Maxygen reports $3.4 million second quarter net loss, plans for two programs to enter clinic in 2006

By Jennifer Lanning Drey

Eugene, Ore., July 31 - Maxygen, Inc. reported a second quarter net loss of $3.4 million, or $0.09 per share, on revenues of $9.3 million, according to a company news release.

That was improved from the net loss of $9.9 million, or $0.28 per share, on revenues of $1.9 million reported for the second quarter of 2005, according to the release.

Maxygen said the increase in revenues in 2006 is primarily due to its ongoing collaboration with Roche for the development of MAXY-VII, which is being developed to treat uncontrolled bleeding.

The company achieved a $5 million preclinical milestone for development of a manufacturing process for factor VIIa product candidates in May.

Maxygen said Monday that it plans to achieve at least one more pre-clinical milestone with MAXY-VII this year.

"We're excited about this program because we believe uncontrolled bleeding is a major medical problem and an underserved market with tremendous market potential," said Russell Howard, chief executive officer of Maxygen, during a company conference call held Monday.

Maxygen is also on track for two of its other drug development programs to enter the clinic this year, he said.

The company is currently completing the necessary preclinical work to file an Investigational New Drug Application and begin phase 1 clinical trials for MAXY-G34 in the third quarter, Howard said.

Maxygen believes MAXY-G34, which is a next-generation G-CSF (granulocyte colony stimulating factor) product for treatment of neutropenia, may demonstrate superior efficacy over products currently available on the market.

"We believe MAXY-G34 would capture a significant portion of the current $3.8 billion worldwide market for G-CSF," said Howard.

Maxygen also expects its MAXY-Alpha program, in development with Roche, to progress to the clinic in 2006, he said. The companies are developing an improved interferon alpha for treatment of hepatitis C viral infections. The product is intended to be used both alone and in conjunction with other small molecules, Howard said.

Maxygen believes the new interferon alpha may have the potential to treat the 40% to 50% of hepatitis C patients who are not effectively treated with existing drugs, he said.

"The drugs we're taking into the clinic in 2006 are both currently multi-billion products. Sales of both alpha interferon and G-CSF are projected to grow over the next few years. It is our hope to gain a significant share of very large markets with proprietary, non-generic drugs designed to be superior to the best-in-class drugs," Howard said.

Maxygen had cash, cash equivalents and marketable securities of $180.2 million on June 30, compared with $180.8 million on March 31, 2006, according to filings made with the Securities and Exchange Commission.

Maxygen has headquarters in Redwood City, Calif., and is focused on the development of superior versions of validated major protein pharmaceuticals.

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