1068796--3/12/2009--MAXYGEN

related topics

{product, candidate, development}

{property, intellectual, protect}

{stock, price, operating}

{acquisition, growth, future}

{product, market, service}

{product, liability, claim}

{personnel, key, retain}

{operation, natural, condition}

{control, financial, internal}

{regulation, change, law}

{stock, price, share}

{condition, economic, financial}

We have implemented a substantial restructuring of our operations and revised our strategic plan, and we may fail to successfully execute this plan. If we do not retain key employees, our ability to maintain our ongoing operations or execute a potential strategic option could be impaired. If we are unable to enter into a collaborative or other arrangement with a third party to fund the further development and commercialization of our MAXY-G34 product candidate, we may elect to further delay or cease all development activities on this program. We have a history of net losses. We expect to continue to incur net losses and may not achieve or maintain profitability. We are an early stage company deploying unproven technologies. If we do not develop commercially successful products, we may be forced to cease operations. The prospects of our current product candidates are highly uncertain. Litigation or other proceedings or third party claims of intellectual property infringement relating to our MAXY-G34 product candidate may delay or materially impact the ability to commercialize MAXY-G34. Drug development is a long, expensive and uncertain process and may not result in the development of any commercially successful products. The development of our product candidates, which is based on modifications to natural human proteins, may be subject to substantial delays, increased development costs, reduced market potential for any resulting product or the termination of the affected development program by us or a collaborator, each of which could adversely affect our business. Our clinical development strategy, which relies on third party contract research organizations, exposes us to additional risk. Our revenues, expenses and operating results are subject to fluctuations that may cause our stock price to decline. Our current and future product candidates could take a long time to complete clinical development, may fail in clinical development, or may never gain approval, which could reduce or eliminate our revenue by delaying or terminating the potential commercialization of our product candidates. Our potential products are subject to a lengthy and uncertain regulatory process and may never gain approval. If our potential products are not approved, we will not be able to commercialize those products. Our manufacturing strategy, which relies on third-party manufacturers, exposes us to additional risks. The manufacturing of our product candidates presents technological, logistical and regulatory risks, each of which may adversely affect our potential revenues. We may need additional capital in the future. If additional capital is not available, we may have to curtail or cease operations. If our collaborations are not successful or we are unable to enter into and maintain future collaboration arrangements for any of our product candidates, we may not be able to effectively develop and market some of our products. Any conflicts with a collaborator could harm our business. Any inability to adequately protect our proprietary technologies could harm our competitive position. Litigation or other proceedings or third party claims of intellectual property infringement could require us to spend time and money and could require us to shut down some of our operations. Budget or cash constraints may force us to delay or terminate our efforts to develop certain products and could prevent us from executing our business plan, meeting our stated timetables and commercializing our potential products as quickly as possible. Our revenues have primarily been derived from collaboration and license agreements and government grants, and our inability to maintain these grants and agreements or establish and maintain new collaborations, license agreements or grants would adversely impact our revenues, financial position and results of operation. Other biological products may compete with our products. Many potential competitors who have greater resources and experience than we do may develop products and technologies that make ours obsolete. Legislative actions, new accounting pronouncements and higher compliance costs may adversely impact our future financial position and results of operations. Our stock price has been, and may continue to be, extremely volatile, and an investment in our stock could decline in value. Substantial sales of shares may adversely impact the market price of our common stock. If current levels of market disruption and volatility continue or worsen, we may not be able to preserve our cash balances or access such sources if necessary. If we or a collaborator receives regulatory approval for one of our drug candidates, we will be subject to ongoing FDA obligations and continued regulatory review, and we may also be subject to additional FDA post-marketing obligations, all of which may result in significant expense and limit our ability to commercialize our potential drugs. We may be subject to costly product liability claims and may not have adequate insurance. Some of our existing stockholders can exert control over us, and may not make decisions that are in the best interests of all stockholders. Our facilities in California are located near an earthquake fault, and an earthquake or other types of natural disasters or resource shortages could disrupt our operations and adversely affect our results.

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1068796--3/12/2009--MAXYGEN_INC