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Table of Contents
 
United States
Securities and Exchange Commission
Washington, D.C. 20549
 
 
Form 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2002
 
Commission file number 000-28401
 
 
 
 
MAXYGEN, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
(State of incorporation)
  
77-0449487
(I.R.S. Employer Identification No.)
 
515 Galveston Drive
Redwood City, California 94063
(Address of principal executive offices, including zip code)
 
 
(650) 298-5300
(Registrant’s telephone number, including area 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     X                No        
 
As of August 1, 2002, there were 34,310,308 shares of the registrant’s common stock outstanding.

1

Table of Contents
 
MAXYGEN, INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 2002
 
INDEX
         
Part I
 
FINANCIAL INFORMATION
     
Item 1:
  
Unaudited Financial Statements:
     
      
3
      
4
      
5
      
6
Item 2:
     
13
Item 3:
     
30
Part II
  
OTHER INFORMATION
     
Item 1:
     
31
Item 2:
     
31
Item 3:
     
31
Item 4:
     
32
Item 5:
     
32
Item 6:
     
32
  
33

2

Table of Contents
Part I – Financial Information
ITEM 1
FINANCIAL STATEMENTS
 
MAXYGEN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
    
December 31,
2001
     
June 30,
2002
  
    
(Note 1)
     
(unaudited)
  
ASSETS
                  
Current assets:
                  
Cash and cash equivalents
   
$
48,388
 
   
$
109,034
 
Short-term investments
   
 
157,557
 
   
 
109,880
 
Grant and other receivables
   
 
7,300
 
   
 
9,243
 
Prepaid expenses and other current assets
   
 
2,279
 
   
 
3,175
 
    
  
Total current assets
   
 
215,524
 
   
 
231,332
 
Property and equipment, net
   
 
17,340
 
   
 
17,339
 
Goodwill
   
 
12,192
 
   
 
12,192
 
Intangible assets, net of accumulated amortization of $1,593 at December 31, 2001 and $2,165 at June 30, 2002, respectively
   
 
1,842
 
   
 
1,270
 
Long-term investments
   
 
28,932
 
   
 
2,540
 
Investment in joint venture
   
 
—  
 
   
 
771
 
Deposits and other assets
   
 
1,588
 
   
 
1,456
 
    
  
Total assets
   
$
277,418
 
   
$
266,900
 
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
Current liabilities:
                  
Accounts payable
   
$
3,398
 
   
$
1,828
 
Accrued compensation
   
 
2,355
 
   
 
3,670
 
Accrued legal expenses
   
 
815
 
   
 
1,084
 
Deferred rent
   
 
937
 
   
 
1,025
 
Other accrued liabilities
   
 
2,381
 
   
 
2,484
 
Deferred revenue
   
 
9,093
 
   
 
10,404
 
Current portion of equipment financing obligations
   
 
622
 
   
 
660
 
    
  
Total current liabilities
   
 
19,601
 
   
 
21,155
 
Deferred revenue
   
 
3,410
 
   
 
2,497
 
Non-current portion of equipment financing obligations
   
 
673
 
   
 
333
 
Commitments and contingencies
                  
Stockholders’ equity:
                  
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at December 31, 2001 and June 30, 2002
   
 
—  
 
   
 
—  
 
Common stock, $0.0001 par value: 100,000,000 shares authorized, 34,026,414, and 34,248,858 shares issued and outstanding at December 31, 2001 and June 30, 2002, respectively
   
 
3
 
   
 
3
 
Additional paid-in capital
   
 
389,607
 
   
 
391,711
 
Notes receivable from stockholders
   
 
(339
)
   
 
(262
)
Deferred stock compensation
   
 
(8,509
)
   
 
(4,472
)
Accumulated other comprehensive income
   
 
1,698
 
   
 
2,365
 
Accumulated deficit
   
 
(128,726
)
   
 
(146,430
)
    
  
Total stockholders’ equity
   
 
253,734
 
   
 
242,915
 
    
  
Total liabilities and stockholders’ equity
   
$
277,418
 
   
$
266,900
 
    
  
 
See accompanying notes.

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Table of Contents
 
MAXYGEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
    
Three Months ended
June 30,
     
Six Months ended
June 30,
  
    
2001
     
2002
     
2001
     
2002
  
Collaborative research and development revenue
   
$
5,972
 
   
$
9,294
 
   
$
10,997
 
   
$
17,309
 
Grant revenue
   
 
1,704
 
   
 
1,220
 
   
 
3,609
 
   
 
2,545
 
    
  
  
  
Total revenues
   
 
7,676
 
   
 
10,514
 
   
 
14,606
 
   
 
19,854
 
Operating expenses:
                                    
Research and development
   
 
13,031
 
   
 
15,381
 
   
 
25,727
 
   
 
30,352
 
General and administrative
   
 
3,952
 
   
 
3,185
 
   
 
7,500
 
   
 
6,249
 
Stock compensation expense (1)
   
 
3,512
 
   
 
1,951
 
   
 
7,055
 
   
 
4,128
 
Amortization of goodwill and other intangible assets
   
 
2,182
 
   
 
286
 
   
 
4,363
 
   
 
572
 
    
  
  
  
Total operating expenses
   
 
22,677
 
   
 
20,803
 
   
 
44,645
 
   
 
41,301
 
    
  
  
  
Loss from operations
   
 
(15,001
)
   
 
(10,289
)
   
 
(30,039
)
   
 
(21,447
)
Interest income, net
   
 
3,455
 
   
 
1,807
 
   
 
7,429
 
   
 
3,972
 
Equity in net loss of joint venture
   
 
—  
 
   
 
(229
)
   
 
—  
 
   
 
(229
)
    
  
  
  
Net loss
   
$
(11,546
)
   
$
(8,711
)
   
$
(22,610
)
   
$
(17,704
)
    
  
  
  
Basic and diluted net loss per share
   
$
(0.35
)
   
$
(0.26
)
   
$
(0.70
)
   
$
(0.53
)
Shares used in computing basic and diluted net loss per share
   
 
32,534
 
   
 
33,385
 
   
 
32,359
 
   
 
33,269
 
(1)     Stock compensation expense related to the following:
                                    
Research and development
   
$
2,875
 
   
$
1,511
 
   
$
5,751
 
   
$
3,092
 
General and administrative
   
 
637
 
   
 
440
 
   
 
1,304
 
   
 
1,036
 
    
  
  
  
    
$
3,512
 
   
$
1,951
 
   
$
7,055
 
   
$
4,128
 
    
  
  
  
 
See accompanying notes.

4

Table of Contents
 
MAXYGEN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
    
Six Months ended
June 30,
  
    
2001
     
2002
  
Operating activities
                  
Net loss
   
$
(22,610
)
   
$
(17,704
)
Adjustments to reconcile net loss to net cash used in operating activities:
                  
Depreciation and amortization
   
 
1,333
 
   
 
2,537
 
Amortization of intangible assets
   
 
4,363
 
   
 
572
 
Equity in net loss of joint venture
   
 
—  
 
   
 
229
 
Non-cash stock compensation
   
 
6,899
 
   
 
4,037
 
Common stock issued and stock options granted to
consultants for services rendered
   
 
360
 
   
 
925
 
Changes in operating assets and liabilities:
                  
Grant and other receivables
   
 
1,101
 
   
 
(1,943
)
Prepaid expenses and other current assets
   
 
(469
)
   
 
99
 
Deposits and other assets
   
 
(208
)
   
 
(156
)
Accounts payable
   
 
(19
)
   
 
(1,570
)
Accrued liabilities and deferred rent
   
 
2,952
 
   
 
1,775
 
Deferred revenue
   
 
2,315
 
   
 
398
 
    
  
Net cash used in operating activities
   
 
(3,983
)
   
 
(10,801
)
    
  
Investing activities
                  
Purchases of available-for-sale securities
   
 
(121,332
)
   
 
(18,877
)
Maturities of available-for-sale securities
   
 
87,543
 
   
 
91,671
 
Investment in joint venture
   
 
—