G. Gleason.*
10.3		Loan Modification Agreement dated July 29, 2002 between the Registrant and Silicon Valley Bank.
10.4		Amendment to Assignment of Deposit Account dated July 23, 2002 between the Registrant, Silicon Valley Bank, and Geoffrey B. Altman.
10.5		Amendment to Assignment of Deposit Account dated July 23, 2002 between the Registrant, Silicon Valley Bank, and Kurt R. Gehlsen.
10.6		Amendment to Assignment of Deposit Account dated July 23, 2002 between the Registrant, Silicon Valley Bank, Dale A. Sander and Denise M. Sander.
99.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

		MAXIM PHARMACEUTICALS, INC.
		By:		/s/ LARRY G. STAMBAUGH Larry G. Stambaugh Chief Executive Officer and Acting Chief Financial Officer (Principal Financial and Accounting Officer and Officer duly authorized to sign this report on behalf of the registrant)