1068796--3/14/2007--MAXYGEN

related topics

{product, candidate, development}

{acquisition, growth, future}

{property, intellectual, protect}

{stock, price, operating}

{regulation, change, law}

{product, market, service}

{personnel, key, retain}

We are an early stage company deploying unproven technologies. If we do not develop commercially successful products, we may be forced to cease operations. Drug development is a long, expensive and uncertain process and may not result in the development of any commercially successful products. Our revenues, expenses and operating results are subject to fluctuations that may cause our stock price to decline. Our revenues are substantially dependent on a limited number of collaborative arrangements and government grants, and our inability to establish or maintain collaborations or grants would adversely impact our revenues, financial position and results of operation. Our potential products are subject to a lengthy and uncertain regulatory process. If our potential products are not approved, we will not be able to commercialize those products. Our current and future product candidates could take a long time to gain regulatory approval, or may never gain approval, which could reduce or eliminate our revenue by delaying or terminating the potential commercialization of our product candidates. 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. If our collaborations are not successful, we may not be able to effectively develop and market some of our products. We conduct proprietary research programs, and any conflicts with our collaborators or any inability to commercialize products resulting from this research 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. We may need additional capital in the future. If additional capital is not available, we may have to curtail or cease operations. Many potential competitors who have greater resources and experience than we do may develop products and technologies that make ours obsolete. Legislative actions, recent and potential new accounting pronouncements and higher compliance costs are likely to adversely impact our future financial position and results of operations. If we do not attract and retain key employees, our business could be impaired. The operation of international locations may increase operating expenses and divert management attention. Acquisitions could result in dilution, operating difficulties and other harmful consequences. Our stock price has been, and may continue to be, extremely volatile, and an investment in our stock could decline in value.

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1068796--3/14/2007--MAXYGEN_INC