Maxygen Reports Fourth Quarter and Year End 2012 Financial Results

  Maxygen Reports Fourth Quarter and Year End 2012 Financial Results

Business Wire

SAN MATEO, Calif. -- March 12, 2013

Maxygen, Inc. (Nasdaq: MAXY), a biopharmaceutical company, today announced
financial and business results for the quarter and year ended
December31,2012.

Fourth Quarter 2012 Financial Results

Maxygen reported a net loss of $1.8 million, or $0.06 per basic and diluted
share, for the fourth quarter of 2012, compared to $2.2 million, or $0.08 per
basic and diluted share, for the same period in 2011. The net loss for the
fourth quarter of 2012 reflects a loss before income taxes of $0.9 million and
income tax expense of $0.9 million. The net loss for the fourth quarter of
2011 primarily reflects a loss from continuing operations before income taxes
of $2.8 million, plus a net tax benefit of $559,000. The net tax benefit
consists of a $1.2 million tax benefit reported within continuing operations,
partially offset by a $593,000 tax expense recorded within discontinued
operations.

Maxygen had no revenue in the fourth quarter of 2012, compared to total
revenue of $3,000 for the same period in 2011, which consisted of
miscellaneous licensing fees.

Total operating expenses from continuing operations for the fourth quarter of
2012 were $1.8 million, compared to operating expenses of $2.8 million for the
same period in 2011. The decrease in operating expenses primarily reflects a
decrease in stock based compensation expense, salaries and related costs, and
accounting fees.

The fourth quarter of 2012 included a $790,000 gain associated with the sale
of substantially all remaining shares of Codexis, Inc. common stock.

At December 31, 2012, Maxygen held approximately $82.8 million in cash, cash
equivalents and short-term investments. At December 31, 2012, Maxygen had
27,512,340 shares of common stock outstanding, which excludes 285,596 shares
underlying unvested restricted stock awards.

Full Year 2012 Results

Maxygen reported net income of $20.1 million, or $0.74 per basic share and
$0.73 per diluted share, for the year ended December 31, 2012, compared to
$51.4 million, or $1.80 per basic and diluted share, for the prior year.

Total revenues for 2012 were $30.0 million, compared to total revenues from
continuing operations of $561,000 for the same period in 2011. Revenue in the
2012 period consisted primarily of the $30.0 million payment received in May
2012 from Bayer in connection with the sale of certain hematology assets in
July 2008. Revenue in the 2011 period consisted primarily of the final payment
Maxygen received in July 2011 from Altravax, Inc. in connection with its
acquisition of substantially all of Maxygen’s vaccine assets in January 2010.

Total operating expenses for 2012 were $9.8 million, compared to operating
expenses of $12.3 million for the same period in 2011. The decrease in
operating expenses primarily reflects decreased research and development
expenses resulting from the cessation of substantially all research and
development activities, and decreased general and administrative expenses,
primarily due to reductions in fees paid to consultants in connection with the
preparation of the proposal submitted to BARDA in May 2011 with respect to the
MAXY-G34 program. Additionally, a reduction in salaries and related costs
contributed to the decrease in general and administrative expenses.

The 2012 period included a $790,000 gain associated with the sale of
substantially all remaining shares of Codexis, Inc. common stock. The 2011
period included a $62.2 million gain related to the sale of Perseid to
Astellas.

Business Update

Over the past several years, Maxygen has focused its efforts on maximizing
stockholder value through sales, distributions and other arrangements
involving various assets. The sale of Maxygen’s interests in Perseid to
Astellas in May 2011, the company’s receipt of the final $30.0 million payment
from Bayer in May 2012, and the company’s distribution in September 2012 of
approximately $100.0 million in cash to stockholders have all been part of
this multi-year process.

Since 2009, Maxygen has returned over $250.0 million in cash and property to
its stockholders through stock repurchases and distributions of cash and
Codexis common stock, and, as of December 31, 2012, the company held cash,
cash equivalents and short-term investments totaling $82.8 million.

Maxygen continues to retain all rights to its MAXY-G34 product candidate, a
next-generation pegylated granulocyte colony stimulating factor, or G-CSF, for
the treatment of chemotherapy-induced neutropenia and acute radiation
syndrome, and the company continues to focus on creating value from this
program for its stockholders, principally through a sale or other transaction
involving the program. Maxygen has no current plans to independently continue
the further development of this product candidate, and to date, the company
has not been successful in identifying any potential transaction for the
MAXY-G34 program. Accordingly, there can be no assurances the company will be
successful in identifying and consummating any such transaction in the future
or be able to realize any value from this program.

Maxygen also continues to evaluate potential strategic options for the company
as a whole, including a merger, reverse merger, sale, liquidation and
dissolution or other strategic transaction. Also, although none are currently
contemplated, Maxygen expects to evaluate and consider additional
distributions to its stockholders of a portion of the company’s cash resources
in excess of its limited future operational requirements, amounts the company
considers appropriate to pursue its ongoing strategic evaluation and adequate
reserves for potential future liabilities. Such distributions may be
accomplished through cash dividends, stock repurchases or other mechanisms and
may be fully or partially taxable depending on the circumstances of such
distribution.

About Maxygen

Maxygen is a biotechnology company that has historically focused on the
discovery and development of improved next-generation protein pharmaceuticals
for the treatment of disease and serious medical conditions. Maxygen continues
to retain all rights to its MAXY-G34 product candidate, a next-generation
pegylated, granulocyte colony stimulating factor, or G-CSF, for the treatment
of chemotherapy-induced neutropenia and acute radiation syndrome. For more
information, please visit our website at www.maxygen.com.

Cautionary Statement Regarding Maxygen Forward-Looking Statements

This document contains forward-looking statements within the meaning of the
“safe harbor” provisions of the Private Securities Litigation Reform Act of
1995. These statements are based on the current expectations and beliefs of
Maxygen’s management and are subject to a number of factors and uncertainties
that could cause actual results to differ materially from those described in
the forward-looking statements. The following factors and uncertainties, among
others, could cause actual results to differ materially from those described
in the forward-looking statements: our ability or plans to identify and
consummate a strategic transaction for our MAXY-G34 program or to recommence
and/or continue the development of our MAXY-G34 product candidate for any
indication; strategic alternatives and transactions with respect to our
company and the timing, likelihood and outcome thereof; our implementation, or
our failure to implement, any additional distributions of our cash resources
to stockholders; our ability to continue operations and our estimates for
future performance and financial position of the company; and economic,
business, competitive, and/or regulatory factors affecting the business of
Maxygen and the markets it serves generally, including those set forth in
Maxygen’s most recent Annual Report on Form 10-K and Quarterly Report on Form
10-Q, especially in the “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” sections, and its
Current Reports on Form 8-K and other SEC filings. These statements are not
guarantees of future performance, involve certain risks, uncertainties and
assumptions that are difficult to predict, and are based upon assumptions as
to future events that may not prove accurate. Therefore, actual outcomes and
results may differ materially from what is expressed herein. In any
forward-looking statement in which Maxygen expresses an expectation or belief
as to future results, such expectation or belief is expressed in good faith
and believed to have a reasonable basis, but there can be no assurance that
the statement or expectation or belief will result or be achieved or
accomplished. Maxygen is under no obligation to (and expressly disclaims any
such obligation to) update or alter its forward-looking statements whether as
a result of new information, future events, or otherwise, except to the extent
required by applicable law.

Maxygen^® is a trademark of Maxygen, Inc.

                                                               
Selected Consolidated Financial Information

Consolidated Statement of Operations

(in thousands, except per share amounts)
                                                                   
                         Three months ended        Year ended
                          December 31,               December 31,
                          2011       2012           2011          2012
                          (unaudited)                (Note 1)      (unaudited)
                                                                   
Revenues:
Technology and license    $ 3         $ —          $ 561         $ 30,011
revenue
Operating expenses:
Research and development    1           14           1,358         226
General and                 2,790      1,741       10,911       9,524    
administrative
Total operating expenses    2,791       1,755        12,269        9,750
Income (loss) from          (2,788 )    (1,755 )     (11,708 )     20,261
operations
Gain on distribution of     103         22           396           229
equity securities
Gain on sale of equity      —           790          —             790
securities
Interest and other          (104   )    52          864          279      
income (expense), net
Income (loss) from
continuing operations       (2,789 )    (891   )     (10,448 )     21,559
before income taxes
Income tax benefit          1,152      (880   )     4,253        (986     )
(expense)
Income (loss) from          (1,637 )    (1,771 )     (6,195  )     20,573
continuing operations
Discontinued operations:
Income from discontinued    —           —            1,302         —
operations
Gain on sale of             —           —            62,219        —
discontinued operations
Income tax expense for      (593   )    —           (5,579  )     —        
discontinued operations
Income (loss) from
discontinued operations,    (593   )    —           57,942       —        
net of taxes
Net income (loss)           (2,230 )    (1,771 )     51,747        20,573
Net income attributable
to non-controlling          —          —           310          450      
interests
Net income (loss)
attributable to Maxygen,  $ (2,230 )  $ (1,771 )   $ 51,437     $ 20,123   
Inc.
Basic net income (loss)
per share:
Attributable to Maxygen,
Inc. from continuing      $ (0.06  )  $ (0.06  )   $ (0.23   )   $ 0.74
operations
Attributable to Maxygen,
Inc. from discontinued    $ (0.02  )  $ —          $ 2.03        $ —
operations
Attributable to Maxygen,  $ (0.08  )  $ (0.06  )   $ 1.80        $ 0.74
Inc.
Diluted net income
(loss) per share:
Attributable to Maxygen,
Inc. from continuing      $ (0.06  )  $ (0.06  )   $ (0.23   )   $ 0.73
operations
Attributable to Maxygen,
Inc. from discontinued    $ (0.02  )  $ —          $ 2.03        $ —
operations
Attributable to Maxygen,  $ (0.08  )  $ (0.06  )   $ 1.80        $ 0.73
Inc.
Shares used in basic net
income (loss) per share     27,368      27,467       28,574        27,327
calculations
Shares used in diluted
net income (loss) per       27,368      27,467       28,574        27,471
share calculations
                                                                            

Consolidated Balance Sheet Data

(in thousands)
                                                              
                                                December 31,     December 31,
                                                2011             2012

                                                (Note 1)         (Unaudited)
                                                
                                                                 
Cash, cash equivalents and short-term           $   159,571      $    82,780
investments
Available-for-sale investment in equity             2,478             76
securities
Prepaid expenses and other assets                  2,584            365
Total assets                                    $   164,633      $    83,221
                                                                 
Distribution payable                            $   1,076        $    1,285
Other liabilities                                   2,613             1,749
Stockholders' equity                               160,944          80,187
Total liabilities and stockholders’ equity      $   164,633      $    83,221
                                                                      
Note 1: Derived from consolidated audited financial statements as of December
31, 2011.

Contact:

Maxygen, Inc.
Adriann Poat, 650-241-2303
adriann.poat@maxygen.com
 
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