MAXIM PHARMACEUTICALS INC, S-1/A, 1997-10-20

MAXIM PHARMACEUTICALS INC
S-1/A, 1997-10-20
MEDICINAL CHEMICALS & BOTANICAL PRODUCTS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 20, 1997

REGISTRATION NO. 333-35895
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MAXIM PHARMACEUTICALS, INC.

(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 2834 87-0279983
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
organization) Number)
</TABLE>

3099 SCIENCE PARK ROAD, SUITE 150
SAN DIEGO, CALIFORNIA 92121
(619) 453-4040

(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)

DALE A. SANDER
VICE PRESIDENT, FINANCE, CHIEF FINANCIAL OFFICER AND SECRETARY
MAXIM PHARMACEUTICALS, INC.
3099 SCIENCE PARK ROAD, SUITE 150
SAN DIEGO, CALIFORNIA 92121
(619) 453-4040

(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------

COPIES TO:

<TABLE>
<S> <C>
LANCE W. BRIDGES, ESQ. LAWRENCE B. FISHER, ESQ.
RANDY J. BERHOLTZ, ESQ. ORRICK, HERRINGTON & SUTCLIFFE LLP
COOLEY GODWARD LLP 666 FIFTH AVENUE
4365 EXECUTIVE DRIVE, SUITE 1100 NEW YORK, NY 10103
SAN DIEGO, CA 92121 (212) 506-5000
(619) 550-6000
</TABLE>

--------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
--------------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective Registration Statement for the same
offering. / /

If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>

SUBJECT TO COMPLETION, DATED OCTOBER 20, 1997

2,500,000 SHARES

[LOGO]

COMMON STOCK

Of the 2,500,000 shares of Common Stock offered hereby, 2,000,000 shares are
being offered in Sweden and other countries outside the United States (the
"International Offering") and 500,000 shares are being offered in the United
States (the "U.S. Offering," and with the International Offering, collectively
the "Offering"). The number of shares offered in the International and the U.S.
Offerings shown above are indicative amounts only. The number of shares actually
sold in each Offering may be more or less than such amounts.

The Company's Common Stock is traded on the American Stock Exchange ("AMEX")
under the symbol "MMP." On October 15, 1997, the last sale price of the Common
Stock on AMEX was $18 7/8 per share. See "Price Range of Common Stock." The
Common Stock has been approved for listing on the Stockholm Stock Exchange
("SSE") under the symbol "MAXM."

FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" COMMENCING
ON PAGE 6 HEREOF.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2)
<S> <C> <C> <C>
Per Share.............................................. $ $ $
Total (3).............................................. $ $ $
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting offering expenses estimated to be $800,000 payable by the
Company.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 375,000 additional shares of Common Stock solely to cover
over-allotments, if any, on the same terms and conditions as the shares
offered hereby. If such option is exercised in full, the total Price to
Public, Underwriting Discount and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."

------------------------

The shares of Common Stock are offered by the several Underwriters named
herein (and in the wrap-around prospectuses relating to the shares offered in
Sweden and internationally to which this Prospectus is attached), subject to
receipt and acceptance by them and subject to their right to reject any order in
whole or in part. It is expected that the shares of the Company's Common Stock
in the Offering will be delivered in book-entry form on or about ,
1997.

------------------------

RODMAN & RENSHAW, INC. ALFRED BERG

The date of this Prospectus is , 1997
<PAGE>
MAXAMINE CLINICAL TRIAL STATUS

Maxim Pharmaceuticals, Inc. anticipates that by early 1998 it will be
conducting three Phase III clinical trials of MAXAMINE for the treatment of
cancer. In June 1997 the Company commenced a 200-patient clinical trial of
MAXAMINE for advanced malignant melanoma in the United States. A separate Phase
III advanced malignant melanoma trial is planned to commence in Sweden and
Australia by the end of 1997. The Company also intends to commence a Phase III
clinical trial for Acute Myelogenous Leukemia ("AML") in Europe and the United
States in early 1998. Furthermore, the Company has initiated earlier stage
clinical trials of MAXAMINE for the treatment of renal cell carcinoma, hepatitis
C, and multiple myeloma, and expects to commence clinical trials of MAXAMINE for
the treatment of additional cancers, such as prostate adenocarcinoma, in 1998.

<TABLE>
<CAPTION>
PHASE I/II PHASE III
INDICATION RESEARCH* PRECLINICAL* CLINICAL CLINICAL MARKET
- --------------------------------------------------------- ------------- --------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Malignant Melanoma -- United States *** *** *** **
Malignant Melanoma -- Sweden / Australia *** *** ** *
AML -- Sweden / United States *** *** ** *
Renal Cell Carcinoma *** *** **
Multiple Myeloma *** *** **
Hepatitis C *** *** **
Prostate Adenocarcinoma *** *** *
</TABLE>

*** Completed ** In-process * Planned for 1997 or 1998

* Note: Research and preclinical testing is completed or clinical trials are
being conducted in reliance upon work completed in other indications.

See "Business--MAXAMINE Immunotherapy Platform" for more complete description.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS OR THE IMPOSITION OF
PENALTY BIDS. FOR A DISCUSSION OF THESE ACTIVITIES, SEE "UNDERWRITING."

MAXAMINE, MAXVAX AND THE MAXIM LOGO ARE TRADEMARKS OF THE COMPANY. ALL
TRADEMARKS AND TRADE NAMES REFERRED TO IN THIS PROSPECTUS ARE THE PROPERTY OF
THEIR RESPECTIVE OWNERS.

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PROSPECTUS SUMMARY

EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THIS PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE U.S. PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995, AS AMENDED. THESE STATEMENTS INVOLVE KNOWN AND
UNKNOWN RISKS AND UNCERTAINTIES THAT MAY CAUSE THE COMPANY'S ACTUAL RESULTS OR
OUTCOMES TO BE MATERIALLY DIFFERENT FROM THOSE ANTICIPATED AND DISCUSSED HEREIN.
SUCH DIFFERENCES ARE DISCUSSED IN THE CAUTIONARY STATEMENTS ACCOMPANYING THE
FORWARD-LOOKING STATEMENTS AND IN THE RISK FACTORS CONTAINED IN THIS PROSPECTUS
AND IN THE RISK FACTORS DETAILED IN THE COMPANY'S OTHER FILINGS WITH THE SEC
DURING THE PAST 12 MONTHS. IN ASSESSING FORWARD-LOOKING STATEMENTS CONTAINED
HEREIN, READERS ARE URGED TO READ CAREFULLY ALL RISK FACTORS AND CAUTIONARY
STATEMENTS CONTAINED IN THIS PROSPECTUS AND IN THE COMPANY'S OTHER FILINGS WITH
THE SEC. UNLESS OTHERWISE INDICATED, ALL FINANCIAL AND SHARE INFORMATION SET
FORTH IN THIS PROSPECTUS ASSUMES (I) A PUBLIC OFFERING PRICE OF $18 7/8 PER
SHARE AND (II) NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION.

THE COMPANY

Maxim Pharmaceuticals, Inc. ("Maxim" or the "Company") is developing novel
therapeutics for the treatment of cancer and infectious disease. The Company's
lead drug, MAXAMINE, is designed to be self-administered on an outpatient basis
in combination with cytokines such as interleukin-2 ("IL-2") and
interferon-alpha ("IFN-a"). MAXAMINE therapy may be used to facilitate an immune
system mechanism that allows these cytokines and other biological response
modifiers to achieve full anti-tumor and anti-infective potential for the
treatment of cancer and infectious disease. The Company believes that MAXAMINE
therapy has the potential to: (i) significantly increase overall survival
outcomes in certain cancers over existing approved therapies and standards of
care; (ii) lower cytokine dosage requirements and reduce related toxicity; (iii)
provide a more cost-effective treatment; and (iv) improve patient quality of
life during therapy.

The Company anticipates that by early 1998 it will be conducting three Phase
III clinical trials of MAXAMINE for the treatment of cancer. In June 1997 the
Company commenced a 200-patient Phase III clinical trial of MAXAMINE for
advanced malignant melanoma in the United States. A separate Phase III advanced
malignant melanoma trial is planned to commence in Sweden and Australia by the
end of 1997. The Company also intends to commence a Phase III clinical trial for
acute myelogenous leukemia ("AML") in Europe and the United States in early
1998. Furthermore, the Company has initiated earlier stage clinical trials of
MAXAMINE for the treatment of renal cell carcinoma, hepatitis C, and multiple
myeloma, and expects to commence clinical trials of MAXAMINE for the treatment
of additional cancers, such as prostate adenocarcinoma, in 1998.

In the Company's two completed Phase II clinical trials for the treatment of
advanced malignant melanoma, MAXAMINE therapy produced improved patient survival
outcomes. Mean survival time for patients treated with MAXAMINE in each of the
two studies exceeded 14 months as compared with reported mean survival times of
approximately seven months for existing available treatments. In patients where
the melanoma metastasized to the liver, MAXAMINE therapy improved mean survival
time to 20 months as compared with a reported mean survival time of
approximately four months for existing available treatments.

The Company's Phase II clinical trials for the treatment of AML have
demonstrated an improvement of disease-free remission intervals. Patients
treated with MAXAMINE during their first complete remission ("CR1") had mean
time in remission in excess of 20 months as compared with reported mean time in
remission of approximately 12 months for patients under the current standard of
care. Patients who relapsed and achieved a second or greater remission ("CR2+")
and were subsequently treated with MAXAMINE had a mean time in remission in
excess of 20 months as compared with reported mean time in remission of
approximately six months under the current standard of care. In the Company's
ongoing Phase II clinical trial, remission inversion (prolonging the duration of
CR2+ to that equal to or exceeding the patient's prior remission duration) was
achieved in 8 of 10 (80%) evaluable patients treated with MAXAMINE therapy as
compared with approximately 10% to 20% under the current standard of care.

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<PAGE>
There are significant patient populations in the markets targeted by
MAXAMINE. The American Cancer Society estimates that approximately 1,380,000 new
cases and approximately 560,000 deaths will be reported for invasive cancers in
the United States in 1997. The Company estimates that the size of the anti-
cancer market in Europe is approximately equivalent to that of the United States
market. The U.S. Centers for Disease Control and Prevention estimates that
approximately four million Americans are infected with the hepatitis C virus
("HCV"). The World Health Organization and other sources estimate that
approximately 60 million people are chronically infected worldwide with HCV.

Maxim is also developing MAXVAX, a mucosal vaccine carrier/adjuvant
platform. The MAXVAX technology is based on the B subunit of cholera toxin
("CTB"), generally regarded as a safe and effective mucosal vaccine carrier. The
Company expects that its future product development efforts will focus on
mucosal vaccines against sexually transmitted diseases, major respiratory
diseases and gastrointensinal tract diseases. The MAXVAX platform is also being
evaluated for therapeutic vaccines and gene-based vaccines. The Company intends
to seek collaborations with pharmaceutical and biopharmaceutical partners for
the development of mucosal vaccine candidates.

Maxim's drug development strategy is designed to facilitate product
development from preclinical to FDA approval and product launch. Once a product
has been launched, Maxim plans to work with numerous collaborators, both
pharmaceutical and clinical, in the oncology and infectious disease communities
to extend the labeling of the drug to other indications. In order to market its
products effectively, the Company intends to develop marketing alliances with
corporate partners and may co-promote and/or co-market in certain territories.

The Company's principal offices are located at 3099 Science Park Road, Suite
150, San Diego, California 92121, United States, and its telephone number is
(619) 453-4040.

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by the Company
Internationally.................................. 2,000,000 shares

Common Stock Offered by the Company in the U.S..... 500,000 shares

Total Common Stock Offered by the Company...... 2,500,000 shares

Common Stock to be Outstanding after the
Offering......................................... 9,191,501 shares (1)

Use of Proceeds.................................... To finance product development
activities and clinical trials of the
Company's MAXAMINE product, research
and development activities for the
Company's MAXVAX technology and for
working capital and general corporate
purposes. See "Use of Proceeds."

AMEX Symbol........................................ "MMP"

Proposed SSE Symbol (2)............................ "MAXM"
</TABLE>

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(1) Excludes, as of October 15, 1997, an aggregate of (i) 2,875,000 shares of
Common Stock reserved for issuance upon exercise of publicly traded warrants
(the "Redeemable Warrants") at an exercise price of $10.50 per share, (ii)
987,600 shares of Common Stock issuable under the Company's 1993 Long Term
Incentive Plan (the "Incentive Plan") of which 770,332 shares of Common
Stock are reserved for issuance upon exercise of outstanding stock options
with a weighted average exercise price of $5.69 per share, (iii) 250,000
shares of Common Stock issuable at $9.00 per share and 250,000 shares of
Common Stock issuable at $12.50 per share, reserved for issuance upon
exercise of warrants held by the underwriter of the Company's initial public
offering or its designees and (iv) 305,976 shares of Common Stock issuable
upon exercise of other outstanding warrants with an exercise price of $3.00
per share. See "Description of Securities" and "Shares Eligible for Future
Sale."

(2) The Company's Common Stock has been approved for listing on the Stockholm
Stock Exchange ("SSE"). The Company expects that the Common Stock will
commence trading on the SSE upon completion of the Offering.

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SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED SEPTEMBER 30, ENDED JUNE 30,
------------------------------- ----------------------
1994 1995 1996 1996 1997
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF OPERATIONS DATA:
Research and development expenses..................... $ 999 $ 985 $ 1,609 $ 1,078 $ 3,294
General and administrative expenses (1)............... 1,024 1,116 1,355 1,027 1,680
Net loss.............................................. (2,433) (2,790) (833) (2,378) (4,315)

SELECTED PER SHARE DATA:
Net loss per share.................................... $ (0.82) $ (0.87) $ (0.20) $ (0.42) $ (0.65)
Weighted average shares outstanding................... 2,961 3,209 4,075 5,656 6,671
</TABLE>

<TABLE>
<CAPTION>
AS OF AS OF JUNE 30, 1997
SEPTEMBER 30, --------------------------
1996 ACTUAL AS ADJUSTED(2)
------------- ---------- --------------
<S> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Cash, cash equivalents and investments.............................. $ 19,144 $ 14,275 $ 57,831
Working capital..................................................... 16,212 10,499 54,055
Total assets........................................................ 21,255 17,516 61,072
Long-term debt, less current portion................................ - 548 548
Deficit accumulated during the development stage.................... (13,937) (18,252) (18,252)
Stockholders' equity................................................ 20,124 15,860 59,416
</TABLE>

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(1) Business development expenses for the nine months ended June 30, 1996 and
1997 have been included in general and administrative expenses to conform to
the presentation for the years ended September 30, 1994, 1995 and 1996.

(2) Adjusted to reflect the sale by the Company of 2,500,000 shares of Common
Stock offered hereby and the receipt of the estimated net proceeds
therefrom. See "Use of Proceeds" and "Capitalization."

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RISK FACTORS

AN INVESTMENT IN THE SHARES OF COMMON STOCK OF THE COMPANY OFFERED HEREBY
INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED
IN THIS PROSPECTUS, THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN
EVALUATING THE COMPANY AND ITS BUSINESS BEFORE PURCHASING THE SHARES OFFERED
HEREBY. PROSPECTIVE INVESTORS SHOULD BE IN A POSITION TO RISK THE LOSS OF THEIR
ENTIRE INVESTMENT. THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH
INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN SUCH FORWARD-LOOKING STATEMENTS AS A RESULT
OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH IN THE FOLLOWING RISK FACTORS AND
ELSEWHERE IN THIS PROSPECTUS.

DEVELOPMENT STAGE COMPANY; ACCUMULATED DEFICIT; UNCERTAINTY OF FUTURE
PROFITABILITY

The Company, as a development stage enterprise, has experienced net losses
every year since its inception and, as of June 30, 1997, had a deficit
accumulated during the development stage of approximately $18.3 million. The
Company anticipates incurring substantial additional losses over at least the
next several years due to, among other factors, the need to expend substantial
amounts on its ongoing and planned clinical trials and anticipated research and
development activities, and the business development and general and
administrative expenses associated with those activities. The Company has not
commercially introduced any product and its products are in varying stages of
development and testing. The Company's ability to attain profitability will
depend upon its ability to develop products that are effective and commercially
viable, to obtain regulatory approval for the manufacture and sale of its
products and to market its products successfully. There can be no assurance that
the Company will ever achieve profitability or that profitability, if achieved,
can be sustained on an ongoing basis. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

NO ASSURANCE OF SUCCESSFUL CLINICAL TRIALS AND PRODUCT DEVELOPMENT

All drug products currently under development by the Company will require
extensive preclinical and clinical testing prior to regulatory approval for
commercial use. To date, the Company has not completed testing for efficacy or
safety in humans on any of its products. Substantial additional research and
development will be necessary in order for the Company to develop products based
on the Company's MAXAMINE and MAXVAX technologies and there can be no assurance
that the Company's research and development efforts will lead to development of
products that are shown to be safe and effective in clinical trials and are
commercially viable. In addition to further research and development, potential
products based on the Company's MAXAMINE and MAXVAX technologies will require
clinical testing, regulatory approval and substantial additional investment
prior to commercialization. There can be no assurance that any such products
will be successfully developed, prove to be safe and effective in clinical
trials, meet applicable regulatory standards, be capable of being produced in
commercial quantities at acceptable costs, be eligible for third party
reimbursement from governmental or private insurers, be successfully marketed or
achieve market acceptance. Further, the Company's products may prove to have
undesirable or unintended side effects that may prevent or limit their
commercial use. The Company may find, at any stage of this process, that
products that appeared promising in preclinical studies or Phase I and Phase II
clinical trials do not demonstrate efficacy in larger-scale, Phase III clinical
trials and do not receive regulatory approvals. Accordingly, any product
development program undertaken by the Company may be curtailed, redirected or
eliminated at any time. In addition, there may be delays in the Company's
testing and development schedules, and there can be no assurance that the
Company will meet expected testing and development schedules, which could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business."

NO ASSURANCE OF REGULATORY APPROVAL; GOVERNMENT REGULATION

The U.S. Food and Drug Administration (the "FDA") and comparable agencies in
countries outside the United States impose substantial requirements on the
introduction of therapeutic pharmaceutical

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products and vaccines through lengthy and detailed laboratory and clinical
testing procedures and other costly and time consuming procedures. Satisfaction
of these requirements typically takes a number of years and varies substantially
based upon the type, complexity and novelty of the pharmaceutical agent. In
general, the FDA approval process for pharmaceuticals involves the submission of
an Investigational New Drug ("IND") application following preclinical studies,
clinical trials in humans to demonstrate the safety and efficacy of the product
under the protocols set forth in the IND and submission of preclinical and
clinical data as well as other information to the FDA in a New Drug Application
("NDA") or Product License Application ("PLA"). The Company must expend
substantial time and financial resources to conduct clinical trials. The
Company's clinical trials have been primarily conducted overseas and in the
future will continue to be conducted in part overseas. There can be no assurance
that the results of such trials will support the submission or the approval of
an NDA or PLA or that data from the Company's overseas trials or approvals of
the Company's products in foreign countries outside of the United States, if
any, will be accepted by the FDA. Accordingly, there can be no assurance that
FDA or other regulatory approval for any products developed by the Company will
be granted on a timely basis, or at all. There can be no assurance that the
Company will have sufficient resources to complete the required regulatory
review process, or that the Company could overcome the inability to obtain, or
delays in obtaining, such approvals. The failure of the Company to receive FDA
approval for its products under development would preclude the Company from
marketing and selling its products in the United States. Therefore, failure to
receive such FDA approval would have a material adverse effect on the business,
financial condition and results of operations of the Company. European and other
international regulatory approvals are subject to the same risks and
uncertainties as FDA and other regulatory approvals in the United States.

The production and marketing of the Company's proposed products, as well as
its ongoing research and development activities, are also subject to regulation
by governmental agencies of the United States and other countries. The effect of
government regulation may be to delay marketing of the Company's products for a
considerable period of time, to impose costly procedures upon the Company's
activities and to furnish a competitive advantage to larger companies that
compete with the Company. Any delay in obtaining, or failure to obtain, FDA or
other necessary regulatory approvals, including approvals by comparable agencies
outside the U.S., would adversely affect the marketing of the Company's products
and the ability to generate product revenue. In addition, the marketing and
manufacturing of pharmaceuticals are subject to continuing FDA (or comparable
international agency) review and surveillance and failure to comply with
regulations or discovery of previously unknown problems can result in FDA (or
comparable international agency) action against the product or the manufacturer,
including fines, recalls, product seizures and suspension or withdrawal of
previously granted regulatory approvals. Furthermore, government regulation may
increase at any time, creating additional costs and delays for the Company. The
extent of potential adverse government regulation which might arise from future
legislation or administrative action cannot be predicted. See
"Business--Government Regulation."

UNCERTAINTY REGARDING PATENTS AND PROPRIETARY RIGHTS

It is the policy of the Company to file patent applications in the United
States, Europe and other major markets throughout the world. The patent
positions of biotechnology and pharmaceutical companies are highly uncertain and
involve complex legal and factual questions, and the breadth of claims allowed
in biotechnology and pharmaceutical patents cannot be predicted. There can be no
assurance that patents will issue from any of the Company's patent applications.
With respect to already issued patents and any patents which may issue from the
Company's applications, there can be no assurance that claims allowed will be
sufficient to protect the Company's technologies. Patent applications in the
United States are maintained in secrecy until a patent issues, and the Company
cannot be certain that others have not filed patent applications for technology
covered by the Company's pending applications or that the Company was the first
to file patent applications for such technology. Competitors may have filed
applications for, or may have received patents and may obtain additional patents
and proprietary rights relating to, compounds or processes that block or compete
without infringing on those of the Company. In

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<PAGE>
addition, there can be no assurance that any patents issued to the Company or to
licensors from whom the Company has licensed rights to its technologies will not
be challenged, invalidated or circumvented or that the rights granted thereunder
will provide proprietary protection or commercial advantage to the Company.

Other public and private concerns, including universities, may have filed
applications for or have been issued patents with respect to technology
potentially useful or necessary to the Company. The scope and validity of such
patents, the extent to which the Company may wish or need to acquire licenses
under such patents, and the cost or availability of such licenses, are currently
unknown.

In addition to patents and proprietary rights, the Company relies on
unpatented trade secrets and proprietary know-how, and there can be no assurance
that others will not obtain access to or independently develop such trade
secrets and know-how. Although potential corporate partners and the Company's
research partners and consultants are not given access to trade secrets and
proprietary know-how of the Company until they have executed confidentiality
agreements, these agreements may be breached by the other party thereto or may
otherwise be of limited effectiveness or enforceability.

The pharmaceutical industry has experienced extensive litigation regarding
patent and other intellectual property rights. Accordingly, the Company could
incur substantial costs in defending itself in suits that may be brought against
the Company claiming infringement of the patent rights of others or in asserting
the Company's patent rights in a suit against another party. The Company may
also be required to participate in interference proceedings declared by the
United States Patent and Trademark Office for the purpose of determining the
priority of inventions in connection with the patent applications of the Company
or other parties. Adverse determinations in litigation or interference
proceedings could require the Company to seek licenses (which may not be
available on commercially reasonable terms) or subject the Company to
significant liabilities to third parties, and could therefore have a material
adverse effect on the Company. See "Business--Patents, Licenses and Proprietary
Rights."

NEED FOR ADDITIONAL FUNDS; UNCERTAINTY OF ADDITIONAL FUNDING

The Company's operations to date have consumed substantial amounts of cash.
Negative cash flow from the Company's operations is expected to continue and to
accelerate over at least the next several years. The Company's capital
requirements will depend on numerous factors, including: the progress of
preclinical testing and clinical trials; the progress of the Company's research
and development programs; the time and costs required to obtain regulatory
approvals; the resources devoted to manufacturing methods and advanced
technologies; the timing and amount, if any, of funding obtained through
corporate collaborations; the cost of filing, prosecuting and, if necessary,
enforcing patent claims; the cost of commercialization activities and
arrangements; and the demand for the Company's products if and when approved.
The net proceeds of the Offering will be sufficient to fund the Company's
operations for at least 12 months from the date of the Offering but will not
enable the Company to fund the commercialization of its first project. The
Company may have to raise substantial additional funds to complete development
of any product or bring products to market. Issuance of additional equity
securities by the Company, for these or other purposes, could result in dilution
to then existing stockholders, including persons purchasing the Common Stock
included in the Offering. There can be no assurance that additional financing
will be available on acceptable terms, if at all. If adequate funds are not
available on acceptable terms, the Company may be required to delay, scale back
or eliminate one or more of its product development programs or obtain funds
through arrangements with collaborative partners or others that may require the
Company to relinquish rights to certain of its technologies or products that the
Company would not otherwise relinquish, which may have a material adverse effect
on the Company's business, financial condition and results of operations. See
"Use of Proceeds" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

8
<PAGE>
DEPENDENCE ON QUALIFIED PERSONNEL

The Company's future performance depends in part upon the continued
contributions of its senior management and on the ability to attract and retain
qualified management and scientific personnel. Competition for such personnel is
intense, and there can be no assurance that the Company will be able to continue
to attract, assimilate or retain highly qualified technical and management
personnel. The loss of key personnel or the failure to recruit additional
personnel or to develop needed expertise could have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business--Employees and Consultants" and "Management."

DEPENDENCE ON COLLABORATIVE PARTNERS

The Company's strategy for the research, development, clinical testing,
manufacturing and commercialization of certain of its products requires
arrangements with corporate and university collaborators, licensors, marketing
partners, licensees, consultants and others, and is dependent upon the
subsequent success of these outside parties in performing their
responsibilities. Although the Company believes parties to any such arrangements
would have an economic motivation to perform their contractual responsibilities,
the amount and timing of resources to be devoted to these activities may not be
within the control of the Company. In addition, there can be no assurance that
collaborators will not pursue alternative technologies as a means for developing
treatments for the diseases targeted by these collaborative programs.
Furthermore, there can be no assurance that the Company will be able to
negotiate acceptable collaborative arrangements, or that its collaborative
arrangements will be successful. See "Business--Product Development and
Collaborative Relationships."

NO MARKETING AND SALES CAPABILITIES; ANTICIPATED DEPENDENCE UPON MARKETING
ALLIANCES

The Company has not developed pharmaceutical marketing or sales
capabilities. In order to market and sell certain products, the Company will
need to develop a sales force and a marketing group with technical expertise, or
make appropriate arrangements with strategic partners. There can be no assurance
that the Company will be able to gain such expertise or that such efforts will
be successful. The Company's strategy for development, commercialization and
marketing of MAXAMINE and MAXVAX is expected to involve, where appropriate, the
establishment of marketing and other collaborative relationships with
pharmaceutical industry partners. There can be no assurance that any such
relationships can be consummated on terms favorable to the Company or that
marketing efforts undertaken by such partners will be successful. See
"Business--Marketing and Sales."

NO ASSURANCE OF MARKET ACCEPTANCE

There can be no assurance that, if approved for marketing, MAXAMINE or any
of the Company's other products in development will achieve market acceptance.
The degree of market acceptance will depend upon a number of factors, including
the scope of regulatory approvals, the establishment and demonstration in the
medical community of the clinical efficacy and safety of the Company's products
and therapies and their potential advantages over existing treatment methods,
and reimbursement policies of government and third-party payors. There can be no
assurance that physicians, patients, payors or the medical community in general
will accept and utilize any products that may be developed by the Company. See
"Business--Competition" and "--Third-Party Reimbursement."

NO MANUFACTURING CAPABILITIES

The Company has not invested in the development of pharmaceutical
manufacturing capabilities. The Company's strategy has been, and is expected to
continue to be for the foreseeable future, to contract with established
pharmaceutical manufacturers for the production of MAXAMINE. If the Company is
unable to contract for manufacturing capabilities on acceptable terms, the
Company's ability to conduct clinical

9
<PAGE>
testing and to produce commercial quantities of product will be adversely
affected, resulting in delays in submissions for regulatory approval and in
commercial product launches, which in turn could materially impair the Company's
competitive position and the possibility of achieving profitability. There can
be no assurance that the Company will be able to maintain its existing, or
acquire or establish new, satisfactory third-party relationships to provide
manufacturing resources. See "Business--Manufacturing."

COMPETITION

There are many companies, both publicly and privately held, including
well-known pharmaceutical companies, as well as academic and other research
institutions, engaged in developing pharmaceutical and biologically-derived
products for the treatment of cancer and vaccines and therapeutics for the
prevention or the treatment of infectious diseases. Many of the Company's
competitors and potential competitors have substantially greater capital,
research and development capabilities and human resources than the Company and
represent significant competition for the Company. Many of these competitors
have significantly greater experience than the Company in undertaking
preclinical testing and clinical trials of new pharmaceutical products and
obtaining FDA and other regulatory approvals. If the Company is permitted to
commence commercial sales of any product, it will also be competing with
companies that have greater resources and experience in the manufacturing,
marketing and sales of pharmaceutical products. The Company's competitors may
succeed in developing products that are more effective, less costly, or have a
better side effect profile than any that may be developed by the Company, and
such competitors may also prove to be more successful than the Company in
manufacturing, marketing and sales. See "Business--Competition."

TECHNOLOGICAL CHANGES AND UNCERTAINTY

The Company is engaged in the pharmaceutical field, which is characterized
by extensive research efforts and rapid technological progress. New developments
in oncology, cancer therapy, medicinal pharmacology, biochemistry and other
fields are expected to continue at a rapid pace in both industry and academia.
There can be no assurance that research and discoveries by others will not
render some or all of the Company's proposed programs or products noncompetitive
or obsolete. The Company's business strategy is subject to the risks inherent in
the development of new products using new technologies and approaches. There can
be no assurance that unforeseen problems will not develop with these
technologies or applications, that the Company will be able to address
successfully technological challenges it encounters in its research and
development programs or that commercially feasible products will ultimately be
developed by the Company. See "Business--Competition."

LEGAL PROCEEDINGS

In March 1997, the former President and Chief Operating Officer and the
Chief Financial Officer of the Company (the "Former Employees") filed a
complaint in the Superior Court in the State of California, County of San Diego
(the "Complaint") seeking claims for certain purported damages in contract and
in tort arising from their respective terminations of employment with the
Company in March 1996. In addition, the Former Employees asserted possible
punitive damages and damages based on emotional distress. The Former Employees
also claimed the right to vested options of the Company's Common Stock.
According to the Complaint, each of the Former Employees appears to be claiming
compensatory damages in excess of $2 million and punitive damages in excess of
$3 million. In June 1997, the Company filed an answer to the Complaint denying
each of the allegations therein. Pretrial discovery with respect to these legal
proceedings has commenced, and a trial date has been scheduled for May 1998. The
Company believes the Former Employees' claims are without merit and the Company
intends to contest any such claims vigorously. However, there can be no
assurances as to the eventual outcome of such claims or their effect on the
Company's business, financial condition and results of operations. In addition,
an adverse determination in any litigation arising from these claims or the
settlement of such claims could have a

10
<PAGE>
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Legal Proceedings."

POTENTIAL ADVERSE EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of the Common Stock of the Company in the
public market could adversely affect prevailing market prices for the Common
Stock and the ability of the Company to raise equity capital in the future. Upon
completion of the Offering, the Company will have outstanding 9,191,501 shares
of Common Stock (9,566,501 shares if the Underwriters' over-allotment option is
exercised in full). Of these shares, an aggregate of 5,387,400 shares will be
freely tradeable in the public market, unless acquired by affiliates of the
Company. The remaining 3,804,101 shares will be restricted securities as that
term is defined in Rule 144 under the Securities Act (the "Restricted Shares").
Of the 3,804,101 Restricted Shares, 1,146,234 shares will be eligible for
immediate sale in the public market pursuant to Rule 144 subject to certain
volume and manner of sale limitations, and 1,299,571 shares will be eligible for
immediate sale in the public market pursuant to Rule 144(k). Additionally,
1,358,296 shares will become eligible for public resale over a period of less
than two years following the completion of the Offering. Moreover the Company
has entered into an agreement with three entities, and their affiliates,
currently holding 1,331,630 shares to file a registration statement, if
requested by each such holder in the event that the shares are not freely
tradable at the time of such holder's request. Pursuant to lock-up agreements,
all officers, directors and certain beneficial holders of outstanding Common
Stock, who collectively hold 1,647,059 shares have agreed not to sell, or
otherwise dispose of any beneficial interest in such securities for a period of
either 90 or 180 days (the "Lock-up Periods") without the prior written consent
of the Representatives. Upon termination of the Lock-up Periods, 400,999 shares
will be eligible for immediate sale pursuant to Rule 144 and 2,044,806 shares
will be eligible for immediate sale pursuant to Rule 144(k).

Approximately 3,680,976 shares of Common Stock underlying certain of the
Company's warrants and 987,600 shares issued or reserved for issuance under the
Company's Incentive Plan would be available for immediate sale in the public
market, unless purchased by affiliates of the Company. However, 305,976 shares
of Common Stock underlying certain outstanding warrants have not been registered
for public sale and will be subject to the public sale restrictions of Rule 144
or Rule 701 under the Securities Act, where applicable if the warrants were
exercised. Subsequent to the Offering, the Company intends to file a
registration statement on Form S-8 under the Securities Act covering 50,000
additional shares of Common Stock reserved for issuance under the Company's
401(k) plan. See "Shares Eligible for Future Sale."

ABSENCE OF DIVIDENDS

The Company has never declared or paid dividends on its Common Stock and
does not anticipate paying any dividends in the foreseeable future. In addition,
the Company has entered into a Loan and Security Agreement with Silicon Valley
Bank which restricts the payment of dividends by the Company. See "Dividend
Policy."

PRODUCT LIABILITY EXPOSURE AND INSURANCE

The Company's business exposes it to potential product liability risks which
are inherent in the clinical testing, manufacturing and marketing of human
therapeutic products. The Company currently maintains product liability
insurance coverage for its clinical trials, and intends to expand its insurance
coverage to include the sales of commercial products if marketing approval is
obtained for MAXAMINE or other products in development. There can be no
assurance that such coverage is or in the future will be adequate or that
adequate insurance will be available in the future at an acceptable cost, if at
all. In addition, there can be no assurance that a product liability claim, even
if the Company has insurance coverage, would not materially adversely affect the
business or financial condition of the Company.

11
<PAGE>
PRICE VOLATILITY OF THE COMMON STOCK

The securities markets have from time to time experienced significant price
and volume fluctuations that may be unrelated to the operating performance of
particular companies. In addition, the market prices of the common stock of many
publicly traded pharmaceutical or biotechnology companies have in the past been,
and can in the future be expected to be, especially volatile. Low trading
volumes, announcements of technological innovations or new products by the
Company or its competitors, developments or disputes concerning patents or
proprietary rights, publicity regarding actual or potential medical results
relating to products under development by the Company or its competitors,
regulatory developments in both the United States and countries outside of the
United States, delays in the Company's testing and development schedules, events
or announcements relating to the Company's collaborative relationships with
others, public concern as to the safety of biopharmaceutical or biotechnology
products and economic and other external factors, as well as period-to-period
fluctuations in the Company's financial results, may have a significant impact
on the market price or liquidity of the Common Stock.

The Company's Common Stock currently trades on the American Stock Exchange
and has not previously traded on the Stockholm Stock Exchange. Historically, the
Common Stock has generally experienced relatively low daily trading volumes in
relation to the aggregate number of shares issuable in this Offering. The price
and liquidity of the Common Stock may be significantly affected by trading
activity and market factors related to the AMEX and SSE, which factors and the
effects thereof may differ between these markets. Notwithstanding the addition
of a new trading market for the Company's Common Stock, there can be no
assurance that the Company's listing on the SSE will not increase the price
volatility or reduce the liquidity of the Company's Common Stock. See "Price
Range of Common Stock."

DISCRETION OF MANAGEMENT AND THE BOARD OF DIRECTORS IN USE OF PROCEEDS

Although the Company intends to apply the net proceeds of this Offering in
the manner described under "Use of Proceeds," the Company's management and the
Board of Directors have broad discretion within such proposed uses as to the
precise allocation of the net proceeds, the timing of expenditures and all other
aspects of the use thereof. The Company reserves the right to reallocate the net
proceeds of this Offering among the various categories set forth under "Use of
Proceeds" as it, in its sole discretion, deems necessary or advisable based upon
prevailing business conditions and circumstances. See "Use of Proceeds."

12
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,500,000 shares of
Common Stock offered hereby is estimated to be $43.6 million ($50.2 million if
the Underwriters' over-allotment option is exercised in full) after deducting
the underwriting discount and offering expenses payable by the Company.

The Company intends to use the net proceeds as follows: (i) approximately
$31.0 million for costs related to the product development activities planned
for the Company's MAXAMINE product, including ongoing and planned clinical
trials, manufacturing development, regulatory application and other research and
development; (ii) approximately $4.5 million for research and development
primarily for the MAXVAX technology; and (iii) for working capital and general
corporate purposes. The amounts and timing of actual expenditures will depend
upon numerous factors, including results of preclinical testing and clinical
trials, results of research and development, relationships with strategic
corporate partners, changes in direction and focus of the Company's research and
development programs, competitive and technological advances, the United States
and international regulatory process and other factors. Additionally, it is the
Company's policy to regularly review potential opportunities to acquire or to
enter into joint venture or licensing relationships with respect to products and
businesses compatible with the Company's existing business. The Company may,
therefore, use a portion of the net proceeds to make acquisitions or to fund
joint research and development or other complementary ventures or strategic
alliances, although the Company does not currently have any arrangements,
agreements or understandings with respect thereto. Pending the uses described
above, the net proceeds will be invested in interest-bearing, investment-grade
securities.

The Company believes that the net proceeds of the Offering, together with
its available cash, cash equivalents, investment securities and investment
income, should be sufficient to finance its cash requirements for a period of at
least 12 months from the date of this Prospectus. However, the net proceeds of
the Offering will not be sufficient to fund the Company's operations through the
commercialization of its first product. The Company will require additional
funds to finance its business, through corporate alliances, borrowings or by
raising additional equity capital, until such time as (i) it can commercially
exploit its technology, either through licensing arrangements or the sale of
products based on its technology and (ii) revenues from those commercial
activities become sufficient to cover its expenses. The Company anticipates that
it will need to obtain additional financing, the amount and timing of which is
currently uncertain and the availability of which, on terms reasonably
acceptable to the Company, if at all, cannot be assured. See "Risk Factors--Need
for Additional Funds; Uncertainty of Additional Funding."

13
<PAGE>
PRICE RANGE OF COMMON STOCK

Concurrent with the Company's initial public offering, the Common Stock
began trading on the American Stock Exchange under the symbol "MMP" on July 10,
1996. Prior to such date there was no established public market for the Common
Stock. The following table sets forth, for the periods indicated, the high and
low sale prices for the Common Stock, as reported by the AMEX:

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
YEAR ENDING SEPTEMBER 30, 1996:
Fourth Quarter (commencing July 10, 1996).................................................... $11 $ 7 3/4

YEAR ENDING SEPTEMBER 30, 1997:
First Quarter................................................................................ $10 5/8 $ 7
Second Quarter............................................................................... 11 1/4 6 3/4
Third Quarter................................................................................ 9 3/4 7 7/8
Fourth Quarter............................................................................... 16 1/2 8 1/2

YEAR ENDING SEPTEMBER 30, 1998:
First Quarter (through October 15, 1997)..................................................... 19 1/4 15 1/2
</TABLE>

On October 15, 1997 the last sale price of the Common Stock, as reported by
the AMEX, was $18 7/8 per share. As of such date, there were approximately 120
holders of record of the Common Stock.

The Company's Common Stock has been approved for listing on the Stockholm
Stock Exchange. The Company expects that the Common Stock will commence trading
on the SSE upon completion of the Offering. The rules and regulations relating
to companies whose capital stock is listed and traded on the SSE may differ from
those required for listing and trading on AMEX. The Company and the holders of
the Company's Common Stock who trade their shares on the SSE may also be subject
to certain Swedish laws which may differ from applicable U.S. federal and state
laws. Any holder of the Company's Common Stock desiring to trade such shares on
the SSE may wish to consult with appropriate legal counsel prior to commencing
any such trading.

DIVIDEND POLICY

The Company has never paid cash dividends on its capital stock and does not
anticipate paying cash dividends in the foreseeable future. Any future
determination to pay cash dividends will be at the discretion of the Board of
Directors and will be dependent upon the Company's financial condition,
business, results of operations, capital requirements and such other factors as
the Board of Directors deems relevant. The Company has entered into a Loan and
Security Agreement with Silicon Valley Bank which restricts the payment of
dividends by the Company. Future cash dividends, if any, will be paid in U.S.
dollars.

14
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1997, and as adjusted to reflect the sale of the 2,500,000 shares of Common
Stock offered hereby and the receipt of the estimated net proceeds therefrom.

<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
-----------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, less current portion..................................................... $ 548 $ 548

STOCKHOLDERS' EQUITY:
Preferred Stock, $.001 par value, 5,000,000 shares authorized, no shares issued and
outstanding.......................................................................... - -
Common Stock, $.001 par value, 20,000,000 shares authorized, 6,671,246 shares issued
and outstanding; 9,171,246 shares issued and outstanding as adjusted (1)............. 7 9
Additional paid-in capital............................................................. 34,173 77,727
Deficit accumulated during the development stage....................................... (18,252) (18,252)
Deferred compensation.................................................................. (68) (68)
---------- -----------
Total stockholders' equity........................................................... 15,860 59,416
---------- -----------
Total capitalization............................................................... $ 16,408 $ 59,964
---------- -----------
---------- -----------
</TABLE>

- ------------------------

(1) Excludes, as of June 30, 1997, an aggregate of (i) 2,875,000 shares of
Common Stock reserved for issuance upon exercise of the Redeemable Warrants
at an exercise price of $10.50 per share, (ii) 999,600 shares of Common
Stock issuable under the Incentive Plan of which 674,497 shares of Common
Stock are reserved for issuance upon exercise of outstanding stock options
with a weighted average exercise price of $4.97 per share, (iii) 250,000
shares of Common Stock issuable at $9.00 per share and 250,000 shares of
Common Stock issuable at $12.50 per share, reserved for issuance upon
exercise of warrants held by the underwriter of the Company's initial public
offering or its designees and (iv) 332,642 shares of Common Stock issuable
upon exercise of other outstanding warrants with an exercise price of $3.00
per share. See "Description of Securities" and "Shares Eligible for Future
Sale."

15
<PAGE>
DILUTION

The net tangible book value of the Company's Common Stock as of June 30,
1997 was approximately $14.1 million, or $2.11 per share. Net tangible book
value per share represents the total amount of tangible assets less total
liabilities divided by the number of shares of Common Stock issued. After giving
effect to the sale of the 2,500,000 shares of Common Stock offered hereby and
the receipt of the estimated net proceeds (after deducting the underwriting
discount and estimated offering expenses payable by the Company), the net
tangible book value of the Company at June 30, 1997 would have been
approximately $57.6 million or $6.28 per share. This represents an immediate
increase in net tangible book value of $4.17 per share to existing stockholders
and an immediate dilution in net tangible book value of $12.60 per share to
purchasers of the Common Stock in this Offering. The following table illustrates
this per share dilution:

<TABLE>
<CAPTION>
<S> <C> <C>
Assumed public offering price per share........................................................ $ 18.88

Net tangible book value per share as of June 30, 1997 (1)...................................... $ 2.11

Increase per share attributable to this Offering............................................... 4.17
---------

Net tangible book value per share after this Offering (1)...................................... 6.28
---------

Dilution per share to purchasers of Common Stock in this Offering.............................. $ 12.60
---------
---------
</TABLE>

If the Underwriters' over-allotment option is exercised in full, the net
tangible book value per share of Common Stock after this Offering would be $6.73
per share, which would result in dilution to new investors of $12.15 per share.

- ------------------------

16
<PAGE>
SELECTED FINANCIAL DATA

The selected data presented below as of September 30, 1995 and 1996, and for
the years ended September 30, 1994, 1995 and 1996, has been derived from the
financial statements of the Company, which have been audited by KPMG Peat
Marwick LLP, independent auditors, and are included elsewhere in this
Prospectus. The selected data presented below as of June 30, 1997 and September
30, 1992, 1993 and 1994, and for the nine months ended June 30, 1996 and 1997,
and for the years ended September 30, 1992 and 1993, and from inception (October
23, 1989) through June 30, 1997, has been derived from unaudited financial
statements. The unaudited interim financial statements contain all of the
adjustments, consisting only of normal recurring adjustments and accruals, which
the Company considers necessary for a fair presentation of its financial
position as of that date and results of operation for these periods. The results
of operations for the nine months ended June 30, 1997 are not necessarily
indicative of the results to be expected in subsequent periods or for the year
as a whole. The following selected financial data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the Financial Statements and Notes thereto.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED SEPTEMBER 30, ENDED JUNE 30,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating expenses:
Research and development......... $ 1,794 $ 3,416 $ 999 $ 985 $ 1,609 $ 1,078 $ 3,294
General and administrative (1)... 476 671 1,024 1,116 1,355 1,027 1,680
--------- --------- --------- --------- --------- --------- ---------
Total operating expenses....... 2,270 4,087 2,023 2,101 2,964 2,105 4,974
Other income (expense):
Gain on sale of subsidiary....... - - - - 2,288 - -
Investment income................ 8 9 5 260 23 732
Interest expense................. (181) (349) (689) (487) (197) (177) (60)
Foreign exchange gains (losses).. (2) 403 (75) (208) (95) (119) -
Other income (expense)........... - - (4) 1 (125) - (13)
Research grant revenue........... 8 - - - - - -
--------- --------- --------- --------- --------- --------- ---------
Total other income (expense)... (175) 62 (759) (689) 2,131 (273) 659
--------- --------- --------- --------- --------- --------- ---------
Loss from continuing operations.... (2,445) (4,025) (2,782) (2,790) (833) (2,378) (4,315)
Discontinued operations:
Loss from operations............. - (214) (134) - - - -
Gain on sale..................... - - 483 - - - -
--------- --------- --------- --------- --------- --------- ---------
Net loss........................... $ (2,445) $ (4,239) $ (2,433) $ (2,790) $ (833) $ (2,378) $ (4,315)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
PER SHARE DATA:
Loss from continuing operations per
share............................ $ (0.88) $ (1.41) $ (0.94) $ (0.87) $ (0.20) $ (0.42) $ (0.65)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net loss per share................. $ (0.88) $ (1.48) $ (0.82) $ (0.87) $ (0.20) $ (0.42) $ (0.65)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Weighted average shares
outstanding...................... 2,772 2,859 2,961 3,209 4,075 5,656 6,671

<CAPTION>
FROM INCEPTION
(OCTOBER 23,
1989)
THROUGH
JUNE 30,
1997
-----------------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Operating expenses:
Research and development......... $ 13,295
General and administrative (1)... 9,267
--------
Total operating expenses....... 22,562
Other income (expense):
Gain on sale of subsidiary....... 2,288
Investment income................ 1,020
Interest expense................. (1,964)
Foreign exchange gains (losses).. 23
Other income (expense)........... (138)
Research grant revenue........... 2,946
--------
Total other income (expense)... 4,175
--------
Loss from continuing operations.... (18,387)
Discontinued operations:
Loss from operations............. (348)
Gain on sale..................... 483
--------
Net loss........................... $ (18,252)
--------
--------
PER SHARE DATA:
Loss from continuing operations per
share............................
Net loss per share.................
Weighted average shares
outstanding......................
</TABLE>

<TABLE>
<CAPTION>
AS OF
JUNE 30,
AS OF SEPTEMBER 30, 1997
----------------------------------------------------- ---------
1992 1993 1994 1995 1996 ACTUAL
--------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Cash, cash equivalents and investments............ $ 74 $ 335 $ 119 $ 513 $ 19,144 $ 14,275
Working capital (deficit)......................... (808) (696) (3,592) (5,324) 16,212 10,499
Total assets...................................... 429 2,688 1,878 2,454 21,255 17,516
Long-term debt, less current portion.............. 1,777 7,395 640 247 - 548
Deficit accumulated during the development
stage........................................... (2,444) (7,881) (10,313) (13,103) (13,937) (18,252)
Stockholders' equity (deficit).................... (1,177) (6,568) (2,513) (3,644) 20,124 15,860

<CAPTION>
AS ADJUSTED (2)
---------------
<S> <C>
SELECTED BALANCE SHEET DATA:
Cash, cash equivalents and investments............ $ 57,831
Working capital (deficit)......................... 54,055
Total assets...................................... 61,072
Long-term debt, less current portion.............. 548
Deficit accumulated during the development
stage........................................... (18,252)
Stockholders' equity (deficit).................... 59,416
</TABLE>

- ------------------------------
(1) Business development expenses for the nine months ended June 30, 1996 and
1997 have been included in general and administrative expenses to conform to
the presentation for the years ended September 30, 1992, 1993, 1994, 1995
and 1996.
(2) Adjusted to reflect the sale of the 2,500,000 shares of Common Stock offered
hereby and the receipt of the estimated net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."

17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS AND OTHER PARTS OF THIS PROSPECTUS CONTAIN FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS. FACTORS THAT MAY CAUSE SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED
TO, THOSE DISCUSSED UNDER "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

Maxim was incorporated in Delaware in 1954 under the name "Wilco Oil &
Minerals, Corp." and has existed under various names since then. From 1987 to
1993, the Company operated as a medical diagnostics products company under the
name "General Biometrics, Inc." In 1993, the Company merged with Syntello
Vaccine Development AB ("SVD"), a Swedish biopharmaceutical company, in an
exchange of stock accounted for as a reverse acquisition (the "Reorganization").
Upon completion of the Reorganization, the Company changed its name to
"Syntello, Inc." and commenced its operations as a biopharmaceutical company.
The Company's proprietary technologies, which target the treatment and
prevention of cancer and infectious disease, were acquired during and following
the Reorganization. The Company sold its medical diagnostic division in 1994 and
sold SVD in July 1996. Since December 1995, the Company has operated under the
name "Maxim Pharmaceuticals, Inc."

Since the Reorganization, the Company has devoted substantially all of its
resources to its MAXAMINE and MAXVAX product development programs. The Company
conducts its research and other product development efforts through a
combination of internal and collaborative programs. For MAXAMINE, in addition to
internal management and staff, the Company relies upon arrangements with
universities and other clinical research sites and contract research
organizations for a significant portion of its product development efforts. The
majority of the basic research and development efforts related to MAXVAX were
transferred to the Company's internal facilities during 1997, and the Company
conducted this research primarily through university laboratories prior to this
year. Oversight and coordination of all external and collaborative programs is
conducted by the Company's executive officers and other staff from its
administrative offices located in San Diego, California.

Maxim's products are in the development stage and the Company does not
expect revenue from product sales in the near future. The Company expects to
continue to incur losses as it expands its research and development activities,
particularly relating to ongoing and planned clinical trials of MAXAMINE. The
Company expects that losses will fluctuate from quarter to quarter and that such
fluctuations may be substantial as a result, among other factors, of the number
and timing of clinical trials conducted, the funding, if any, provided as a
result of corporate collaborations, the results of clinical testing, and the
timing of FDA or international regulatory approvals. There can be no assurance
that the Company will successfully develop, commercialize, manufacture or market
its products or ever achieve or sustain product revenues or profitability. As of
June 30, 1997, the Company had an accumulated deficit since inception of
approximately $18.3 million.

RESULTS OF OPERATIONS

NINE MONTHS ENDED JUNE 30, 1997 AND 1996

RESEARCH AND DEVELOPMENT EXPENSES--For the nine months ended June 30, 1997,
research and development expenses were $3,294,000, an increase of $2,215,000, or
205%, over the same period of the prior year. This increase was primarily
attributable to increased activity related to cancer clinical trials of the
Company's MAXAMINE therapy, including hiring additional clinical and development
personnel, contract research organization costs and consulting and other costs
associated with commencement in June 1997 of Phase III clinical trials in the
United States. The current period increase also resulted from increased

18
<PAGE>
efforts relating to preclinical development of the Company's MAXVAX mucosal
vaccine technology, including the addition of laboratory personnel and
establishment of internal research capabilities.

BUSINESS DEVELOPMENT AND GENERAL AND ADMINISTRATIVE EXPENSES--Business
development costs for the nine month period ended June 30, 1997 totaled
$285,000, an increase of $205,000, or 257%, over the same period of the prior
year. This increase was due to additional personnel and other resources devoted
to corporate partnering efforts and market evaluations. General and
administrative expenses for the nine month period ended June 30, 1997 increased
$448,000, or 47%, over the same period of the prior year to $1,395,000. This
increase was largely due to the increased personnel, insurance, reporting and
compliance costs associated with operation as a public company.

OTHER INCOME (EXPENSE)--Investment income was $732,000 for the nine month
period ended June 30, 1997, compared to $23,000 for the same period in the prior
year, due to investment income on the proceeds of the Company's initial public
offering completed in July 1996. Interest expense was $60,000 compared to
$177,000 for the same period in the prior year. This decrease was due to the
repayment of approximately $2.85 million of notes payable and long-term debt
subsequent to December 1995.

NET LOSS--Net loss for the nine months ended June 30, 1997 totaled
$4,315,000, an increase of $1,936,000, or 81% over the same period of the prior
year. Net loss per share of Common Stock for the
nine month period ended June 30, 1997 was $0.65, a 55% increase over the loss of
$0.42 per share for the same period of the prior year. This increase was a
result of the expanded research and development and business development
discussed above. The increase in the current period net loss per share was
offset partially by an increase in the number of shares of Common Stock
outstanding.

YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994

RESEARCH AND DEVELOPMENT EXPENSES--For the year ended September 30, 1996,
research and development expenses increased $624,000, or 63%, to $1,609,000.
This increase was primarily attributable to a $382,000 increase in research
funding to certain universities due to increased activity in cancer clinical
trials of the Company's MAXAMINE therapy, and increased funding of preclinical
projects for its MAXVAX mucosal vaccine technology. For the years ended
September 30, 1995 and 1994, research and development expenses remained
relatively constant at approximately $985,000 and $999,000, respectively.

GENERAL AND ADMINISTRATIVE EXPENSES--For the year ended September 30, 1996,
general and administrative expenses increased $238,000, or 21%, to $1,355,000
over the prior year. This increase was primarily the result of $276,000 in
deferred compensation recognized in that fiscal year related to stock options
issued to management, directors and consultants; no such expense was incurred in
the prior year. For the years ended September 30, 1995 and 1994, general and
administrative expenses remained relatively constant at $1,117,000 and
$1,023,000, respectively.

OTHER INCOME (EXPENSE)--During the year ended September 30, 1996, the
Company recorded a gain of $2,288,000 from the sale of a subsidiary of the
Company. Investment income increased to $260,000 for the year ended September
30, 1996, compared to $6,000 for the prior year, due to income on the proceeds
of the Company's initial public offering. Interest expense for the year ended
September 30, 1996 decreased $290,000, or 60%, to $197,000 compared to the prior
year due to the repayment of approximately $2.85 million of notes payable and
long-term debt. Interest expense for the year ended September 30, 1995 was
$487,000, a decrease of $202,000, or 29%, from the prior year due to the
conversion of approximately $1.7 million of debt into equity and the repayment
of approximately $1.1 million of notes payable.

DISCONTINUED OPERATIONS--During the year ended September 30, 1994, the
Company sold its medical diagnostic operations recording a gain of $483,000.
This gain was offset by a loss of $134,000 in fiscal 1994 from the operations of
the diagnostic division.

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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

The Company, as a development stage enterprise, has experienced net losses
every year since its inception and, as of June 30, 1997, had a deficit
accumulated during the development stage of approximately $18.3 million. The
Company anticipates incurring substantial additional losses over at least the
next several years due to, among other factors, the need to expend substantial
amounts on its ongoing and planned clinical trials and anticipated research and
development activities, and the business development and general and
administrative expenses associated with those activities. The Company has
financed its operations primarily through the sale of its equity securities,
including an initial public offering of Common Stock and Redeemable Warrants in
July 1996 which provided approximately $18.2 million, net of financing costs, to
the Company.

As of June 30, 1997, the Company had cash, cash equivalents and investments
totaling approximately $14.3 million. For the nine months ended June 30, 1997,
net cash used in the Company's operating activities was approximately $3.8
million. The Company expects its cash requirements to increase significantly in
future periods as it conducts additional product development activities
including internal product research, development and testing, preclinical
studies and clinical testing of its potential products and marketing of any
products that are developed. Among the specific planned activities which are
expected to result in an increase in cash requirements are the Phase III
clinical trials commenced in June 1997 in the U.S. for the MAXAMINE therapy and
other planned clinical trials.

The Company's cash requirements may vary materially from those now planned
because of the results of research, development and clinical trials, the time
and costs involved in obtaining regulatory approvals, the cost of filing,
prosecuting, defending and enforcing patent claims and other intellectual
property rights, competing technological and market developments, changes in the
Company's existing research relationships, the ability of the Company to
establish collaborative arrangements and the development of the Company's
product commercialization activities. As a result of these factors, it is
difficult to predict accurately the timing and amount of the Company's cash
requirements.

The Company believes that the net proceeds of the Offerings together with
its available cash, cash equivalents, investment securities and investment
income, should be sufficient to fund the Company's operations at least 12 months
from the date of the Offering. However, the net proceeds of the Offering will
not be sufficient to fund the Company's operations through commercialization of
its first product. In order to successfully commercialize any of its products,
the Company expects that it will ultimately be required to seek additional funds
through public or private financings or collaborative arrangements with
corporate partners. The issuance of additional equity securities could result in
substantial dilution to the Company's stockholders. There can be no assurance
that additional funding will be available on terms acceptable to the Company, if
at all. The failure to fund its capital requirements would have a material
adverse effect on the Company's business, financial condition and results of
operations.

The Company has never paid a cash dividend and does not contemplate the
payment of cash dividends in the foreseeable future.

ACCOUNTING CONSIDERATIONS

In October 1995, the Financial Accounting Standard Board ("FASB") issued
SFAS No. 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION" effective for fiscal
years beginning after December 15, 1995. Under the provisions of SFAS No. 123,
the Company is encouraged, but not required, to measure compensation costs
related to its employee stock compensation under the fair value method. If the
Company elects not to recognize compensation expense under this method, it is
required to disclose the pro forma effects based on the SFAS No. 123
methodology. The Company anticipates adopting the pro forma method of disclosure
under SFAS No. 123.

20
<PAGE>
In February 1997, the FASB issued SFAS No. 128, "EARNINGS PER SHARE." This
statement specifies the computation, presentation, and disclosure requirements
for earnings per share for entities with publicly held common stock or potential
common stock. This statement shall be effective for financial statements for
both interim and annual periods ending after December 15, 1997. Earlier
application is not permitted. At this time the Company does not believe that
this statement will have a significant impact on the financial position or
results of operations for the year ending September 30, 1998.

In February 1997, the FASB issued SFAS No. 129, "DISCLOSURE OF INFORMATION
ABOUT CAPITAL STRUCTURE." This statement shall be effective for financial
statements for both interim and annual periods ending after December 15, 1997.
At this time the Company does not believe that this statement will have a
significant impact on the financial position or results of operations for the
year ending September 30, 1998.

In June 1997, the FASB issued SFAS No. 130, "REPORTING COMPREHENSIVE
INCOME." This statement established standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purposes financial statements. This statement shall be
effective for fiscal years beginning after December 15, 1997. Reclassification
of financial statements for earlier periods provided for comparative purposes is
required. At this time the Company does not believe that this statement will
have a significant impact on the financial position or results of operations for
the year ending September 30, 1999.

In June 1997, the FASB issued SFAS No. 131, "DISCLOSURES ABOUT SEGMENTS OF
AN ENTERPRISE AND RELATED INFORMATION." This statement established standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires that enterprises report
selected information about operating segments in interim financial reports
issued to stockholders. This statement shall be effective for fiscal years
beginning after December 15, 1997. In the initial year of application,
comparative information for earlier years is to be restated. At this time the
Company does not believe that this statement will have a significant impact on
the financial position or results of operations for the year ending September
30, 1999.

21
<PAGE>
BUSINESS

22
<PAGE>
Company intends to develop marketing alliances with corporate partners and may
co-promote and/or co-market in certain territories.

MAXAMINE IMMUNOTHERAPY PLATFORM

CANCER MARKET

Cancer comprises a large and diverse group of diseases resulting from the
uncontrolled proliferation of abnormal (malignant) cells. Most cancers will
spread beyond their original sites and invade surrounding tissue and may also
metastasize to more distant sites and ultimately cause death in the patient
unless effectively treated. To be effective, cancer treatment must target not
only the primary tumor site but also distant metastases. CANCER FACTS AND
FIGURES, a report from the American Cancer Society, estimates that a total of
approximately 1,380,000 new cases and approximately 560,000 deaths will be
reported for invasive cancers in the United States in 1997. Predominant forms of
cancer include leukemia and lymphoma, breast, lung, urinary, prostate, melanoma,
ovarian, colon, rectal and brain cancers. The National Cancer Institute
estimates that the direct medical cost of treating cancer in the United States
is $35 billion per year. Information regarding certain cancer indications is
summarized below.

ESTIMATED INCIDENCE FOR SELECTED CANCERS IN THE UNITED STATES FOR 1997

<TABLE>
<CAPTION>
ANNUAL
---------------------
NEW CASES DEATHS
---------- ---------
<S> <C> <C>
Malignant Melanoma........................................................................ 40,000 7,000
Acute Myelogenous Leukemia................................................................ 9,000 7,000
Prostate Adenocarcinoma................................................................... 335,000 42,000
All Invasive Cancers...................................................................... 1,380,000 560,000
</TABLE>

The Company estimates that the size of the anti-cancer pharmaceutical market
in Europe is approximately equivalent to the U.S. market.

Predominant methods of treating cancer generally include surgery, radiation
therapy, chemotherapy and immunotherapy. Although these techniques have achieved
success for certain cancers, particularly when detected in the early stages,
each has drawbacks which may significantly limit their success in treating
certain types and stages of cancer. For example, cancer may recur even after
repeated attempts at surgical removal of tumors or other treatment. Surgery may
be successful in removing visible tumors but may leave smaller nests of cancer
cells in the patient which continue to proliferate. Radiation or chemotherapy
are relatively imprecise methods for the destruction of cancer cells (i.e., such
therapies can kill both cancer cells and normal cells) and have toxic side
effects which may themselves be lethal to the patient; these toxic side effects
may also restrict the application of these treatment modes to less than optimal
levels required to ensure eradication of the cancer.

The high number of cancer-related deaths indicate the need for more
efficacious therapies for many patients. In addition, the Company believes that
new cancer therapies will increasingly be required to be more cost-effective and
allow for alternate site or in-home treatment and to improve patient quality of
life during treatment.

HEPATITIS C MARKET

The U.S. Centers for Disease Control and Prevention estimates that
approximately four million Americans are infected with the hepatitis C virus
("HCV"). Approximately 85% of HCV patients develop long-term or chronic
infection, possibly leading to serious liver diseases, cirrhosis (scarring of
the liver), liver cancer and death. HCV is the leading cause of liver cancer and
the primary reason for liver transplantation in the United States. The World
Health Organization and other sources estimate that

23
<PAGE>
approximately 60 million people are chronically infected worldwide. The only
approved treatment for HCV is IFN-a. However, IFN-a therapy results in
sustained, long-lasting responses in only about 10-15% of chronically infected
persons.

IMMUNE SYSTEM MODULATION AGAINST CANCER AND INFECTIOUS DISEASES

In recent years, research has focused on the immune system's ability to
combat cancer and infectious diseases. New drugs, vaccines, chemotherapeutic
agents and advanced radiation therapy technologies are continually being
developed to protect and enhance the response of the immune system to disease.
Many of these technologies, however, have demonstrated significant limitations
in their ability to treat cancer and certain infectious agents. These
limitations include marginal efficacy, severe adverse side effects and the
development of multi-drug resistance.

Since the early 1980's, the cytokines IL-2 and IFN-a have been studied for
the treatment of many cancers and infectious diseases including advanced
malignant melanoma, renal cell carcinoma, hepatitis C and AML. Cytokines are
naturally occurring molecules that have potent effects related to inflammation
and immune cell functions. The medical community held high expectations for IL-2
and IFN-a in the treatment of cancer and infectious diseases based on findings
that these cytokines enhance the anti-tumor activity of natural killer-cells
("NK-cells") IN VITRO (NK-cells are a specialized subset of cells which can
function to destroy cancer cells and virally infected cells). Although certain
beneficial effects were demonstrated with IL-2 and IFN-a therapy in both
experimental animals and in the killing activity of human NK-cells IN VITRO, in
only a small portion of cancer patients do these cytokines demonstrate a
clinically significant tumor response. Further, in chronically infected
hepatitis C patients, IFN-a therapy results in sustained, long-lasting responses
in only about 10-15% of these cases. Moreover, cytokines generally produce
severe adverse side-effects and are intolerable at high doses.

MAXAMINE TECHNOLOGY

The Company's lead product, MAXAMINE, was designed to enhance and support
the activity of cytokines and may play a key role in the recent emphasis on
combination therapy for certain cancers and infectious diseases. A novel
mechanism discovered and researched by the Company's scientists at the
University of Gothenburg, Sweden may explain, in part, why cytokine therapy
using IL-2 or IFN-a for many forms of cancer and infectious diseases have
demonstrated limited efficacy.

This research has shown that phagocytic cells (such as monocytes,
macrophages and neutrophils) which are present in tumors and may comprise a
significant portion of the tumor's cellular volume, inhibit the tumor-killing
activity of NK-cells and T-cells and can prevent their activation by cytokines.
The specific suppression of NK-cells and T-cells has been shown to be caused by
localized oxidative stress resulting from the release of reactive oxygen
metabolites ("ROMs") by phagocytes. The ROMs inhibit T-cell function and cause
NK-cells to undergo apoptosis (programmed cell death) thereby destroying the
NK-cells. The administration of cytokines, regardless of the dosage, cannot
overcome the suppression of NK-cells and T-cells within the tumor.

This research has also shown that by the addition of an H(2) receptor
agonist such as MAXAMINE, the production of ROMs can be blocked, thereby
protecting NK-cells and T-cells. Under such conditions, enhanced activation of
NK-cells and T-cells is possible, leading to improved anti-tumor and anti-viral
activity. This mechanism is diagrammed on the following page.

24
<PAGE>
MECHANISM OF ACTION OF MAXAMINE

[DIAGRAM]

PHAGOCYTIC CELLS, WHICH ARE PRESENT IN TUMORS, INHIBIT THE
TUMORICIDAL ACTIVITY OF NK-CELLS AND T-CELLS AND CAN PREVENT THEIR
ACTIVATION BY CYTOKINES SUCH AS IL-2.

[DIAGRAM]

THE ADMINISTRATION OF H(2) RECEPTOR AGONISTS SUCH AS MAXAMINE CAN
BLOCK THE PRODUCTION OF ROMS (H(2)O(2)), THEREBY PROTECTING
NK-CELLS AND T-CELLS. UNDER SUCH CONDITIONS, ENHANCED ACTIVATION
OF NK-CELLS AND T-CELLS IS POSSIBLE, LEADING TO IMPROVED
ANTI-TUMOR AND ANTI-VIRAL ACTIVITY.

BENEFITS OF MAXAMINE

The Company believes that MAXAMINE will be integral in the growing trend
toward combination therapy for certain cancers and infectious diseases and may
offer a number of important clinical and commercial advantages relative to
current therapies or approaches including:

- IMPROVED CLINICAL EFFICACY. The Company's preliminary clinical data has
provided evidence of improved therapeutic efficacy (extended survival and
remission intervals) over approved therapies or standards of care. In
addition, the combination therapy may extend the range of indications for
the use of cytokine therapies in both cancer and infectious diseases.

- IMPROVED QUALITY OF LIFE. Combination therapies with MAXAMINE may be an
important part of a strong medical interest in reducing treatment
toxicities and improving quality of life during therapy.

- OUTPATIENT ADMINISTRATION. MAXAMINE therapy can be self-administered on
an outpatient basis, subcutaneously, rather than the in-hospital
administration required for other therapies. The Company believes that the
greater ease of outpatient administration, as well as low dosage
requirements for the combined products, will result in increased patient
quality of life.

25
<PAGE>
- COST EFFECTIVE THERAPY. By utilizing a lower dose of IL-2 or IFN-a, the
cost to the patient may be reduced below existing treatment regimens. In
addition, the Company's product is designed to be delivered on an
outpatient basis rather than in-hospital.

MAXAMINE CLINICAL TRIAL STATUS

A number of clinical trials of MAXAMINE have been initiated or are planned
by the Company in the near future. By early 1998, the Company expects to have
commenced three Phase III clinical trials for MAXAMINE in various countries
around the world, any one of which, if successful, could provide data necessary
to file for the approval to market MAXAMINE in certain countries. The table
below sets forth the disease indications currently targeted or planned to be
targeted by the Company. No assurance can be given that the Company will be able
to commence planned clinical studies within the time frames set forth below, if
at all. Moreover, the Company cannot predict when clinical studies for all of
the indications set forth below will be completed or whether the results of such
studies will support the filing of NDAs or the equivalent. See "Risk Factors--No
Assurance of Successful Clinical Trials and Product Development."

MAXAMINE CLINICAL TRIAL STATUS

<TABLE>
<CAPTION>
INDICATION PHASE STATUS LOCATION
- ----------------------------------- ---------------- ------------------------- -----------------------------
<S> <C> <C> <C>
Advanced Malignant Melanoma Phase III trial Ongoing United States
Phase II trial Ongoing Sweden
Phase III trial Planned for late 1997 Sweden and Australia

Acute Myelogenous Leukemia Phase II trial Ongoing Sweden
Phase III trial Planned for early 1998 Europe and United States

Renal Cell Carcinoma Phase I trial Ongoing Sweden

Multiple Myeloma Phase I trial Ongoing Sweden

Hepatitis C Phase I trial Ongoing Sweden
Phase I/II trial Planned for 1998 United States

Prostate Adenocarcinoma Phase I trial Planned for 1998 United States and Sweden
</TABLE>

ADVANCED MALIGNANT MELANOMA

The Company's initial Phase II clinical trial was conducted in Sweden at the
Sahlgrenska University Hospital in Gothenburg in which fifteen patients with
advanced metastatic malignant melanoma were treated with a high-dose regimen of
IL-2 together with daily injections of IFN-a in five-day cycles. Eight of the
patients were also given MAXAMINE injections twice daily during treatment with
IL-2 and IFN-a.

The results of the initial Phase II clinical trial indicated that MAXAMINE
may be given as an effective adjuvant to IL-2/IFN-a therapy. In the seven
patients who did not receive MAXAMINE, one partial response (defined as a 50%
reduction of the total tumor burden) was observed in a patient with skin and
lymph node melanoma. In the eight MAXAMINE-treated patients, four partial and
two mixed responses were observed. Notably, two of the MAXAMINE-treated patients
had complete resolution of their extensive liver metastases. Sites of response
in MAXAMINE-treated patients also included skin, lymph nodes, skeleton, spleen
and muscle. In patients receiving MAXAMINE, there was a statistically
significant improvement in overall survival (p < 0.03). The MAXAMINE-treated
patients had a mean survival of 14.7 months, more than double the mean 6.8 month
survival in the control group. One MAXAMINE-treated patient remains completely
free of detectable disease more than four years after the onset of MAXAMINE
therapy.

A second advanced malignant melanoma study was undertaken at the Sahlgrenska
University Hospital in Sweden to determine if a lower-dose regimen of the same
cytokines (IL-2 and IFN-a) in combination

26
<PAGE>
with the same doses of MAXAMINE would retain the efficacy seen previously while
reducing the side effects of the cytokine portion of the treatment. In addition
to survival, a goal for MAXAMINE therapy is to lower toxicity of immunotherapy
and thus enhance the patients' quality of life. Lowering the doses of the
cytokines reduces many of the side effects of these drugs, thereby facilitating
tolerance of the therapy and even allowing self-administration of the drugs at
home. The mean survival time of patients with advanced (stage IV) malignant
melanoma using conventional treatments is historically reported to be seven
months. In this second, ongoing low-dose malignant melanoma study, 11 patients
have been evaluated and as of the date of last report (September 1997) had a
mean survival time of 16.5 months, more than double the rate generally reported
for the normal course of the disease and exceeding the favorable results from
the high-dose study described above. In this second malignant melanoma clinical
trial MAXAMINE treatment was well-tolerated and most patients were able to treat
themselves at home.

A third Phase II advanced malignant melanoma trial of stage IV patients is
ongoing in Sweden using MAXAMINE in combination with IL-2 and IFN-a. As of
September 1997, 12 patients have been enrolled and 10 of 12 remain alive and on
treatment. In aggregate, MAXAMINE has now been studied in three Phase II trials
in a total of 31 patients with stage IV malignant melanoma. In each of the first
two trials the mean survival time has exceeded 14 months compared to reported
means of seven months for conventional treatments. In addition, of the seven
patients having liver metastases, treatment with MAXAMINE was shown to
significantly improve survival outcome (mean of 20 months survival as a group)
compared to the historically reported four months survival rate for these
patients.

A multi-center Phase III clinical trial of MAXAMINE in the United States for
the treatment of advanced malignant melanoma commenced in June 1997. In this
clinical trial, advanced malignant melanoma patients are being treated with a
combination of MAXAMINE and IL-2, while patients in the control group are being
treated with IL-2 alone. The primary endpoint of the study is overall patient
survival, and the secondary endpoints include time to progression, tumor
response rate, duration of response and quality of life. The enrollment
objective for the study is 200 evaluable patients, 100 in each arm. The study
will ultimately be conducted in 15 or more centers in the United States.

The Company currently plans to initiate a second Phase III trial of MAXAMINE
for the treatment of advanced malignant melanoma in Sweden and Australia later
this year. The trial will be performed in approximately 8-10 clinical centers in
Sweden and a similar number of sites in Australia. Patients in the treatment arm
will receive a co-administration of MAXAMINE plus low-dose IL-2 and IFN-a, while
patients in the control arm will receive dacarbazine (DTIC), the most common
chemotherapeutic agent for the treatment of advanced malignant melanoma which
has a reported survival benefit of 6-7 months in advanced malignant melanoma
patients. The Swedish/Australian study will be designed to encompass 200
evaluable patients.

ACUTE MYELOGENOUS LEUKEMIA ("AML")

Once diagnosed with AML, patients are typically treated with chemotherapy to
attain remission, yet 75-80% of these patients will relapse and require
additional chemotherapy. The standard of care once a patient is in remission,
however, is no further treatment. Historically, patients in their first complete
remission ("CR1") remain in disease-free remission for a mean of approximately
12 months. Patients who have relapsed and achieved a second or subsequent
remission ("CR2+") typically have shorter remissions (mean time to relapse of
six months or less) and have less than 1% probability of long-term survival. In
Phase II clinical trials conducted in Sweden, 28 patients with AML in complete
remission have been evaluated to date in a clinical trial wherein they were
given outpatient therapy with MAXAMINE plus IL-2. The objective of the study is
to treat AML patients in remission with MAXAMINE and low doses of IL-2 to
prevent relapse and prolong disease-free survival while maintaining a good
quality of life during treatment.

At August 1, 1997, the 11 patients in the CR2+ group have had a mean time in
remission of 20 months, compared to the historic mean of six months. The 17
patients in the CR1 group have had a mean

27
<PAGE>
time in remission of 20 months and 12 (71%) remain in complete remission. In
this clinical trial the MAXAMINE treatment was well-tolerated and the patients
were able to treat themselves at home. In the ongoing study, remission inversion
(defined as prolonging the duration of complete remission to at least equal that
of the patient's own previous remission) has been achieved in 80% of the 10
evaluable CR2+ patients.

The above findings for patients in CR2+ may be compared to those in a study
published in 1994 in which non-bone marrow transplanted patients were treated
with IL-2 alone. In that study, remission inversion was achieved with IL-2 alone
in only 2 of 29 AML patients, or 7%, and time in CR2+ averaged less than six
months (compared to 80% and a mean of 20 months for MAXAMINE treated patients as
reported above). In addition, data collected in Gothenburg, Sweden from 1976 to
1994 representing the natural course for this disease reported a 9% remission
inversion and a mean remission time of only five and one-half months.

A Phase III clinical trial of MAXAMINE for the treatment of AML is planned
to commence in early 1998 based upon the results of the data for the ongoing
Phase II study. The Company currently plans to include clinical sites in both
Europe and the United States and to enroll approximately 300 patients.

HEPATITIS C

In mid-1997 the Company initiated a Phase I clinical trial of MAXAMINE for
the treatment of HCV. The Company expects to treat up to 15 HCV patients with a
combination of MAXAMINE and IFN-a. Response to the therapy will be measured
through an evaluation of specific liver function tests and viral burden. The
objective of the trial will be to determine if the administration of MAXAMINE as
an adjunct to IFN-a is safe and can demonstrate clinical responses among
previously IFN-a-resistant HCV patients. The study is being conducted in
Gothenburg, Sweden.

MAXVAX MUCOSAL VACCINE CARRIER/ADJUVANT PLATFORM

OVERVIEW OF VACCINE MARKET AND INFECTIOUS DISEASES

There remains today a broad range of infectious diseases for which no
therapies currently exist. One of the most promising areas in the fight against
such diseases is the development of vaccines. Recent trends in the delivery of
health care in the United States, including an increased emphasis on preventive
health care, have contributed to significant growth of interest in disease
prevention and development of the vaccine market. Immunization has long been
recognized as an effective means to decrease health care costs through disease
prevention and is one of the key areas given priority attention by the United
States Department of Health and Human Services and the World Health Organization
in their respective public health service publications. In 1992, revenues for
the total world human vaccine market totaled $1.8 billion, with the U.S. and
Europe comprising 75% of the market. It is estimated that by 1999, the total
world market for human vaccine products will have more than tripled to $5.3
billion and is anticipated to grow in excess of 20% per year.

MUCOSAL MEMBRANES--A FIRST-LINE DEFENSE

The mucosal membranes (which line the nasal compartment and sinuses, eyes,
ears, oral cavity, respiratory tract, gastrointestinal tract and urogenital
tract) represent the body's first line of defense against infections and are the
sites where most infectious agents enter the body. Examples of infectious
pathogens which enter the body through the mucosal membranes are chlamydia,
herpes simplex viruses and HIV, which cause sexually transmitted diseases;
respiratory syncytial virus ("RSV"), pneumococcus and streptococcus which cause
respiratory diseases; and HELICOBACTER PYLORI (ulcers) and rotavirus (diarrhea)
which causes gastrointestinal diseases. There has been a long-standing interest
in developing mucosal vaccines against these and other important infections.

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MAXVAX SYSTEM--MUCOSAL VACCINE CARRIER/ADJUVANT PLATFORM

[DIAGRAM]

CHOLERA TOXIN IS COMPRISED OF TWO SUBUNITS; THE A-SUBUNIT ("CTA"),
WHICH IS THE KNOWN TOXIC PORTION OF THE MOLECULE, AND THE
B-SUBUNIT ("CTB"), WHICH HAS BEEN SHOWN TO BE IMMUNOGENIC,
NON-TOXIC AND BINDS SPECIFICALLY TO THE GM-1 GANGLIOSIDE MOLECULE
ON THE TARGET M-CELL OF THE MUCOSAE. THE COMPANY IS DEVELOPING THE
MAXVAX SYSTEM TO LINK TARGET ANTIGENS TO CTB. THE CTB-ANTIGEN
CONJUGATE THEN BINDS SPECIFICALLY TO M-CELLS FOR PROCESSING AND
PRESENTATION TO THE APPROPRIATE IMMUNE SYSTEM CELLS.

MAXVAX is a mucosal vaccine carrier/adjuvant platform based on the cholera
toxin B subunit ("CTB"). CTB has already been administered to hundreds of
thousands of patients worldwide and is a major component of an existing oral
cholera vaccine and traveler's diarrhea vaccine. Most current vaccines have been
designed to provide systemic immunity administered through injection. They treat
or prevent infection only after the infecting organism has entered the blood
stream or deep tissues of the body. The mechanisms which induce mucosal immunity
appear to be distinct from those that protect systemically. The Company believes
that the MAXVAX approach to therapeutic and protective vaccines has the
potential to elicit both mucosal and systemic immunity by delivering antigens
directly to the mucosal system. By combining the Company's proprietary
recombinant form of CTB with vaccine antigens and/or genes, the Company believes
that it will be able to develop effective, new mucosal-based vaccines.

POTENTIAL BENEFITS OF MUCOSAL IMMUNIZATION USING MAXVAX

The Company's MAXVAX approach to therapeutic and protective vaccines has
been shown to elicit both mucosal and systemic immunity and is based upon
"non-injectable" administration. The Company believes that there are numerous
important clinical and commercial advantages to mucosal immunization compared
with traditional injected vaccine products, including:

- GREATER CLINICAL EFFICACY. The body's largest defense system against
disease is the mucosal immune system where most infectious agents enter
the body. The Company believes that its mucosal vaccine

29
<PAGE>
platform may likely result in mucosal and systemic immune stimulation and
could more effectively prevent or treat most infectious diseases, as
compared to traditional injected vaccines.

- HIGHER LEVEL OF SAFETY. CTB-based vaccines have been administered to
hundreds of thousands patients worldwide in clinical trials for the
cholera and traveler's diarrhea. CTB is widely thought to be a safe and
effective mucosal vaccine carrier.

- LOWER COST OF ADMINISTRATION. The administration of the Company's
products by oral, nasal and topical applications involving direct contact
with mucosal surfaces may not require patients to go to clinics nor will
it require trained personnel, thereby effectively lowering the cost of
administration. The vaccines may be prescribed by a doctor and dispensed
by a pharmacy, thus simplifying delivery and eliminating the multiple
office visits required for injection delivery of most contemporary
vaccines.

- IMPROVED VACCINE UTILIZATION. Maxim believes that the relative ease of
administration and the concept of "prescription" vaccines may improve
vaccine utilization over traditionally administered vaccines. Further, the
Company believes that this novel mucosal vaccine concept may allow
development of protective and therapeutic approaches to diseases where
previous vaccines and therapeutics have failed.

The MAXVAX technology is currently in preclinical development. The Company
has expanded its internal research and development efforts with emphasis on a
mucosal vaccine against chlamydia and a mucosal vaccine against diphtheria. In
addition, the Company has ongoing programs related to gene-based vaccines and
potential therapeutic vaccines. The chlamydia vaccine utilizes the Company's
gene-fusion technology and is nearing a prototype for animal testing. This
program also includes an ongoing human Phase I study addressing appropriate
routes of administration (nasal, oral, vaginal), dosing and immune response
using the MAXVAX carrier alone. The results of this human study is expected to
be published in a scientific journal. The Company intends to seek collaborations
with pharmaceutical and biopharmaceutical companies for the discovery and
development of vaccine candidates of market interest.

The MAXVAX technology represents an early stage discovery and development
program. As with any such program, substantial additional research and
development will be necessary in order for the Company or its partners to
develop products based on the technology, and there can be no assurance that the
Company's research and development efforts will lead to development of products
that are shown to be safe and effective in clinical trials and are commercially
viable. See "Risk Factors--No Assurance of Successful Clinical Trials and
Product Development."

PRODUCT DEVELOPMENT AND COLLABORATIVE RELATIONSHIPS

The Company conducts its research and other product development efforts
through a combination of its internal research staff and collaborative programs.
For MAXAMINE, the Company relies upon its clinical management personnel along
with arrangements with universities and other clinical research sites, contract
research organizations and similar institutions and persons for a significant
portion of its product development efforts. The majority of the basic research
and development efforts related to MAXVAX were transferred to the Company's
internal laboratories during 1997, although the Company expects to rely more
heavily on pharmaceutical company collaborative relationships as product
development advances.

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<PAGE>
The Company has relied upon licensing and other transactions to gain access
to certain of its proprietary technologies. Conduct of the Company's current and
planned clinical trials of MAXAMINE relies upon contractual relationships with
universities and other clinical trial sites, contract research organizations,
home nursing organizations, and regulatory and other consultants. The Company's
strategy for development, commercialization and marketing of MAXAMINE and MAXVAX
will involve, where appropriate, the establishment of marketing and other
collaborative relationships with pharmaceutical industry partners. The Company
intends to seek collaborative relationships in certain targeted development
areas, particularly in situations where the Company believes that the clinical
testing, marketing, manufacturing and other resources of pharmaceutical
collaborators will enable it to more effectively access particular products or
geographic markets.

MARKETING AND SALES

The Company expects to enter into an alliance with one or more
pharmaceutical companies to market MAXAMINE and to assist with funding of
certain portions of the clinical development efforts. The Company is currently
in discussions with potential collaborative marketing partners, although there
can be no assurance that any such relationships can be consummated, or that any
such relationships will be consummated under terms favorable to the Company. See
"Risk Factors--No Marketing and Sales Capacities; Anticipated Dependence Upon
Marketing Alliances."

The treatment of cancer is a highly specialized activity in which the
approximately 3,500 practicing oncologists in the United States tend to be
concentrated in major medical centers. The Company's marketing strategy for
MAXAMINE may include co-promotion or co-marketing of the product with the
Company's future marketing partners.

Due to the nature of the vaccine markets, the Company intends to establish
licensing arrangements with pharmaceutical companies with large distribution
systems for MAXVAX and does not expect to establish a direct sales capability in
the vaccine area.

MANUFACTURING

There are a number of facilities with FDA Good Manufacturing Practice
("GMP") approval available for contract manufacturing of the MAXAMINE product.
The Company does not intend to acquire or establish its own dedicated
manufacturing facilities for MAXAMINE in the foreseeable future. The Company's
strategy has been, and is expected to continue, to contract with established
pharmaceutical manufacturers for the production of MAXAMINE. The CTB protein
portion of MAXVAX is currently being produced by SBL Vaccin AB ("SBL"),
Stockholm, Sweden, under GMP through a system suitable for large-scale
industrial production.

The Company believes that, in the event of the termination of an agreement
with any single supplier or manufacturer, the Company would likely be able to
enter into agreements with other suppliers and/or manufacturers on similar
terms. However, there can be no assurance that there will be manufacturing
capacity available to the Company within the timelines and at quantities
required. See "Risk Factors--No Manufacturing Capabilities."

PATENTS, LICENSES AND PROPRIETARY RIGHTS

The Company holds five issued or allowed patents and has six patent
applications pending in the United States. In addition, the Company holds
license rights to one issued patent and three patent applications pending in the
United States. Corresponding patent applications have been filed, and in certain
instances patents have been issued, in major international markets. It is the
Company's policy to file, where possible, patent applications to protect
technologies, inventions and improvements that are important to the development
of its business. Maxim's management has devoted substantial attention and
resources to the Company's patent and license portfolio to obtain the strongest
positions available.

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<PAGE>
Maintaining patents and licenses and conducting an assertive patent prosecution
strategy is a high priority of the Company.

KEY GRANTED PATENTS AND PENDING APPLICATIONS

The Company holds a patent relating to the combination of IL-2 and
H(2) receptor agonists ("H(2)RA's") that was issued by the U.S. Patent and
Trademark Office in September 1994 and has additionally been granted in Europe
and Australia. The Company holds a patent application relating to the
combination of IFN-a and H(2)RA's which was allowed by the U.S. Patent and
Trademark Office in July 1997 and has also issued in Australia. The Company also
holds four other patent applications in the United States relating to other
cytokines, biotherapies, mechanisms, rates and routes of administration, and
uses which have also been filed internationally.

Maxim holds a worldwide exclusive license to Vitec AB ("Vitec") and SBL's
U.S. and international patents for recombinantly producing CTB for use in
infectious diseases other than cholera, bacterial related diarrheas and HIV (the
Company holds non-exclusive rights to this patent with regard to HIV). The
Company also holds exclusive license rights to related patent applications as
well as a patent application with respect to certain therapeutic and
anti-inflammatory properties of CTB.

A patent application has been filed by the Company in the U.S. Patent and
Trademark Office covering use of CTB to make vaccines against chlamydia and
other sexually transmitted diseases. The Company has filed a U.S. patent
application for the use of CTB and other proteins in gene delivery of DNA or
RNA.

MAXAMINE TECHNOLOGY RIGHTS

In 1993, the Company entered into a technology transfer agreement pursuant
to which the Company purchased the core intellectual property and patent rights
related to its MAXAMINE technology. The technology transfer agreement requires
that the Company pay certain royalty obligations to the two inventors of the
technology. The Company has also filed additional patent applications and
received additional patents encompassing the MAXAMINE technology.

MAXVAX LICENSES AND TECHNOLOGY RIGHTS

In 1993, the Company entered into an option and license agreement with Vitec
and SBL, pursuant to which the Company exercised an option for an exclusive,
worldwide license to technology related to CTB for use in a chlamydia vaccine.
Under the agreement, the Company is required to use its best efforts to engage
SBL to manufacture any products which result from the application of the
licensed technology. The Company has to make royalty payments on the net sales
of products using the licensed technology and to make additional license and
milestone payments to Vitec upon the execution of any sub-licenses. Pursuant to
the agreement, any party may terminate the license agreement, with respect to
the rights and duties of that party, as a result of a material breach of the
agreement by another party.

In 1994, the Company entered into a second license agreement with Vitec and
SBL for an exclusive, worldwide license to technology rights related to CTB for
all infectious diseases except chlamydia (which is governed by the agreement
discussed above), HIV (which is governed by a separate non-exclusive sub-license
agreement held by the Company), cholera and bacterial-related diarrheas. Under
the agreement, the Company has agreed to use its best efforts to engage SBL to
manufacture any products which result from the application of licensed
technology, and both Vitec and the Company shall receive a percentage of any
profits that SBL derives from manufacturing such products. The licensors may
terminate the agreement upon a material breach of the agreement by the Company.

The Company has asked Active i Malmo AB (publ) ("Active"), SBL's recent
acquirer, to address concerns regarding SBL's performance under the 1994 license
agreement, including (i) the transfer of technical information and materials to
Maxim as required by the license agreement, (ii) disclosure of all

32
<PAGE>
improvements to the technology licensed to Maxim as required by the license
agreement and (iii) cessation of any activities which conflict with Maxim's
rights under the license agreement. The Company is currently discussing
resolution of the matter with Active. The Company cannot determine what impact,
if any, an unfavorable resolution of the existing concerns would have on the
commercial value of the CTB technology.

The Company holds other licenses relating to CTB, including a non-exclusive
sub-license to CTB for the prevention and treatment of HIV infection, and an
exclusive, worldwide license to patent applications and related technology
rights with respect to certain therapeutic and anti-inflammatory properties of
CTB.

TRADE SECRETS AND TECHNOLOGY TRANSFER

The Company's competitive position is also dependent upon unpatented trade
secrets. In an effort to protect its trade secrets, the Company has a policy of
requiring its employees, consultants and advisors to execute confidentiality,
proprietary information and invention assignment agreements upon commencement of
employment or consulting relationships with the Company. These agreements
provide that all confidential information of the Company developed or made known
to such individuals during the course of their relationship with the Company
must be kept confidential, except in specified circumstances. These agreements
also provide that inventions resulting from agreements be assigned to the
Company. There can be no assurance, however, that these agreements will provide
meaningful protection for the Company's trade secrets or other proprietary
information in the event of unauthorized use or disclosure of confidential
information. Invention assignment agreements executed by consultants and
advisors may conflict with, or be subject to, the rights of third parties with
whom such individuals have employment or consulting relationships. In addition,
there can be no assurance that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to the Company's trade secrets, that such trade secrets will not be
disclosed or that the Company can effectively protect its rights to unpatented
trade secrets.

The Company has entered into confidentiality and non-compete agreements with
its Swedish scientists and other collaborating scientists. These agreements
generally give Maxim license rights and access to most past and current
inventions and processes as they relate to the Company's current products, as
well as rights in certain future discoveries made by such scientists. Such
technology transfers are directly between the Company and the scientists. Unlike
U.S. institutions, Swedish universities cannot hold patent positions on any
discoveries made by their research scientists.

GENERAL PATENT UNCERTAINTIES AND RISKS

The patent position of participants in the pharmaceutical field generally is
highly uncertain, involves complex legal and factual questions, and has recently
been the subject of much litigation. There can be no assurance that any patent
applications relating to the Company's potential products or processes will
result in patents being issued, or that the resulting patents, if any, will
provide protection against competitors who successfully challenge the Company's
patents, obtain patents that may have an adverse effect on the Company's ability
to conduct business, or are able to circumvent the Company's patent position. It
is possible that other parties have conducted or are conducting research, and
could make discoveries of compounds or processes that would precede any
discoveries made by the Company, which could prevent the Company from obtaining
patent protection for these discoveries. Finally, there can be no assurance that
others will not independently develop pharmaceutical products similar to or make
obsolete those that the Company is planning to develop, or duplicate any of the
Company's products.

The Company may be required to obtain licenses to patents or proprietary
rights of others. No assurance can be given that any licenses required under any
such patents or proprietary rights would be made available on terms acceptable
to the Company, if at all. If the Company does not obtain such licenses, it
could encounter delays in product market introductions while it attempts to
design around such

33
<PAGE>
patents, or could find that the development, manufacture or sale of products
requiring such licenses could be foreclosed. Litigation may be necessary to
defend against or assert claims of infringement, to enforce patents issued to
the Company, to protect trade secrets or know-how owned by the Company, or to
determine the scope and validity of the proprietary rights of others. In
addition, interference proceedings declared by the United States Patent and
Trademark Office may be necessary to determine the priority of inventions with
respect to patent applications of the Company or its licensors. Litigation or
interference proceedings could result in substantial costs to and diversion of
effort by, and may have a material adverse impact on, the Company. In addition,
there can be no assurance that these efforts by the Company will be successful.
See "Risk Factors--Uncertainty Regarding Patents and Proprietary Rights."

GOVERNMENT REGULATION

Regulation by governmental authorities in the United States and other
countries is a significant factor in the development, manufacture and marketing
of the Company's proposed products and in its ongoing research and product
development activities. The nature and extent to which such regulation applies
to the Company will vary depending on the nature of any products which may be
developed by the Company. It is anticipated that all of the Company's products
will require regulatory approval by governmental agencies prior to
commercialization. In particular, human therapeutic and vaccine products are
subject to rigorous preclinical and clinical testing and other approval
procedures of the U.S. Food and Drug Administration ("FDA") and similar
regulatory authorities in European and other countries. Various governmental
statutes and regulations also govern or influence testing, manufacturing,
safety, labeling, storage and record-keeping related to such products and their
marketing. The process of obtaining these approvals and the subsequent
compliance with appropriate statutes and regulations require the expenditure of
substantial time and financial resources. Any failure by the Company or its
collaborators to obtain, or any delay in obtaining, regulatory approval could
adversely affect the marketing of any products developed by the Company, its
ability to receive product revenues and its liquidity and capital resources. See
"Risk Factors--No Assurance of Regulatory Approval; Government Regulation."

FDA APPROVAL PROCESS

Prior to commencement of clinical studies involving human beings,
preclinical testing of new pharmaceutical products is generally conducted on
animals in the laboratory to evaluate the potential efficacy and the safety of
the product. The results of these studies are submitted to the FDA as a part of
an Investigational New Drug ("IND") application, which must become effective
before clinical testing in humans can begin. Typically, clinical evaluation
involves a time consuming and costly three-phase process. In Phase I, clinical
trials are conducted with a small number of subjects to determine the early
safety profile, the pattern of drug distribution and metabolism. In Phase II,
clinical trials are conducted with groups of patients afflicted with a specific
disease in order to determine preliminary efficacy, optimal dosages and expanded
evidence of safety. In Phase III, large-scale, multi-center, comparative trials
are conducted with patients afflicted with a target disease in order to provide
enough data to demonstrate the efficacy and safety required by the FDA. The FDA
closely monitors the progress of each of the three phases of clinical testing
and may, at its discretion, re-evaluate, alter, suspend or terminate the testing
based upon the data which have been accumulated to that point and its assessment
of the risk/benefit ratio to the patient.

The results of the preclinical and clinical testing on a non-biologic drug
and certain diagnostic drugs are submitted to the FDA in the form of a New Drug
Application ("NDA") for approval prior to commencement of commercial sales. In
the case of vaccines, the results of clinical trials are submitted as a Product
License Application ("PLA"). In responding to an NDA or PLA, the FDA may grant
marketing approval, request additional information or deny the application if
the FDA determines that the application does not satisfy its regulatory approval
criteria. There can be no assurance that approvals will be granted on a timely
basis, if at all. Similar procedures are in place in countries outside the
United States.

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<PAGE>
The FDA has issued "fast-track" regulations intended to accelerate the
approval process for the development, evaluation and marketing of new
therapeutic products used to treat life-threatening and severely debilitating
illnesses, especially those for which no satisfactory alternative therapies
exist. "Fast-track" designation affords the Company early interaction with the
FDA in terms of protocol design and permits, although it does not require, the
FDA to grant approval after completion of Phase II clinical trials. On March 29,
1996, the FDA announced further intentions to accelerate the approval for cancer
therapeutics. The FDA's cancer drug initiative consists of specific requirements
and elements including accelerated approval for cancer drugs, expanded access
for drugs approved in other countries and facilitating additional uses of
approved cancer drugs. Further, the FDA has stated that it will increase its
proactive role in ensuring cancer drugs become available to patients by
soliciting applications for U.S. approval for products approved overseas and,
for the first time, taking international regulatory approvals into
consideration. The FDA has previously accepted data generated in clinical trials
from Sweden for incorporation in NDAs filed in the United States. The Company
believes that a number of its product candidates may fall under these
regulations, but there can be no assurance that any of the Company's products
will receive this or other similar regulatory treatment.

The Advisory Committee of Immunization Practices ("ACIP") of the Centers for
Disease Control and Prevention ("CDCP") has a role in setting the market for
most, if not all, of the vaccine products Maxim intends to make. The ACIP meets
quarterly to review developing data on licensed vaccines, and those approaching
license, as well as epidemiologic data on the need for these products. The
recommendations of the ACIP on the appropriate use of vaccines and related
products are published in the MORBIDITY AND MORTALITY WEEKLY REPORT and
reprinted in several journals. The CDCP develops epidemiological data in support
of the need for new vaccines and monitors vaccine usage and changes in disease
incidence. In addition, CDCP staff frequently act as key advisors to the FDA in
their review process.

EUROPEAN AND OTHER REGULATORY APPROVAL

Whether or not FDA approval has been obtained, approval of a product by
comparable regulatory authorities in Europe and other countries will likely be
necessary prior to commencement of marketing the product in such countries. The
regulatory authorities in each country may impose their own requirements and may
refuse to grant, or may require additional data before granting, an approval
even though the relevant product has been approved by the FDA or another
authority. As with the FDA, the European Union ("EU") countries and other
developed countries have very high standards of technical appraisal and,
consequently, in most cases a lengthy approval process for pharmaceutical
products. The process for gaining such approval in particular countries varies,
but generally follows a similar sequence to that described for FDA approval. In
Europe, the European Committee for Proprietary Medicinal Products provides a
mechanism for EU-member states to exchange information on all aspects of product
licensing and assesses license applications submitted under two different
procedures (the multi-state and the high-tech concentration procedures). The EU
has established a European agency for the evaluation of medical products, with
both a centralized community procedure and a decentralized procedure, the latter
being based on the principle of mutual recognition between the member states.

ORPHAN DRUG ACT

Under the Orphan Drug Act, the FDA may designate drug products as orphan
drugs if there is no reasonable expectation of recovery of the costs of research
and development from sales in the United States or if such drugs are intended to
treat a rare disease or condition, which is defined as a disease or condition
that affects less than 200,000 persons in the United States. If certain
conditions are met, designation as an orphan drug confers upon the sponsor
marketing exclusivity for seven years following FDA approval of the product,
meaning that the FDA cannot approve another version of the "same" product for
the same use during such seven year period. The market exclusivity provision
does not, however, prevent the FDA from approving a different orphan drug for
the same use or the same orphan

35
<PAGE>
drug for a different use. The Orphan Drug Act has been controversial, and many
legislative proposals have from time to time been introduced in Congress to
modify various aspects of the Orphan Drug Act, particularly the market
exclusivity provisions. There can be no assurance that new legislation will not
be introduced in the future that may adversely impact the availability or
attractiveness of orphan drug status for any of the Company's products.

OTHER REGULATIONS

The Company is also subject to various U.S. federal, state and local and
international laws, regulations and recommendations relating to safe working
conditions, laboratory manufacturing practices and the use and disposal of
hazardous or potentially hazardous substances, including radioactive compounds
and infectious disease agents, used in connection with the Company's research
work. The extent of government regulation which might result from future
legislation or administrative action cannot be predicted accurately.

THIRD-PARTY REIMBURSEMENT

The business and financial condition of pharmaceutical and biotechnology
companies will continue to be affected by the efforts of government and
third-party payors to contain or reduce the cost of health care through various
means. For example, in certain international markets pricing negotiations are
often required in each country of the European Community, even if approval to
market the drug under the European Medical Evaluation Authority's centralized
procedure is obtained. In the U.S., there have been, and the Company expects
that there will continue to be, a number of federal and state proposals to
implement similar government control. In addition, an increasing emphasis on
managed care in the U.S. has and will continue to increase the pressure on
pharmaceutical pricing. While the Company cannot predict whether any such
legislative or regulatory proposals will be adopted or the effect such proposals
or managed care efforts may have on its business, the announcement of such
proposals or efforts could have a material adverse effect on the Company's
ability to raise capital, and the adoption of such proposals or efforts could
have a material adverse effect on the Company's business, financial condition
and results of operations. Further, to the extent that such proposals or efforts
have a material adverse effect on other pharmaceutical companies that are
prospective corporate partners for the Company, the Company's ability to
establish a strategic alliance may be adversely affected. In addition, in both
the U.S. and elsewhere, sales of prescription pharmaceuticals are dependent in
part on the availability of reimbursement to the consumer from third-party
payors, such as government and private insurance plans that mandate
predetermined discounts from list prices. In addition, third-party payors are
increasingly challenging the prices charged for medical products and services.
If the Company succeeds in bringing one or more products to the market, there
can be no assurance that these products will be considered cost effective and
that reimbursement to the consumer will be available or will be sufficient to
allow the Company to sell its products on a competitive basis.

COMPETITION

Competition in the discovery and development of methods for treating or
preventing cancer and infectious disease is intense. Numerous pharmaceutical,
biotechnology and medical companies and academic and research institutions in
the United States and elsewhere are engaged in the discovery, development,
marketing and sale of products for the treatment of cancer and infectious
disease. These include surgical approaches, new pharmaceutical products and new
biologically derived products. The Company expects to encounter significant
competition for the principal pharmaceutical products it plans to develop.
Companies that complete clinical trials, obtain regulatory approvals and
commence commercial sales of their products before their competitors may achieve
a significant competitive advantage. A number of pharmaceutical companies are
developing new products for the treatment of the same diseases being targeted by
the Company. In some instances, the Company's competitors already have products
in clinical

36
<PAGE>
trials. In addition, certain pharmaceutical companies are currently marketing
drugs for the treatment of the same diseases being targeted by the Company, and
may also be developing new drugs to address these disorders.

The Company believes that its competitive success will be based on its
ability to create and maintain scientifically advanced technology, develop
proprietary products, attract and retain scientific personnel, obtain patent or
other protection for its products, obtain required regulatory approvals, obtain
orphan drug status for certain products and manufacture and successfully market
its products either independently or through outside parties. Many of the
Company's competitors have substantially greater financial, clinical testing,
regulatory compliance, manufacturing, marketing, human and other resources. In
addition, the Company will continue to seek licenses with respect to key
technologies related to its fields of interest and may face competition with
respect to such efforts. See "Risk Factors--Competition."

EMPLOYEES AND CONSULTANTS

As of October 15, 1997, the Company had 20 employees, all but one of which
were based at its headquarters in San Diego, California. The Company believes
its relationships with its employees are satisfactory. Other experienced
professionals and personnel are expected to be hired to join the Company's
management team in 1997 and 1998 to, among other things, address the
requirements of the expansion of clinical trials of MAXAMINE and other
commercialization efforts. See "Risk Factors--Dependence on Qualified
Personnel."

In addition to its employees, Maxim has engaged approximately 12 experienced
consultants in the United States, Europe and Australia with pharmaceutical and
business backgrounds to assist in its product development efforts. The Company
plans to leverage its key personnel by making extensive use of contract
laboratories, development consultants, and strategic partnerships with
pharmaceutical companies to conduct the Company's preclinical and clinical
trials.

FACILITIES

The Company currently leases approximately 9,500 square feet of laboratory
and office space in San Diego, California. The Company has no current plans for
any expansion of its facilities, but believes that increases in its clinical
trial and other commercialization efforts related to MAXAMINE may increase the
Company's facility requirements.

LEGAL PROCEEDINGS

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The names, ages and positions of the Company's executive officers and
directors, as of October 15, 1997, are set forth below:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- ---------------------------------------------------------------
<S> <C> <C>
Larry G. Stambaugh........................ 50 Chairman of the Board, President and Chief Executive Officer
Kurt R. Gehlsen, Ph.D..................... 41 Chief Technical Officer and Vice President, Development
Dale A. Sander............................ 38 Chief Financial Officer, Vice President, Finance and Secretary
Colin B. Bier, Ph.D....................... 51 Director
G. Steven Burrill......................... 53 Director
Per-Olof Martensson....................... 60 Director
F. Duwaine Townsen........................ 64 Director
</TABLE>

LARRY G. STAMBAUGH has served as the Company's Chairman of the Board of
Directors, President and Chief Executive Officer since 1993. From 1989 to 1992,
Mr. Stambaugh served in a number of positions at ABC Laboratories, Inc., an
international contract science research laboratory, including Chairman of the
Board of Directors, President and Chief Executive Officer. From 1983 to 1989,
Mr. Stambaugh served as Executive Vice President and Chief Financial Officer of
CNB Financial Corporation, a multi-bank holding company. Mr. Stambaugh received
a B.A. in business administration from Washburn University and is a certified
public accountant.

KURT R. GEHLSEN, PH.D. joined the Company as Chief Technical Officer and
Vice President, Development in 1996. From 1991 to 1995, Dr. Gehlsen served as
Chairman of the Board of Directors, President and Chief Executive Officer of
Trauma Products, Inc., a biomedical company. From 1989 to 1991, Dr. Gehlsen
served as Senior Research Scientist and Head, Division of Molecular and Cellular
Biology, Pharmacia Experimental Medicine Division of Pharmacia, Inc., a
biopharmaceutical company and as Vice President, Chief Operating Officer and
Director of Molecular and Cellular Biology for the La Jolla Institute for
Experimental Medicine. Dr. Gehlsen received a B.S. in biology from the
University of Arizona and a Ph.D. from the University of Arizona College of
Medicine.

DALE A. SANDER joined the Company in 1996 as Chief Financial Officer, Vice
President, Finance and Secretary. From 1993 to 1996, Mr. Sander served as Chief
Financial Officer of Pacific Pharmaceuticals, Inc. (formerly Xytronyx, Inc.), a
biotech company. From 1991 to 1993, Mr. Sander served as Chief Financial Officer
of Tactyl Technologies, Inc., a medical device manufacturer. Prior to 1991 he
worked for over nine years with Ernst & Young, an international professional
service firm. Mr. Sander is a Certified Public Accountant and has a B.S. in
Accounting from San Diego State University.

COLIN B. BIER, PH.D. has served as a director of Maxim since 1994. Dr. Bier
has served as Managing Director of ABA BioResearch, an independent bioregulatory
affairs consulting firm, since 1988. Dr. Bier is also a director of Boston Life
Sciences, Inc., BioChem Vaccins, a subsidiary of BioChem Pharmaceuticals, NYMOX
Pharmaceuticals Corporation, Receptagen Corp. and Sparta Pharmaceuticals, Inc.

G. STEVEN BURRILL has served as a director of Maxim since 1996. He founded
and has served as Chief Executive Officer of Burrill & Company, a private
merchant bank, since January 1997, and its predecessor firm, Burrill & Craves,
since 1994. Prior to that, Mr. Burrill served for 28 years with Ernst & Young
LLP as a partner and as chairman of the firm's Manufacturing/High Technology
Industry Services Group. Mr. Burrill is also a director of Axis Genetics plc,
Advanced Bioresearch Associates, Genitope Corporation, Hambro Health
International, NuGene Technologies, Promega Corporation and UltraOrtho, Inc.

PER-OLOF MARTENSSON has served as a director of Maxim from 1993 to 1995 and
again beginning in 1996. Since 1990, Mr. Martensson has owned and operated POM
Advisory Services AB, an independent

38
<PAGE>
consulting firm. Since 1997, Mr. Martensson has served as Chairman of the Board
of Karo Bio AB, a pharmaceutical company, and from 1991 to 1997 served as
President and Chief Executive Officer. From 1992 to 1995, Mr. Martensson served
as Chairman of Skandigen AB, a diversified investment company. From 1987 to
1990, Mr. Martensson served as President of Pharmacia LEO Therapeutics AB, and
as Executive Vice President of Pharmacia AB, both biopharmaceutical companies.
From 1985 to 1990, Mr. Martensson served as President and Chief Executive
Officer of AB LEO, a biopharmaceutical company. Mr. Martensson is also a
director of Gambro AB, AB Eleata and Nobel BioCare AB. Mr. Martensson is a
shareholder and a former director of MediGlobe AB, a corporation that has
recently filed for bankruptcy in Sweden. Mr. Martensson received an M.S. in
Pharmacy from The Royal Institute of Pharmaceutical Sciences (Kungliga
Farmacevtiska Institutet) in Stockholm, Sweden.

F. DUWAINE TOWNSEN has served as a director of Maxim since 1993. Mr. Townsen
has served as a Managing Partner of Ventana Growth Funds, a group of five
venture capital funds, since 1983. Prior to that, Mr. Townsen served as Chairman
of the Board of Directors and Chief Executive Officer of Kay Laboratories, Inc.,
a manufacturer of medical products. Mr. Townsen is a certified public
accountant. Mr. Townsen is also a director of Cymer, Inc.

SCIENTIFIC ADVISORS

Biographical information with respect to some of the Company's key
collaborating scientists and scientific and development advisors is set forth
below in alphabetical order:

MATS BRUNE, M.D., PH.D.,is the principal investigator of the Phase II
clinical trials of MAXAMINE in the treatment of AML in Sweden. Dr. Brune is a
physician at the Department of Hematology, Sahlgrenska University Hospital in
Gothenburg, Sweden. Dr. Brune will serve as Coordinating Investigator for the
planned Phase III AML clinical trial.

PAUL BUNN, M.D., serves on the Company's clinical advisory board. Dr. Bunn
is presently the Director of the University of Colorado Cancer Center and
Interim Chairman of the Department of Radiation Oncology at the University of
Colorado Health Sciences Center, Denver. In addition, he has been a member of
the Food and Drug Administration (FDA) Oncology Drug Advisory Committee since
1992 and served as acting chairman from 1995 to 1996. Dr. Bunn also serves on
the National Cancer Institute's Cancer Clinical Trials Committee and is on the
board of directors of the American Society of Clinical Oncology.

JIM BURNS, PH.D., is one of the Company's regulatory advisors and assists
with the Company's interactions with the FDA. Dr. Burns is Sr. Vice President,
Regulatory Affairs, for PharmaNet, Inc.

CECIL CZERKINSKY, D.M.D., PH.D., is a co-inventor with Dr. Holmgren of the
CTB technology and is collaborating with the Company on certain of the MAXVAX
platform technologies licensed by the Company.

KRISTOFFER HELLSTRAND, M.D., PH.D., is the inventor of the Company's
MAXAMINE platform technology, and is working closely with the Company and
outside investigators in Sweden and elsewhere on designing and conducting
Maxim's cancer clinical trials. Dr. Hellstrand is Assistant Professor of
Immunology at the University of Gothenburg, Sweden.

JAN HOLMGREN, M.D., PH.D., is one of the inventors of the Company's MAXVAX
platform technology. He has devoted more than 20 years to research on mucosal
immunity and is recognized as one of the world's foremost authorities on the
subject. Dr. Holmgren heads a leading mucosal immunology research team, and he
is Chairman of the World Health Organization's steering committee on mucosal
immunology and new vaccination approaches. Dr. Holmgren was the first to
describe the subunit molecular structure of cholera toxin and the biologic
properties of its binding subunit portion, and the first to develop an effective
CTB cholera vaccine. For his pioneering scientific contributions in mucosal
immunology and CTB, he was awarded the prestigious 1994 Louis Jeantet Prix de
Medecine award. Dr. Holmgren has more than 300 scientific publications and is a
noted speaker at international scientific meetings. He is the Head of the
Department of Microbiology and Immunology at the University of Gothenburg in
Sweden.

39
<PAGE>
LOWELL D. MILLER, PH.D., is one of the Company's scientific and business
development advisors. Dr. Miller advises the Company on general research and
development matters, monitors the Company's clinical programs and participates
in formulating the Company's business development strategies. Dr. Miller serves
the pharmaceutical industry as a consultant following his retirement from Marion
Laboratories (now Hoechst Marion Roussel). During his 17 years with Marion, Dr.
Miller had extensive experience in the development and approval of many
pharmaceuticals and served as Marion's Senior Vice President of Research and
Development and as a member of its Board of Directors. Dr. Miller continues to
serve as an adjunct professor of biochemistry at the University of Missouri.

PETER NAREDI, M.D., PH.D., is principal investigator of the Phase II
clinical trials of MAXAMINE for the treatment of malignant melanoma in Sweden.
Dr. Naredi is an Associate Professor, Surgery, University of Umea, Sweden. Dr.
Naredi will serve as Coordinating Investigator for the planned
Swedish/Australian Phase III malignant melanoma clinical study and is an
advisory investigator for the U.S. Phase III trial.

BENGT SIMONSSON, M.D., PH.D., serves on the Company's clinical advisory
board. Dr. Simonsson heads the division of hematology in the department of
internal medicine at University Hospital, Uppsala University, Sweden. As a
member of numerous scientific committees, he is the current Chairman of a
European multi-center study on autologous bone marrow transplantation in acute
myelogenous leukemia.

BOARD OF DIRECTORS AND COMMITTEES

The Board of Directors is divided into three classes, each class consisting
of one or two directors, and each class having a three-year term. Vacancies on
the Board may be filled only by persons elected by a majority of the remaining
directors. A director elected by the Board to fill a vacancy (including a
vacancy created by an increase in the Board of Directors) will serve for the
remainder of the term of the class of directors in which the vacancy occurred
and until such director's successor is elected and qualified. The Class II
directors, whose term of office expires at the annual meeting of stockholders in
1998, are Messrs. Martensson and Stambaugh. The Class III director, whose term
of office expires at the annual meeting in 1999, is Dr. Bier. The Class I
directors, whose term of office expires at the annual meeting in 2000, are
Messrs. Burrill and Townsen. The officers of the Company are appointed annually
and serve at the discretion of the Board of Directors. See "Description of
Securities--Change of Control Provisions and Delaware Anti-Takeover Law."

The Board has an Audit Committee, a Compensation Committee, a Nominating
Committee and a Technology Committee which all operate independently of the
Company's management. The Audit Committee, composed soley of outside directors,
meets at least annually with the Company's independent auditors to, among other
things, review the results and scope of the annual audit and discuss the
Company's financial statements and receive and consider comments as to controls,
adequacy of staff and management performance and procedures in connection with
audit and financial controls. The Audit Committee also makes recommendations to
the Board regarding the retention of independent auditors. The Audit Committee
is currently composed of Messrs. Townsen, Burrill and Dr. Bier.

The Compensation Committee, composed solely of outside directors, makes
recommendations concerning salaries and incentive compensation, administers and
awards stock options to employees and consultants under the Company's equity
incentive plans and otherwise determines compensation levels and performs such
other functions regarding compensation as the Board may delegate. The
Compensation Committee is currently composed of Messrs. Burrill, Martensson and
Townsen.

The Nominating Committee interviews, evaluates, nominates and recommends
individuals for membership on the Company's Board of Directors and committees
thereof and nominates specific individuals to be elected as officers of the
Company by the Board of Directors. The Nominating Committee is currently
composed of Messrs. Stambaugh, Burrill and Martensson.

40
<PAGE>
The Technology Committee meets with management to evaluate and make
recommendations regarding the progress of the Company's technologies and product
development activities. The Technology Committee is currently comprised of Mr.
Martensson and Dr. Bier.

The Company has adopted a director compensation policy under which each
non-employee director will receive an annual fee of $4,000 and a per-meeting fee
of $1,000, if attended in person, or $500 if attended by telephone. Each
non-employee director will also receive a fee of $250 per committee meeting
attended and $500 per committee meeting attended in the capacity as that
committee's chairperson. In addition, each non-employee director will receive an
automatic stock option grant of 10,000 shares of Common Stock upon his election
or reelection to the Board and 5,000 shares annually if he attends at least 75%
of the meetings held during a fiscal year. Non-employee directors are also
eligible for reimbursement for their expenses incurred in connection with
attendance at Board meetings in accordance with Company policy. Notwithstanding
the foregoing, Mr. Burrill is not entitled to receive the above-described fees
because of his firm's consulting arrangement with the Company. In connection
with his reelection as a director at the February 11, 1997 annual meeting of
stockholders of the Company, the Company granted Mr. Townsen a fully vested
option to purchase 10,000 shares of Common Stock at an exercise price of $8.875
per share.

On May 2, 1996, in connection with their services as directors, the Company
granted Dr. Bier fully vested stock options to purchase 45,000 shares of Common
Stock and each of Messrs. Martensson and Townsen fully vested stock options to
purchase 40,000 shares of Common Stock at an exercise price of $3.75 per share.
Mr. Stambaugh was granted stock options on May 2, 1996 and November 11, 1996 in
connection with his services as President and Chief Executive Officer as
described in "Compensation of Executive Officers" below. In addition, entities
affiliated with certain of the directors have, from time to time, entered into
transactions with the Company. See "Certain Transactions."

COMPENSATION OF EXECUTIVE OFFICERS

The following table shows for the three fiscal years ending September 30,
1997 compensation of the Company's Chief Executive Officer and its other two
executive officers (collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
--------------------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION (1) YEAR SALARY ($) BONUS ($)(2) OPTIONS (#)
- ------------------------------------------------------------ ------------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Larry G. Stambaugh 1997 $ 225,000 $ - 83,333
Chairman, President and Chief Executive Officer........... 1996 180,000 67,500 233,333
1995 180,000 54,000 16,666

Kurt R. Gehlsen, Ph.D. (3) 1997 $ 140,000 $ - 23,334
Chief Technical Officer and Vice President, Development... 1996 126,000(4) - 66,666
1995 - - -

Dale A. Sander (3) 1997 $ 125,000 $ - 75,000
Chief Financial Officer, Vice President, Finance and 1996 - - -
Secretary................................................. 1995 - - -
</TABLE>

- ------------------------------

(1) The principal position for each of the Named Executive Officers reflects the
offices and titles held by each of them for the current fiscal year.

(2) Bonuses are reflected in the fiscal year earned. Bonuses for fiscal 1997
will be determined by the Compensation Committee of the Board of Directors
prior to December 31, 1997.

(3) Dr. Gehlsen's and Mr. Sander's employment commenced in May 1996 and October
1996, respectively.

(4) Dr. Gehlsen's fiscal year 1996 salary has been annualized.

41
<PAGE>

OPTION GRANTS DURING THE YEAR ENDED SEPTEMBER 30, 1997

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED OPTION TERM (2)
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ----------------------
NAME GRANTED (1) FISCAL YEAR PRICE DATE 5% 10%
- ---------------------------------- ----------- --------------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Larry G. Stambaugh................ 83,333 35.2% $ 9.00 11/19/03 $ 305,324 $ 711,535

Kurt R. Gehlsen, Ph.D............. 10,000 4.2 9.00 11/19/03 36,639 85,385
13,334 5.7 8.88 8/19/04 48,176 112,270

Dale A Sander..................... 30,000 12.7 9.00 11/19/03 109,917 256,154
45,000 19.0 8.88 8/19/04 162,586 378,894
</TABLE>

- ------------------------

(1) Consists of stock options granted pursuant to the Incentive Plan. The
maximum term of each option granted is seven years from the date of grant.
The exercise price is equal to the market value of the stock on the grant
date as adjusted for subsequent stock splits.

(2) In accordance with the rules of the SEC, shown are the gains or "option
spreads" that would exist for the respective options granted. These gains
are based on the assumed rates of annually compounded stock price
appreciation of 5% and 10% from the date the option was granted over the
full option term. These assumed annually compounded rates of stock price
appreciation are mandated by the rules of the SEC and do not represent the
Company's estimates or projection of future Common Stock prices.

The following table sets forth certain information for the Named Executive
Officers with respect to the exercise of options to purchase Common Stock during
the fiscal year ended September 30, 1997 and the number and value of securities
underlying unexercised options held by the Named Executive Officers as of
September 30, 1997.

AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR ENDED SEPTEMBER 30, 1997
AND YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON
STOCK UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SEPTEMBER 30, 1997 SEPTEMBER 30, 1997 (1)
-------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Larry G. Stambaugh....................................... 195,833 120,833 $ 2,191,659 $ 1,091,669
Kurt R. Gehlsen, Ph.D.................................... 29,167 60,833 329,587 607,076
Dale A. Sander........................................... 12,000 63,000 78,000 415,125
</TABLE>

- ------------------------

(1) Represents the fair market value of the shares of Common Stock underlying
the options as of September 30, 1997, less the exercise price of the
options.

EMPLOYMENT AGREEMENTS

Pursuant to an executive employment agreement between the Company and Larry
G. Stambaugh, the Chairman, President and Chief Executive Officer of the
Company, dated November 12, 1996, Mr. Stambaugh receives an annual salary of not
less than $225,000, an annual bonus in an amount up to 30% of his annualized
base salary and equity compensation as determined by the Board of Directors. The
term of Mr. Stambaugh's employment agreement expires on December 31, 1998. The
employment agreement also provides that, if Mr. Stambaugh's employment is
terminated without cause or upon

42
<PAGE>
constructive discharge, he will receive a severance payment equal to his then
annual base salary plus health care insurance coverage for one year or the
remainder of the term of his employment agreement, whichever is greater.
Pursuant to his employment agreement, in November 1996 Mr. Stambaugh was granted
an option to purchase 83,333 shares of Common Stock at an exercise price of
$9.00 per share, vesting over approximately four years. Mr. Stambaugh's stock
option agreements provide that such options will become fully exercisable in the
event his employment is terminated without cause or following a change in
control of the Company. In addition, the Company has agreed to maintain a life
insurance policy in the amount of $1,000,000 on Mr. Stambaugh's behalf.

Pursuant to an executive employment agreement between the Company and Kurt
R. Gehlsen, Ph.D., the Chief Technical Officer and Vice President, Development
of the Company, dated October 1, 1996, Dr. Gehlsen receives an annual salary of
not less than $140,000 and is eligible to receive an incentive bonus of up to
$28,000. The term of Dr. Gehlsen's employment agreement expires on December 31,
1997. The employment agreement provides that if Dr. Gehlsen's employment is
terminated without cause he will be entitled to continuation of his then base
salary and health benefits for six months. Dr. Gehlsen's stock option agreements
provide that such options will become fully exercisable in the event his
employment is terminated without cause or following a change in control of the
Company.

Pursuant to an executive employment agreement between the Company and Dale
A. Sander, the Chief Financial Officer and Vice President, Finance of the
Company, dated October 1, 1996, Mr. Sander receives an annual salary of not less
than $125,000. The term of Mr. Sander's employment agreement expires on December
31, 1997. The employment agreement provides that if Mr. Sander's employment is
terminated without cause he will be entitled to continuation of his then base
salary and health benefits for six months. Mr. Sander's stock option agreements
provide that such options will become fully exercisable in the event his
employment is terminated without cause or following a change in control of the
Company.

1993 LONG-TERM INCENTIVE PLAN AND OTHER BENEFIT PLANS

The Company's 1993 Long-Term Incentive Plan (the "Incentive Plan") was
adopted by the Board of Directors in 1993. The Incentive Plan was amended and
restated by the Board of Directors in March 1996 and December 1996 and
subsequently approved by the Company's stockholders in April 1996 and February
1997, respectively. A total of 1,000,000 shares of Common Stock have been
reserved for issuance under the Incentive Plan. As of October 15, 1997, 12,400
shares had been issued upon the exercise of stock awards granted under the
Incentive Plan, 770,332 shares were subject to outstanding stock options and
217,268 shares remained available for future grants. The Incentive Plan provides
for the grant to employees of the Company (including officers and employee
directors) of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and for the grant of
non-statutory stock options to employees, directors and consultants of the
Company. The Incentive Plan also provides for the issuance of restricted stock
purchase awards, stock bonuses and stock appreciation rights. With respect to
officers, employee-directors and consultant-directors, the Incentive Plan is
administered by the Compensation Committee of the Board of Directors, which
determines the recipients and types of awards to be granted, including exercise
price, number of shares subject to the award and the exercisability thereof. The
Chief Executive Officer administers the Incentive Plan with respect to all other
employees and consultants.

The exercise price of all incentive stock options granted under the
Incentive Plan must be equal to at least 100% of the fair market value of the
Common Stock on the date of grant. The term of all options granted under the
Incentive Plan is determined by the appropriate administrator, but in no event
will such term exceed ten years.

Restricted stock purchase awards granted under the Incentive Plan must be
subject to at least one term or condition constituting a "substantial risk of
forfeiture" as defined by Section 83(c) of the Code. Stock bonuses may be
awarded in consideration for past services without a purchase payment. Stock
appreciation rights authorized for issuance under the Incentive Plan may be
tandem stock appreciation

43
<PAGE>

rights, concurrent stock appreciation rights or independent stock appreciation
rights. As of October 15, 1997, the Company has not issued any restricted stock
purchase awards, stock bonuses or stock appreciation rights.

The Company has registered the shares issuable under the Incentive Plan
(including shares subject to outstanding options under such plan), thus
permitting the resale of such shares in the public market without restriction
under the Securities Act of 1933.

401(K) PLAN

As of July 1, 1997 the Company adopted a tax-qualified employee savings and
retirement plan (the "401(k) Plan") covering the Company's employees. Pursuant
to the 401(k) Plan, eligible employees may elect to reduce their current
compensation by up to the lesser of 15% of their annual compensation or the
statutorily prescribed annual limit ($9,500 in 1997) and have the amount of such
reduction contributed to the 401(k) Plan. The 401(k) Plan provides for matching
contributions by the Company in an amount equal to the lesser of 50% of the
employees' deferral or 3% of the employees' qualifying compensation. The Company
contribution may be made in the form of either the Common Stock of the Company
or cash, at the discretion of the Company's Board of Directors. The trustees of
the 401(k) Plan, at the discretion of each participant, invest the assets of the
401(k) Plan in designated investment options. The 401(k) Plan is intended to
qualify under Section 401 of the United States Internal Revenue Code of 1996, as
amended, so that both employee and Company contributions to the 401(k) Plan, and
income earned on the 401(k) Plan contributions, are not taxable until withdrawn,
and that contributions by the Company will be deductible when made. Subsequent
to the Offering, the Company intends to register 50,000 shares of Common Stock
for issuance under the 401(k) Plan.

LIMITATIONS OF DIRECTORS' AND OFFICERS' LIABILITY AND INDEMNIFICATION

The Company's Bylaws provide that the Company will indemnify its directors
and executive officers and may indemnify its other officers, employees and other
agents to the fullest extent permitted by Delaware law. The Company is also
empowered under its Bylaws to enter into indemnification contracts with its
directors and officers and to purchase insurance on behalf of any person whom it
is required or permitted to indemnify. Pursuant to this provision, the Company
has entered into indemnity agreements with each of its directors and officers
and currently maintains directors and officers insurance coverage.

In addition, the Company's Certificate of Incorporation provides that, to
the fullest extent permitted by Delaware law, the Company's directors will not
be liable for monetary damages for breach of the directors' fiduciary duty of
care to the Company and its stockholders. This provision in the Certificate of
Incorporation does not eliminate the duty of care, and in appropriate
circumstances equitable remedies such as an injunction or other forms of
non-monetary relief would remain available under Delaware law. Each director
will continue to be subject to liability for breach of the director's duty of
loyalty to the Company or its stockholders, for acts or omissions not in good
faith or involving intentional misconduct or knowing violations of law, for any
transaction from which the director derived an improper personal benefit, and
for unlawful payments of dividends or unlawful stock purchase or redemption.
This provision also does not affect a director's responsibilities under any
other laws, such as the federal securities laws or state or federal
environmental laws.

Larry G. Stambaugh, the Chairman, President and Chief Executive Officer, is
named as a defendant, together with the Company, in the complaint filed by the
Former Employees as described under the caption "Business--Legal Proceedings."
Mr. Stambaugh is indemnified under the above mentioned indemnification agreement
in the aggregate amounts stated therein for damages he may incur as a result of
such legal proceedings. There is no other pending litigation or proceeding
involving a director, officer, employee or other agent of the Company as to
which indemnification is being sought, nor is the Company aware of any pending
or threatened litigation that may result in claims for indemnification by any
director, officer, employee or other agent.

44
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of October 15, 1997 and as adjusted
to reflect the sale by the Company of the shares of Common Stock offered hereby
(assuming no exercise of the Underwriters' over-allotment option) by (i) each
person (or group of affiliated persons) who is known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) each
of the Company's directors, (iii) each of the Named Executive Officers, and (iv)
all directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-------------------------------------------------------
NUMBER OF PERCENT BEFORE PERCENT AFTER
BENEFICIAL OWNER (1) SHARES OFFERING (2) OFFERING (2)
- --------------------------------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Clearwater Funds (3) ........................ 938,483 14.0% 10.2%
611 Druid Road East, No. 200
Clearwater, FL 34616

HealthCap KB (4) ............................ 567,447 8.3% 6.1%
Sturegatan 34
SE 114 36, Stockholm, Sweden

S-E-Banken Funds (5) ........................ 556,666 8.3% 6.1%
Regeringsgatan 45
ST R2
S-106 40 Stockholm, Sweden

F. Duwaine Townsen (6) ...................... 462,679 6.8% 5.0%
8880 Rio San Diego Drive, Suite 500
San Diego, CA 92108

Ventana Growth Funds (7) .................... 394,913 5.9% 4.3%
8880 Rio San Diego Drive, Suite 500
San Diego, CA 92108

Larry G. Stambaugh (8) ...................... 197,933 2.9% 2.1%
3099 Science Park Road, Suite 150
San Diego, CA 92121

G. Steven Burrill (9) ....................... 53,005 * *
Burrill & Company
One Bush Street, Suite 1100
San Francisco, CA 94104

Colin B. Bier, Ph.D. (10) ................... 45,000 * *
ABA BioResearch Inc.
677 Dr. Frederik Philips
Saint-Laurent, Quebec
H4M 2W4 Canada

Per-Olof Martensson (11) .................... 40,333 * *
POM Advisory Services AB
Kompass Vagen 18
Box 6
S-26041 Nyhamnslage
Sweden

Kurt R. Gehlsen, Ph.D. (12) ................. 31,967 * *
3099 Science Park Road, Suite 150
San Diego, CA 92121

Dale A. Sander (13) ......................... 12,000 * *
3099 Science Park Road, Suite 150
San Diego, CA 92121

All Directors and Officers as a Group (7
persons)(14)............................... 842,917 11.8% 8.7%
</TABLE>

45
<PAGE>
- ------------------------------

* Represents beneficial ownership of less than 1%.

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as otherwise indicated,
the Company believes, based on information furnished by such owners, that
the beneficial owners of the shares listed above have sole investment and
voting power with respect to such shares, subject to community property
laws where applicable.

(2) Percentage of beneficial ownership is based on an aggregate of 6,691,501
shares of Common Stock outstanding as of October 15, 1997 and 9,191,501
shares of Common Stock outstanding after completion of this Offering.

(3) Includes 791,424 shares held by Clearwater Fund IV, LLC, and 147,059 shares
held by Clearwater Offshore Fund, Ltd.

(4) Includes 160,000 Redeemable Warrants exercisable within 60 days of October
15, 1997.

(5) Includes 8,000 shares subject to warrants exercisable within 60 days of
October 15, 1997.

(6) Includes an aggregate of 370,591 shares and 24,322 shares subject to
warrants exercisable within 60 days of October 15, 1997 held by Ventana
Holdings, L.P., Ventana Growth Fund II L.P. ("Ventana II"), Ventana
Partnership III L.P. ("Ventana III") and Ventana Growth Capital Fund V L.P.
("Ventana V"). See Note 7. Mr. Townsen is a general partner of Ventana
Holdings L.P., Ventana II, Ventana III and Ventana V. Mr. Townsen disclaims
beneficial ownership of all shares held by such entities except to the
extent of his pecuniary interest therein, if any. Includes 8,933 shares and
83 shares subject to warrants exercisable within 60 days of October 15,
1997 held jointly by Mr. Townsen and his wife. Also includes 50,000 shares
subject to stock options exercisable within 60 days of October 15, 1997,
and 8,750 shares subject to warrants exercisable within 60 days of October
15, 1997 held by Mr. Townsen.

(7) Includes (i) 369,866 shares and 16,666 shares subject to warrants
exercisable within 60 days of October 15, 1997 held by Ventana II, (ii)
1,825 shares subject to warrants exercisable within 60 days of October 15,
1997 held by Ventana V, (iii) 5,831 shares subject to warrants exercisable
within 60 days of October 15, 1997 held by Ventana III, and (iv) 725 shares
held by Ventana Holdings, L.P. F. Duwaine Townsen, a director of the
Company, is a general partner of each of the aforementioned entities. Mr.
Townsen disclaims beneficial ownership of all shares held by such entities
except to the extent of his pecuniary interest therein, if any.

(8) Includes 1,000 shares and 1,000 Redeemable Warrants exercisable within 60
days of October 15, 1997 held by Mr. Stambaugh's spouse, and 195,833 shares
subject to stock options exercisable within 60 days of October 15, 1997.

(9) Includes 53,005 shares subject to warrants exercisable within 60 days of
October 15, 1997 held by Burrill & Company, Inc. Mr. Burrill is the Chief
Executive Officer and a principal of Burrill & Company, Inc. Mr. Burrill
disclaims beneficial ownership of all shares held by Burrill & Company,
Inc. except to the extent of his pecuniary interest therein, if any.

(10) Includes 45,000 shares subject to stock options exercisable within 60 days
of October 15, 1997.

(11) Includes 40,000 shares subject to stock options exercisable within 60 days
of October 15, 1997.

(12) Includes 2,400 shares subject to Redeemable Warrants exercisable within 60
days of October 15, 1997 held by the immediate family of Dr. Gehlsen and
17,167 shares subject to stock options exercisable within 60 days of
October 15, 1997.

(13) Includes 12,000 shares subject to stock options exercisable within 60 days
of October 15, 1997.

(14) Includes 3,400 shares subject to Redeemable Warrants, 86,160 shares
subject to warrants and 360,000 shares subject to stock options
exercisable within 60 days of October 15, 1997. See Notes 6-13.

46
<PAGE>
CERTAIN TRANSACTIONS

In April 1997, the Company entered into agreements with Clearwater Fund IV,
LLC and Clearwater Offshore Fund, Ltd. (collectively the "Clearwater Funds") and
HealthCap KB, each beneficial holders of more than 5% of the outstanding Common
Stock of the Company. Under the agreements, the Company agreed to file, on
request, a registration statement covering the re-sale of the 888,983 and
367,647 shares of Common Stock held by the Clearwater Funds and HealthCap KB,
respectively, provided that such shares are not freely tradable at the time of
the request.

In July 1996, the Company sold its interest in its subsidiary, Syntello
Vaccine Development AB ("SVD") to Dr. Anders Vahlne, a former member of the
Company's Board of Directors, for $1.00. In connection with such sale, SVD
granted to the Company a non-exclusive sub-license to the CTB mucosal vaccine
carrier technology for vaccines to treat or prevent HIV infection.

In May 1996, the Company sold and issued to S-E-Banken Lakemedelsfonder
("S-E-Banken"), a beneficial owner of more than 5% of the outstanding Common
Stock of the Company, 400,000 shares of the Company's Common Stock at a purchase
price of $4.50 per share.

In May 1996, the Company and each of the holders of certain outstanding
warrants to purchase an aggregate 332,642 shares of the Company's Common Stock
agreed to amend and restate such warrants to, among other things, remove certain
provisions relating to early termination of the warrants and provisions
adjusting the exercise prices of the warrants upon certain dilutive stock
issuances. The Company did not receive any additional cash consideration to
amend and restate such warrants, and the expiration dates of the amended and
restated warrants remain the same as the original warrants. The following
affiliates or beneficial owners of more than 5% of the outstanding Common Stock
of the Company agreed to the amendment and restatement of warrants to purchase
the number of shares set forth opposite their names:

<TABLE>
<CAPTION>
NUMBER OF
WARRANT HOLDER SHARES
- ------------------------------------------------------------------------------------------------------ -----------
<S> <C>
Ventana Group (1)..................................................................................... 33,072

Atrix-Ventana Investment & Company L.P................................................................ 10,673

S-E-Banken............................................................................................ 8,000
</TABLE>

- ------------------------

(1) Ventana Group includes warrants to purchase 16,666, 1,825, 5,831 and 8,750
shares of Common Stock held by Ventana Growth Fund II L.P., Ventana Growth
Capital Fund V L.P., Ventana Partnership III L.P. and F. Duwaine Townsen, a
director of the Company and a general partner of the foregoing entities,
respectively. All of such warrants shall expire in August or November 1998,
or May 1999, as the case may be.

In February 1996, the Company entered into an agreement with a predecessor
company of Burrill & Company, Inc. ("B&C"). G. Steven Burrill, a director of the
Company, is the Chief Executive Officer and a principal of B&C. Pursuant to the
agreement, the Company agreed to pay B&C a retainer of $10,000 per month for
three years, and the Company has granted B&C a warrant expiring in February 2003
to purchase up to 173,333 shares of its Common Stock at an exercise price of
$3.00 per share. One-half of the shares subject to this warrant vest ratably
over 36 months from the date of the agreement and the other one-half of such
shares vest 30 days prior to the expiration of the seven year term of the
warrant; provided, however, that vesting with respect to such shares may
accelerate in connection with certain performance-based events set forth in the
agreement. In exchange for such consideration, B&C provides strategic planning
and advisory services to the Company and has agreed to seek sources of private
equity financing and strategic corporate partners to assist in the development
of the Company's product candidates.

In January 1996, the Company completed a private financing pursuant to which
the Company issued 473,329 shares of its Common Stock and warrants expiring in
January 1999 to purchase an additional

47
<PAGE>
94,663 shares of Common Stock. In connection with such financing, S-E-Banken, a
beneficial owner of more than 5% of the outstanding Common Stock of the Company,
purchased 40,000 shares of Common Stock and warrants to purchase an additional
8,000 shares of Common Stock. The warrants issued in such financing are fully
vested, have an exercise price of $3.00 per share and expire three years from
their date of issuance. Such warrants were amended and restated in May 1996 as
described above.

In October and December of 1995, Ventana Growth Fund II L.P. ("Ventana II")
purchased 41,666 and 62,000 shares of the Company's Common Stock at $3.00 per
share. In March 1995, the Company issued a $250,000 principal amount demand
promissory note to Ventana II. To secure the repayment obligations under such
note, the Company granted Ventana II a security interest in all of its tangible
and intangible property. The Company repaid the note in September 1996.

In December 1994 and May 1995, Ventana Growth Capital Fund V L.P. ("Ventana
V"), Ventana II and Atrix-Ventana Investment & Company L.P. ("Atrix-Ventana"),
each then a beneficial owner of more than 5% of the outstanding securities of
the Company, as well as Paladin Equities (1991), Inc. ("Paladin"), an entity
affiliated with a director and officer of the general partner of Atrix-Ventana,
posted certificates of deposit aggregating $2,250,000 as collateral for lines of
credit extended by Scripps Bank and Valle de Oro Bank to the Company. In
consideration for collateralizing the lines of credit, the Company issued
warrants to purchase 421, 16,666, 7,078 and 1,250 shares of Common Stock with an
exercise price of $7.20 per share to Ventana V, Ventana II, Atrix-Ventana and
Paladin, respectively. Such warrants expire in November 1998, December 1998,
November 1998 and May 1999, respectively. The certificates of deposit posted by
Ventana V, Ventana II, Atrix-Ventana and Paladin were guaranteed by Ventana
Growth Fund III, L.P. ("Ventana III") and F. Duwaine Townsen, a director of the
Company. Ventana III and Mr. Townsen received warrants to purchase 5,831 and
8,750 shares of Common Stock, respectively, for guaranteeing such certificates
of deposit. Such warrants expire in November 1998 and May 1999, respectively. In
September 1995, the Company, Ventana V, Ventana II, Atrix-Ventana and Paladin
reached an agreement to release the collateral securing the lines of credit to
permit the lines of credit to be fully repaid. In December 1995, in return for
the cancellation of the indebtedness created by such release of collateral, the
Company issued 28,066, 166,666, 471,866 and 83,333 shares of Common Stock at a
purchase price of $3.00 per share to Ventana V, Ventana II, Atrix-Ventana and
Paladin, respectively.

During the period from September 1994 through July 1995, Ventana II, a
beneficial owner of more than 5% of the outstanding securities of the Company,
loaned the Company an aggregate of $975,000 pursuant to demand promissory notes
bearing annual interest at the prime lending rate plus 2%. Approximately
$500,000 of principal and $9,500 of accrued interest under such notes were
repaid by the Company in fiscal 1995. In August 1995, the Company and Ventana II
reached an agreement pursuant to which the Company treated $225,000 of such
loans as an advance toward Ventana II's purchase of shares of Common Stock, at a
purchase price of $3.00 per share, in the Company's August 1995 financing. In
December 1995, Ventana II converted the remaining $250,000 of principal and
approximately $9,200 of accrued interest into shares of Common Stock at a
conversion price of $3.00 per share. These transactions resulted in the issuance
of approximately 161,408 shares of Common Stock to Ventana II.

During the period from October 1993 through July 1994, the Company financed
its operations by issuing promissory notes in the aggregate principal amount of
$3,405,000 and related five year warrants to purchase 11,251 shares of the
Company's Common Stock. Among the investors in such financing transactions were
(i) F. Duwaine Townsen, a director of the Company and a managing partner of
Ventana V, (ii) Merle and Eileen Stambaugh, parents of Larry G. Stambaugh, the
Company's Chairman of the Board, President and Chief Executive Officer, and
(iii) Ventana V and Atrix-Ventana, each of which then beneficially owned more
than 5% of the outstanding securities of the Company. In August 1994, such
indebtedness was converted into shares of Common Stock at a price of $3.00 per
share, the related warrants were amended and exercised at $3.00 per share and
new warrants expiring in August 1998 to purchase up to an additional 11,251
shares of Common Stock at an exercise price of $3.00 per share were issued. The
new warrants issued pursuant to such debt conversion were amended and restated
in May 1996

48
<PAGE>
as described above. As a result of such debt conversion, warrant exercise and
amendment and restatement of warrants, the Company issued the following number
of shares of Common Stock and warrants to the interested parties described
above:

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
STOCKHOLDER SHARES WARRANTS
- ----------------------------------------------------------------------------------------- ----------- -------------
<S> <C> <C>
Atrix-Ventana............................................................................ 385,970 3,595

Ventana V................................................................................ 159,742 1,404

Merle and Eileen Stambaugh............................................................... 10,688 100

F. Duwaine Townsen....................................................................... 8,884 83
</TABLE>

The Company has also entered into an employment agreement with each of the
Named Executive Officers, as described under the caption "Management--Employment
Agreements." As described in "Management--Board of Directors and Committees" and
"--Compensation of Executive Officers," the Company has granted stock options to
certain directors and executive officers of the Company. The Company has entered
into indemnity agreements with each of its directors and officers and currently
maintains directors and officers insurance coverage. See
"Management--Limitations of Directors' and Officers' Liability and
Indemnification."

49
<PAGE>
DESCRIPTION OF SECURITIES

The authorized capital stock of the Company consists of 20,000,000 shares of
Common Stock, $0.001 par value, and 5,000,000 shares of Preferred Stock, $0.001
par value (the "Preferred Stock").

COMMON STOCK

At October 15, 1997, 6,691,501 shares of Common Stock were outstanding and
held of record by approximately 120 stockholders. The holders of Common Stock
are entitled to one vote per share on all matters to be voted upon by the
stockholders. Subject to preferences that may be applicable to any outstanding
Preferred Stock, the holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor. See "Dividend Policy." In the
event of a liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to share ratably in all assets remaining after payment
of liabilities and the liquidation preferences of any outstanding shares of
Preferred Stock. Holders of Common Stock have no preemptive, conversion,
subscription or other rights. There are no redemption or sinking fund provisions
available to the Common Stock. All outstanding shares of Common Stock are fully
paid and non-assessable. The Common Stock is listed on AMEX under the symbol
"MMP". The Company's Common Stock has been approved for listing on the SSE under
the symbol "MAXM." The Company expects that the Common Stock will commence
trading on the SSE upon completion of the Offering.

PREFERRED STOCK

The Board of Directors has the authority, without further action by the
stockholders, to issue up to 5,000,000 shares of Preferred Stock in one or more
series and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences, sinking fund terms and the number of shares
constituting any series or the designation of such series, any or all of which
may be greater than the rights of the Common Stock. The issuance of Preferred
Stock could adversely affect the voting power of holders of Common Stock and
reduce the likelihood that such holders will receive dividend payments and
payments upon liquidation and could have the effect of delaying, deterring or
preventing a change in control of the Company. The Company has no present plan
to issue any shares of Preferred Stock.

WARRANTS

As of October 15, 1997, there were outstanding warrants to purchase 305,976
shares of Common Stock at an exercise price of $3.00 per share. Such warrants
expire between one to four years from July 10, 1996, and most are currently
exercisable, except for a warrant granted to Burrill & Company which is subject
to vesting. See "Certain Transactions." Also, as of October 15, 1997, there were
outstanding warrants (the "IPO Warrants") to purchase from the Company up to
250,000 shares of Common Stock and 250,000 redeemable warrants. The IPO Warrants
are exercisable at a price of $9.00 per share of Common Stock and $0.12 per
redeemable warrant for a period of four (4) years, commencing at the beginning
of the second year after their issuance and sale. The redeemable warrants
issuable upon exercise of the IPO Warrants are exercisable at a price of $12.38
per share of Common Stock. The IPO Warrants provide for adjustment in the number
of shares of Common Stock and redeemable warrants issuable upon the exercise
thereof and in the exercise price of the IPO Warrants as a result of certain
events, including subdivisions and combinations of the Common Stock. The IPO
Warrants, and the securities underlying the IPO Warrants, have been registered
with the SEC and may be sold at any time, subject to certain requirements
imposed by applicable securities laws. The IPO Warrants grant to the holders
thereof certain rights of registration with respect to the securities issuable
upon exercise thereof.

50
<PAGE>
REDEEMABLE WARRANTS

As of October 15, 1997, there were outstanding redeemable warrants to
purchase up to 2,875,000 shares of Common Stock ("Redeemable Warrants"). The
Redeemable Warrants are listed on AMEX under the trading symbol "MMP.WS." The
following is a brief summary of certain provisions of the Redeemable Warrants.

EXERCISE PRICE AND TERMS

The Redeemable Warrants expire on July 10, 2001. Each Redeemable Warrant
entitles the registered holder thereof to purchase, at any time prior to July
10, 2001, one share of Common Stock at a price of $10.50 per share, subject to
adjustment in accordance with the anti-dilution and other provisions referred to
below.

ADJUSTMENT

The exercise price and the number of shares of Common Stock purchasable upon
the exercise of the Redeemable Warrants are subject to adjustment upon the
occurrence of certain events, including stock dividends, stock splits,
combinations or reclassifications of the Common Stock. Additionally, an
adjustment would be made in the case of a reclassification or exchange of Common
Stock, consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the surviving
corporation) or sale of all or substantially all of the assets of the Company in
order to enable holders of Redeemable Warrants to acquire the kind and number of
shares of stock or other securities or property receivable in such event by a
holder of the number of shares of Common Stock that might otherwise have been
purchased upon the exercise of the Redeemable Warrant.

REDEMPTION PROVISIONS

Commencing January 10, 1998, the Redeemable Warrants are subject to
redemption at $.01 per Warrant on thirty (30) days prior written notice to the
holders if the average closing price of the Common Stock as reported on AMEX
equals or exceeds $12.00 per share of Common Stock for any twenty (20) trading
days within a period of thirty (30) consecutive trading days ending on the fifth
trading day prior to the date of the notice of redemption. In the event the
Company exercises the right to redeem the Redeemable Warrants, such Redeemable
Warrants will be exercisable until the close of business on the business day
immediately preceding the date for redemption fixed in such notice. If any
Redeemable Warrant called for redemption is not exercised by such time, it will
cease to be exercisable and the holder will be entitled only to the redemption
price.

CHANGE OF CONTROL PROVISIONS AND DELAWARE ANTI-TAKEOVER LAW

Certain provisions of the Company's Amended and Restated Certificate of
Incorporation and Bylaws may have the effect of preventing, discouraging or
delaying transactions involving an actual or potential change in the control of
the Company (including transactions in which stockholders might otherwise
receive a premium for their shares over then current prices) and may maintain
the incumbency of the Board of Directors and management. The authorization of
undesignated Preferred Stock makes it possible for the Board of Directors to
issue Preferred Stock with voting or other rights or preferences that could
impede the success of any attempt to change control of the Company. In addition,
the Company's Bylaws limit the ability of stockholders of the Company to raise
matters or nominate persons to serve as members of the Company's Board of
Directors at a meeting of stockholders without giving advance notice. The
Company's Amended and Restated Certificate of Incorporation provides that the
Board of Directors is divided into three classes of directors with each class
serving a staggered three-year term. The classification system of electing
directors may tend to discourage a third party from making a tender offer or
otherwise attempting to obtain control of the Company and may maintain the
incumbency of the Board of Directors,

51
<PAGE>
as the classification of the Board of Directors generally increases the
difficulty of replacing a majority of the directors. The Company's Amended and
Restated Certificate of Incorporation also eliminates the right of stockholders
to act by written consent without a meeting. Special meetings of the
stockholders of the Company may be called only by the Chairman of the Board, the
Chief Executive Officer, or by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized directors. The Amended
and Restated Certificate of Incorporation and Bylaws do not provide for
cumulative voting in the election of directors.

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203") regulating corporate takeovers. In
general, Section 203 prohibits certain Delaware corporations, including those
whose securities are listed on the American Stock Exchange, from engaging, under
certain circumstances, in a "business combination" (which includes a merger,
sale of more than 10% of the corporation's assets or other transactions
resulting in a financial benefit to the stockholder) with any "interested
stockholder" (a stockholder who, together with affiliates and associates, owns,
or, if an affiliate of the corporation, within the three previous years did own,
15% or more of the corporation's voting stock without the prior approval of the
corporation's Board of Directors) for three years following the date that such
stockholder became an "interested stockholder," unless the business combination
is approved in a prescribed manner. A Delaware corporation may "opt out" of
Section 203 with an express provision in its original certificate of
incorporation or an express provision in its certificate of incorporation or
bylaws resulting from a stockholders' amendment approved by at least a majority
of the outstanding voting shares. The Company has not "opted out" of the
provisions of Section 203.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York 10005, United
States, Telephone (718) 921-8254.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of the Common Stock of the Company in the
public market could adversely affect prevailing market prices for the Common
Stock and the ability of the Company to raise equity capital in the future. Upon
completion of the Offering, the Company will have outstanding 9,191,501 shares
of Common Stock (9,566,501 shares if the Underwriters' over-allotment option is
exercised in full). Of these shares, an aggregate of 5,387,400 shares will be
freely tradeable in the public market, unless acquired by affiliates of the
Company. The remaining 3,804,101 shares held by existing stockholders will be
restricted securities as defined in Rule 144 under the Securities Act (the
"Restricted Shares"). Restricted Shares may be sold in the public market only if
registered under the Securities Act or qualified for an exemption from
registration under Rule 144 or 701 promulgated under the Securities Act. Of the
3,804,101 Restricted Shares, 1,146,234 shares will be eligible for immediate
sale in the public market pursuant to Rule 144 subject to certain volume and
manner of sale limitations, and 1,299,571 shares will be eligible for immediate
sale in the public market pursuant to Rule 144(k). Additionally, 1,358,296
shares currently held by three entities and their affiliates will become
eligible for public resale over a period of less than two years following the
completion of the Offering. Moreover, the Company has entered into an agreement
with three entities, and their affiliates, currently holding 1,331,630 shares to
file a registration statement, if requested by each such holder and in the event
that the shares are not freely tradable at the time of such holder's request.
Pursuant to lock-up agreements, all officers, directors and certain beneficial
holders of outstanding Common Stock who collectively hold 1,647,059 shares have
agreed not to sell or otherwise dispose of any beneficial interest in such
securities for a period of either 90 or 180 days (the "Lock-up Period") without
the prior written consent of the Representatives. Upon termination of the
Lock-up Periods, 400,999 shares will be eligible for immediate sale in the
public markets pursuant to Rule 144 and 2,044,806 shares will be eligible for
immediate sale in the public market pursuant to Rule 144(k).

52
<PAGE>

In general, under Rule 144, a person who has beneficially owned Restricted
Shares for at least one year (including the holding period of any prior owner
except an affiliate) would be entitled to sell within any three-month period a
number of shares that does not exceed the greater of (i) one percent of the
number of shares of Common Stock then outstanding (approximately 91,915 shares
immediately after the Offering), or (ii) the average weekly trading volume of
the Common Stock during the four calendar weeks preceding the filing of a Form
144 with respect to such sale. Sales under Rule 144 are also subject to certain
manner of sale provisions and notice requirements and to the availability of
current public information about the Company. Under Rule 144(k), a person who is
not deemed to have been an affiliate of the Company at any time during the 90
days preceding a sale, and who has beneficially owned the shares proposed to be
sold for at least two years (including the holding period of any prior owner
except an affiliate), is entitled to sell such shares without complying with the
manner of sale, public information, volume limitation or notice provisions of
Rule 144.

In general, Rule 701 permits resales of shares issued pursuant to certain
compensatory benefit plans and contracts 90 days after the Company beocmes
subject to the reporting requirements of the Securities Exchange Act, in
reliance upon Rule 144, but without compliance with certain restrictions
including the holding period requirements contained in Rule 144.

Sales of substantial amounts of Common Stock issuable upon exercise of the
Company's warrants and options may also adversely affect prevailing market
prices for the Common Stock and the ability of the Company to raise equity
capital. The Common Stock currently outstanding excludes an aggregate of (i)
2,875,000 shares of Common Stock reserved for issuance upon exercise of the
Redeemable Warrants at an exercise price of $10.50 per share, (ii) 987,600
shares of Common Stock issuable under the Company's Incentive Plan of which
770,332 shares of Common Stock reserved for issuance upon exercise of stock
options with a weighted average exercise price of $5.69 per share, (iii) 250,000
shares of Common Stock issuable at $9.00 per share, and 250,000 shares of Common
Stock issuable at $12.50 per share, reserved for issuance upon exercise of the
IPO Warrants, and (iv) 305,976 shares of Common Stock issuable upon exercise of
outstanding warrants at an exercise price of $3.00 per share. The 3,375,000
shares of Common Stock underlying certain of the Company's warrants, and the
987,600 shares issued or reserved for issuance under the Incentive Plan, have
been registered and upon exercise would be available for immediate sale in the
public market without restriction under the Securities Act, unless purchased by
affiliates of the Company. The 305,976 shares of Common Stock underlying certain
of the warrants have not been registered for public sale and would be subject to
the above restrictions on public sale if the warrants were exercised. Subsequent
to this Offering, the Company intends to file a registration statement on Form
S-8 under the Securities Act covering 50,000 additional shares of Common stock
reserved for issuance under the Company's 401(k) Plan. See "Risk
Factors--Potential Adverse Effect of Shares Eligible for Future Sale."

TRADING IN THE SWEDISH SECURITIES MARKET

Stock market trading in Sweden is primarily conducted on the Stockholm Stock
Exchange. There are no market makers or specialist systems on the Stockholm
Stock Exchange and trading is conducted on behalf of clients by banks and
brokers that are members of the SSE. There is, however, a trend towards market
making. While banks and brokers are permitted to act as principals in trading
both on and off the exchange, they generally engage in transactions as agents.
The SSE operates through a fully electronic trading system, the Stockholm
Automated Exchange (the "SAX"), which covers all stocks listed on the SSE.
Trading on the SSE begins each morning at 10:00 a.m. (Stockholm time) at an
opening price determined by the SAX system and based on orders entered by SSE
members, and continues at prices based on market demand until 5:00 p.m. Buy and
sell orders are registered on the system in round lots, typically of 100 shares,
and odd lots are matched separately at the last price for round lots. All
standard transactions on the SSE through banks or brokers are made through the
SAX's order book. Larger trades can be made outside the SAX and reported to the
SAX provided that the price is within the SAX's spread in its order book. Very
large transactions may be executed at a price that is outside the spread.

53
<PAGE>
In addition to official trading on the SSE, there is also trading off the
SSE during and after official trading hours, through intermediaries or directly.
Trades in excess of 20 round lots can be effected off the SSE if the transaction
price lies within the spread then appearing on the SAX, and trades in excess of
500 round lots (for shares on the "Most Traded Shares" list of the SSE) or 250
round lots (for all other shares) may be effected off the SSE without regard to
such spread. Trades after official SSE trading hours must normally be effected
at a transaction price that lies within the spread appearing on the SAX at the
time of the closing. If there are no orders in the SAX at such time, the trade
may be effected at a price that otherwise reflects the market situation at such
time. If the market situation changes after the closing of the SAX, trades may
be effected outside the spread, provided that it can be shown that the
transaction price reflected the market situation prevailing at the time of the
trade. Trading on the SSE tends to involve a higher percentage of retail
clients, while trading off the SSE, whether through intermediaries or directly,
often involves larger Swedish institutions, banks arbitrating between the
Swedish market and foreign markets and foreign buyers and sellers purchasing
shares from or selling shares to Swedish institutions.

The SSE is an authorized stock exchange in accordance with the Swedish Stock
Exchange and Clearing House Act and is subject to regulation by the Swedish
Financial Supervisory Authority. The Swedish Stock Exchange and Clearing House
Act provides for the regulation and supervision of the Swedish securities market
and market participants, and the Swedish Financial Supervisory Authority
implements such regulation and supervision. The regulatory system governing
trading on and off the SSE is intended to achieve transparency and equality of
treatment. All trades on the SSE are made through the SAX to the SSE, which
records information as to the banks and brokers involved, the issuer, the number
of shares and the price and the time of the transaction. Each bank or broker is
required to maintain records indicating trades carried out as agent or, in the
case of banks, as principal. All trades off the SSE by or through members of the
SSE must also be reported to the SSE within five minutes, although trades after
5:00 p.m. are to be reported no later than 30 minutes prior to the opening on
the next trading day.

All trading information reported on the SSE is publicly available. The SSE
also maintains a Market Supervision Unit that reviews trading during the day on
a "real time" basis for indications of unusual market activity or trading
behavior and continually examines information disseminated by listed companies.
Accordingly, information such as earnings reports, acquisitions and other
investment plans, and changes in ownership structure, is reviewed on a daily
basis. When the Market Supervision Unit becomes aware of non-public price
sensitive information, it monitors trading in the shares concerned to ensure
that if unusual trading activity develops which evidences that persons may be
trading on such information, the information is made public as soon as possible.
Specific legislation relating to market manipulation was enacted in January 1997
pursuant to which certain types of agreements in connection with financial
instruments trading, and entered into with the intention of unduly affecting the
market price of such instruments, will constitute a criminal offense. Similarly,
under the new legislation other agreements made and measures taken with a view
to unduly affecting the market price will constitute a criminal offense if
misleading in relation to the market. Market manipulation may also constitute a
violation of the Insider Trading Act or constitute fraud under Swedish law. The
Financial Supervisory Authority may cause the operating license of a bank or
broker to be revoked if the bank or broker has engaged in improper conduct,
which could include behavior constituting market manipulation.

REGISTRATION PROCEDURE; THE BOOK-ENTRY SYSTEM

The Common Stock sold in the International Offering initially will be traded
on the SSE and registered as book-entries on stockholders' book-entry accounts
("VP Accounts") at the Swedish Securities Registration Center ("VPC"). The legal
right of ownership of a share traded on the SSE is established upon registration
in a VP Account. Transfer of ownership for shares of Common Stock traded on the
SSE will be made effective by book-entry in the VPC system from the transferor's
account to the account of the transferee through an authorized account operating
entity or, if the shares are registered in the name of a nominee, by notice to
such nominee. Accordingly, with respect to shares traded on the SSE, no share

54
<PAGE>
certificates will be issued by the Company. The account holder's name, address
and nationality are recorded in VP Accounts. Each account is kept up to date and
the holder is immediately notified of any change. An annual statement at the end
of the year shows the year-end balance in the account.

VPC REGISTRATION

In accordance with the stipulations of the Swedish Share Accounts Act, the
shares of Common Stock sold in the International Offering initially will be
registered by VPC in a so-called control register in the VP Account indicated by
the stockholder. Requests regarding a transfer of shares from the Company's
control register at VPC to another register shall be addressed to the
stockholder's account operating entity (normally the bank or securities company
with which the stockholder undertakes his or her securities transactions). As a
result of such a request, the account operating entity and VPC will arrange a
transfer to another account (or equivalent) via the Depository Trust Company or
another institution which, on behalf of Maxim, will handle the registration of,
among other details, information regarding holdings of shares in the Company and
changes in such holdings. With respect to shares held by a nominee, a transfer
in accordance with the foregoing will be undertaken following a request
addressed to the nominee. The account operating entity undertakes registration
measures in the Company's control register at VPC and charges a fee (charged
against the stockholder) for the exchange in accordance with the rates
applicable at that time. It is also possible to transfer shares of Common Stock
to the Company's control register at VPC. Such a transfer will be undertaken
after a request to the Depository Trust Company (or in accordance with the
Company's instructions).

SETTLEMENT AND CUSTODY OF SHARES OF COMMON STOCK

The shares of Common Stock sold in the International Offering will be
delivered in book-entry form to investors' VP Accounts on or about the closing
date on the cover page of this Prospectus, following payment and timely
provision of appropriate account details. Investors may choose to keep their
shares of Common Stock on the register of a custodian bank or securities broker
acting as or through a nominee as described above.

55
<PAGE>
UNDERWRITING

Alfred Berg Fondkommission AB ("Alfred Berg"), will act as global
coordinator (the "Global Coordinator") and Rodman & Renshaw, Inc. ("Rodman")
will act as the U.S. representative (the "U.S. Representative") for the Offering
of the shares of the Company's Common Stock. The Offering consists of an
International Offering of 2,000,000 shares and a U.S. Offering of 500,000
shares.

Subject to the terms and conditions of an underwriting agreement (the
"Underwriting Agreement") among the Company, Alfred Berg and Rodman, Alfred Berg
has agreed to procure purchasers, which may include a syndicate of underwriters
(together with Alfred Berg, the "International Underwriters"), for (or failing
which, to purchase) the 2,000,000 shares offered in the International Offering.
The shares of Common Stock subject to the Underwriting Agreement will be offered
by Alfred Berg when, as and if sold to, and accepted by, Alfred Berg and will be
subject to their right to reject orders in whole or in part. Rodman and each of
the U.S. underwriters named below (together with Rodman, the "U.S.
Underwriters"), has severally agreed to purchase from the Company, on a firm
commitment basis, the respective number of shares of Common Stock allocated to
such U.S. Underwriter. The allocation of shares in the Offering to each of the
International Underwriters and each of the U.S. Underwriters is set forth below:

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL UNDERWRITERS SHARES
- --------------------------------------------------------------------------------- ----------
<S> <C>
Alfred Berg Fondkommission AB....................................................
Subtotal....................................................................... 2,000,000
----------

U.S. UNDERWRITERS
- ---------------------------------------------------------------------------------
Rodman & Renshaw, Inc............................................................
Subtotal....................................................................... 500,000
----------
Total........................................................................ 2,500,000
----------
----------
</TABLE>

The International Underwriters and the U.S. Underwriters are collectively
referred to as the "Underwriters." The offering price and aggregate underwriting
discounts per share for the U.S. Offering and the International Offering are
identical. The number of shares allocated to each of the International Offering
and the U.S. Offering may differ from the amount offered due to reallocation
between each offering. The closing of each of the International Offering and the
U.S. Offering is conditional upon the simultaneous closing of the other
offering.

The Underwriting Agreement provides that the obligations of the Underwriters
to pay for and accept delivery of the shares of Common Stock offered hereby are
subject to the approval of certain legal matters by their counsel and to certain
other conditions. The U.S. Underwriters are obligated to take and pay for all of
the shares of Common Stock offered hereby (other than those covered by the
Underwriters' over-allotment option described below), if any such shares are
taken.

The Company has been advised that the Underwriters propose initially to
offer the shares of Common Stock to the public at the public offering price set
forth on the cover page of this Prospectus and to certain dealers at such price
less concessions not in excess of $ per share. Such dealers may reallow a
concession not in excess of $ per share to certain other dealers. After the
commencement of the Offering, the public offering prices, concession and
reallowance may be changed by the Global Coordinator.

Pursuant to an Agreement Among Underwriters, as part of the distribution of
the shares and subject to certain exceptions, sales may be made among the
Underwriters of such number of shares as may be mutually agreed. Pursuant to the
Agreement Among Underwriters, as part of the distribution of the shares offered
hereby, and subject to certain exceptions, the Underwriters in each region of
the Offering will offer and sell shares only to investors in their respective
region.

56
<PAGE>
The U.S. Representative has informed the Company that it does not expect
sales to discretionary accounts by the U.S. Underwriters to exceed five percent
(5%) of the shares offered hereby.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act and to contribute to
payments that the Underwriters may be required to make. The Company has also
agreed to pay the actual out-of-pocket expenses of the Global Coordinator and
the U.S. Representative.

The Company has granted to the Underwriters an over-allotment option,
exercisable during the thirty (30) day period from the date of this Prospectus,
to purchase up to an additional 375,000 shares of Common Stock at the initial
public offering price per share offered hereby, less underwriting discounts.
Such option may be exercised only for the purpose of covering over-allotments,
if any, incurred in the sale of the shares offered hereby. In connection with
the Offering, the Global Coordinator may effect borrowing arrangements in order
to deliver over-allotted shares. Shares borrowed from time to time under these
arrangements may exceed the number of shares covered by the over-allotment
option.

All officers and directors of the Company and certain beneficial holders of
the Company's Common Stock have agreed not to sell or otherwise dispose of any
beneficial interest in such securities for periods ranging from 90 days to 180
days following the effective date of the Registration Statement without the
prior written consent of the Global Coordinator and the U.S. Representative.
Upon presentation, an appropriate legend shall be marked on the face of
certificates representing all such securities.

The Company has agreed not to, without the prior written consent of the
Global Coordinator and the U.S. Representative, issue, sell, agree or offer to
sell, grant an option for the purchase or sale of, or otherwise transfer or
dispose of any of its securities for a period of six months following the
effective date of the Registration Statement, except in connection with the
exercise of the Underwriters' over-allotment option, the issuance of shares of
Common Stock upon the exercise of currently outstanding options and warrants,
the issuance and exercise of options and warrants reserved for issuance under
the Company's Incentive Plan and the 401(k) Plan (including 50,000 shares of
Common Stock to be registered on a Form S-8 subsequent to the Offering), up to
an additional 150,000 shares of Common Stock to be issued at the discretion of
the Company and the issuance of securities in connection with any merger or
acquisition transaction.

The U.S. Representative was retained by the Company in September 1997 for a
12-month period to provide certain financial advisory services related to
general strategic financial advice, including in connection with serving as the
U.S. Representative of this Offering, valuation and potential mergers and
acquisitions. The Company has agreed to pay the U.S. Representative $200,000 for
such services, payable in monthly installments until the consummation of this
Offering, at which time the remaining amount shall be paid in full.

In connection with the Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M, pursuant to which such persons may bid for or
purchase Common Stock for the purpose of stabilizing its market price. The
Underwriters also may create a short position for the account of the
Underwriters by selling more Common Stock in connection with the Offering than
they are committed to purchase from the Company, and in each case may purchase
Common Stock in the open market following completion of the Offering to cover
all or a portion of such short position. The Underwriters may also cover all or
a portion of such short position, up to 375,000 shares of Common Stock, by
exercising the over-allotment option referred to above. In addition, the U.S.
Representative and the Global Coordinator may impose "penalty bids" under
contractual arrangements with the Underwriters whereby they may reclaim from an
Underwriter (or dealer participating in the Offering) for the account of other
Underwriters, the selling concession with respect to Common Stock that is
distributed in the Offering but subsequently purchased for the account of the
Underwriters in the open market. Any of the

57
<PAGE>
transactions described in this paragraph may result in the maintenance of the
price of the Common Stock at a level above that which might otherwise prevail in
the open market. None of the transactions described in this paragraph is
required, and, if they are undertaken, they may be discontinued at any time.
Such transactions may be effected on the AMEX, the SSE or otherwise.

This Prospectus may be used in connection with shares of Common Stock
initially offered outside the United States in the International Offering
insofar as such shares of Common Stock are resold from time to time in the
United States in transactions that require registration under the Securities
Act.

The foregoing is a summary of the principal terms of the Underwriting
Agreement described above and does not purport to be complete. Reference is made
to a copy of such agreement which is filed as an exhibit to the Registration
Statement. See "Available Information."

LEGAL MATTERS

The validity of the issuance of the Securities offered hereby will be passed
upon for the Company by its counsel, Cooley Godward LLP, San Diego, California.
Orrick, Herrington & Sutcliffe LLP has acted as U.S. counsel to the
Underwriters.

EXPERTS

The consolidated financial statements of Maxim Pharmaceuticals, Inc. as of
September 30, 1995 and 1996 and for each of the years in the three-year period
ended September 30, 1996 and for the period from inception (October 29, 1989)
through September 30, 1996, have been included herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.

58
<PAGE>
AVAILABLE INFORMATION

The Company is subject to the informational requirements of the United
States Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports, proxy statements and other
information with the United States Securities and Exchange Commission (the
"SEC"). Copies of such periodic reports, proxy statements and other information
can be inspected and copied at the public reference facilities maintained by the
SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the following Regional Offices of the SEC: Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center, Suite
1300, New York, New York 10048. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the SEC, 450 Fifth Street,
N.W., Washington, D.C. 20549. The SEC maintains a World Wide Web site located at
http://www.sec.gov which contains periodic reports, proxy statements and other
information regarding registrants that file electronically with the SEC,
including the Company, at the address.

The Company has filed with the SEC a registration statement on Form S-1
(together with any amendments thereto, the "Registration Statement") under the
Securities Act with respect to the shares being offered pursuant to this
Prospectus. This Prospectus is part of the Registration Statement and does not
contain all the information set forth in the Registration Statement, certain
portions of which have been omitted pursuant to the rules and regulations of the
SEC. Such additional information may be obtained from the SEC's principal office
in Washington, D.C. Statements contained in this Prospectus as to the contents
of any contract or other document referred to herein are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed or incorporated by reference as an exhibit to the
Registration Statement or incorporated by reference therein, each such statement
being qualified in all respects by such reference.

The Common Stock is listed on the American Stock Exchange ("AMEX") and
reports and other information concerning the Company may be inspected at the
offices of AMEX at 86 Trinity Place, Seventh Floor, New York, N.Y. 10006. The
Company has been approved to list its Common Stock on the Stockholm Stock
Exchange (the "SSE") upon completion of the Offering. The address for the SSE is
Kallargrand 2, 11182 Stockholm, Sweden and its World Wide Web site is located at
www.xsse.se.

59
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Independent Auditors' Report............................................................................... F-2

Annual Financial Statements:
Balance Sheets - September 30, 1995 and 1996............................................................. F-3
Statements of Operations - Years ended September 30, 1994, 1995, 1996 and for the period from inception
(October 23, 1989) through September 30, 1996.......................................................... F-4
Statements of Stockholders' Equity (Deficit) - From inception (October 23, 1989) through September 30,
1996................................................................................................... F-5
Statements of Cash Flows - Years ended September 30, 1994, 1995, 1996 and for the period from inception
(October 23, 1989) through September 30, 1996.......................................................... F-6
Notes to Financial Statements............................................................................ F-7

Unaudited Interim Financial Statements:
Balance Sheets - September 30, 1996 and June 30, 1997.................................................... F-16
Statements of Operations - Nine months ended June 30, 1996 and 1997 and for the period from inception
(October 23, 1989) through June 30, 1997............................................................... F-17
Statements of Cash Flows - Nine months ended June 30, 1996 and 1997 and for the period from inception
(October 23, 1989) through June 30, 1997............................................................... F-18
Notes to Financial Statements............................................................................ F-19
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

Board of Directors
Maxim Pharmaceuticals, Inc.:

We have audited the accompanying consolidated balance sheets of Maxim
Pharmaceuticals, Inc. and subsidiary (a development stage company) as of
September 30, 1995 and 1996, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for each of the years
in the three-year period ended September 30, 1996 and for the period from
inception (October 23, 1989) through September 30, 1996. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Maxim
Pharmaceuticals, Inc. and subsidiary (a development stage company) as of
September 30, 1995 and 1996, and the results of their operations and their cash
flows for each of the years in the three-year period ended September 30, 1996
and for the period from inception (October 23, 1989) through September 30, 1996,
in conformity with generally accepted accounting principles.

/s/ KPMG PEAT MARWICK LLP

San Diego, California
November 27, 1996

F-2
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
------------------------------
1995 1996
-------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................................... $ 512,928 $ 4,070,089
Short-term investments in marketable securities................................. - 12,563,622
Accrued interest and other current assets....................................... 13,676 709,285
-------------- --------------
Total current assets.......................................................... 526,604 17,342,996

Investments in marketable securities.............................................. - 2,510,366
Patents and licenses, net......................................................... 1,619,591 1,367,235
Property and equipment, net....................................................... 142,292 31,037
Receivable from related party..................................................... 147,803 -
Other assets...................................................................... 17,611 3,397
-------------- --------------
Total assets.................................................................. $ 2,453,901 $ 21,255,031
-------------- --------------
-------------- --------------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable................................................................ $ 335,556 $ 405,760
Accrued expenses................................................................ 349,204 478,623
Current portion of long-term debt............................................... 353,000 247,000
Notes payable to bank........................................................... 2,250,000 -
Note payable to stockholder..................................................... 250,000 -
Note payable to Swedish governmental agency..................................... 2,312,853 -
-------------- --------------
Total current liabilities..................................................... 5,850,613 1,131,383

Long-term debt, less current portion.............................................. 247,000 -

Commitments and contingencies - Note 9

Stockholders' equity (deficit):
Preferred stock, $.001 par value, 5,000,000 shares authorized, 250,000 shares
issued and outstanding at September 30, 1995.................................. 250 -
Common stock, $.001 par value, 20,000,000 shares authorized, 2,082,821 and
6,671,237 shares issued and outstanding at September 30, 1995 and 1996,
respectively.................................................................. 2,083 6,672
Additional paid-in capital...................................................... 9,768,370 34,172,618
Deficit accumulated during the development stage................................ (13,103,415) (13,936,903)
Deferred compensation........................................................... - (118,739)
Common stock subscriptions receivable........................................... (311,000) -
-------------- --------------
Total stockholders' equity (deficit).......................................... (3,643,712) 20,123,648
-------------- --------------
Total liabilities and stockholders' equity (deficit)........................ $ 2,453,901 $ 21,255,031
-------------- --------------
-------------- --------------
</TABLE>

See Notes to Consolidated Financial Statements

F-3
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FROM INCEPTION
(OCTOBER 23,
1989)
YEAR ENDED SEPTEMBER 30, THROUGH
------------------------------------------- SEPTEMBER 30,
1994 1995 1996 1996
------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C>
Operating expenses:
Research and development........................ $ 999,439 $ 984,778 $ 1,608,931 $ 10,001,258
General and administrative...................... 1,023,256 1,116,714 1,355,197 7,587,807
------------- ------------- ------------- -----------------
Total operating expenses...................... 2,022,695 2,101,492 2,964,128 17,589,065

Other income (expense):
Gain on sale of subsidiary...................... - - 2,288,474 2,288,474
Investment income............................... 8,712 5,590 259,625 287,730
Interest expense................................ (688,568) (486,671) (197,028) (1,903,809)
Foreign exchange gain (loss).................... (75,036) (208,520) (95,217) 23,426
Other income (expense).......................... (4,158) 971 (125,214) (125,214)
Research grant revenue.......................... - - - 2,946,001
------------- ------------- ------------- -----------------
Total other income (expense).................. (759,050) (688,630) 2,130,640 3,516,608
------------- ------------- ------------- -----------------
Loss from continuing operations................... (2,781,745) (2,790,122) (833,488) (14,072,457)

Discontinued operations:
Loss from operations of discontinued diagnostic
division...................................... (134,040) - - (347,608)
Gain on sale of diagnostic division............. 483,162 - - 483,162
------------- ------------- ------------- -----------------
Net loss.......................................... $ (2,432,623) $ (2,790,122) $ (833,488) $ (13,936,903)
------------- ------------- ------------- -----------------
------------- ------------- ------------- -----------------
Loss from continuing operations per share of
common stock.................................... $ (0.94) $ (0.87) $ (0.20)
------------- ------------- -------------
------------- ------------- -------------
Net loss per share of common stock................ $ (0.82) $ (0.87) $ (0.20)
------------- ------------- -------------
------------- ------------- -------------
Weighted average shares outstanding............... 2,961,004 3,209,469 4,074,961
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

See Notes to Consolidated Financial Statements

F-4
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
SUBSCRIPTION
PREFERRED STOCK COMMON STOCK ADDITIONAL RECEIVABLE/
---------------------- ---------------------- PAID-IN ACCUMULATED DEFERRED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT COMPENSATION
--------- ----------- --------- ----------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at October 23, 1989
(inception)....................... - $ - - $ - $ - $ - $ -
Issuance of common stock at $.001... - - 1,000 8,029 - - -
Net income.......................... - - - - - 44 -
--------- ----- --------- ----------- ---------- ------------ -------------
Balance at December 31, 1989........ - - 1,000 8,029 - 44 -
Net income.......................... - - - - - 751 -
--------- ----- --------- ----------- ---------- ------------ -------------
Balance at December 31, 1990........ - - 1,000 8,029 - 795 -
Net income.......................... - - - - - 272 -
--------- ----- --------- ----------- ---------- ------------ -------------
Balance at December 31, 1991........ - - 1,000 8,029 - 1,067 -
Additional funding.................. - - 42 - 1,259,249 - -
Net loss............................ - - - - - (2,445,184) -
--------- ----- --------- ----------- ---------- ------------ -------------
Balance at December 31, 1992........ - - 1,042 8,029 1,259,249 (2,444,117) -
Net effect of reorganization and
issuance of common stock to
account for reverse acquisition... - - 173,977 (7,854) 53,009 (1,197,822) -
Net loss............................ - - - - - (4,238,731) -
--------- ----- --------- ----------- ---------- ------------ -------------
Balance at September 30, 1993....... - - 175,019 175 1,312,258 (7,880,670) -
Issuance of common stock at $60 per
share for consulting and
professional services............. - - 1,098 1 65,999 - -
Issuance of Series A preferred stock
for cash at $3.00 per share....... 250,000 250 - - 487,250 - -
Issuance of common stock to convert
bridge debt financing at prices
from $52.50 to $75 per share...... - - 112,440 113 5,933,894 - -
Net loss............................ - - - - - (2,432,623) -
--------- ----- --------- ----------- ---------- ------------ -------------
Balance at September 30, 1994....... 250,000 250 288,557 289 7,799,401 (10,313,293) -
Issuance of common stock at $3.00
per share upon conversion of
debt.............................. - - 553,254 553 1,659,210 - -
Issuance of common stock pursuant to
anti-dilutive provisions in
previous bridge debt financing.... - - 1,137,343 1,137 (1,137) - -
Issuance of common stock at $3.00
per share for subscription
receivable........................ - - 103,667 104 310,896 - (311,000)
Net loss............................ - - - - - (2,790,122) -
--------- ----- --------- ----------- ---------- ------------ -------------
Balance at September 30, 1995....... 250,000 250 2,082,821 2,083 9,768,370 (13,103,415) (311,000)
Issuance of common stock at $3.00
per share in exchange for
repayment of note payable to
bank.............................. - - 744,646 745 2,249,255 - -
Receipt of subscription
receivable........................ - - - - - - 311,000
Issuance of common stock and
warrants at $3.75 per unit for
cash.............................. - - 465,504 465 1,740,033 - -
Issuance of common stock at $4.50
per share for cash................ - - 400,000 400 1,799,600 - -
Exercise of common stock options.... - - 400 1 2,999 - -
Issuance of common stock at $7.50
per share and warrants at $.10 per
warrant in initial public
offering.......................... - - 2,875,000 2,875 18,217,215 - -
Conversion of preferred stock to
common stock...................... (250,000) (250) 102,866 103 147 - -
Options granted to employees........ - - - - 394,999 - (163,124)
Amortization of deferred
compensation...................... - - - - - - 44,385
Net loss............................ - - - - - (833,488) -
--------- ----- --------- ----------- ---------- ------------ -------------
Balance at September 30, 1996....... - $ - 6,671,237 $ 6,672 $34,172,618 ($13,936,903) $(118,739)
--------- ----- --------- ----------- ---------- ------------ -------------
--------- ----- --------- ----------- ---------- ------------ -------------

TOTAL
----------
<S> <C>
Balance at October 23, 1989
(inception)....................... $ -
Issuance of common stock at $.001... 8,029
Net income.......................... 44
----------
Balance at December 31, 1989........ 8,073
Net income.......................... 751
----------
Balance at December 31, 1990........ 8,824
Net income.......................... 272
----------
Balance at December 31, 1991........ 9,096
Additional funding.................. 1,259,249
Net loss............................ (2,445,184)
----------
Balance at December 31, 1992........ (1,176,839)
Net effect of reorganization and
issuance of common stock to
account for reverse acquisition... (1,152,667)
Net loss............................ (4,238,731)
----------
Balance at September 30, 1993....... (6,568,237)
Issuance of common stock at $60 per
share for consulting and
professional services............. 66,000
Issuance of Series A preferred stock
for cash at $3.00 per share....... 487,500
Issuance of common stock to convert
bridge debt financing at prices
from $52.50 to $75 per share...... 5,934,007
Net loss............................ (2,432,623)
----------
Balance at September 30, 1994....... (2,513,353)
Issuance of common stock at $3.00
per share upon conversion of
debt.............................. 1,659,763
Issuance of common stock pursuant to
anti-dilutive provisions in
previous bridge debt financing.... -
Issuance of common stock at $3.00
per share for subscription
receivable........................ -
Net loss............................ (2,790,122)
----------
Balance at September 30, 1995....... (3,643,712)
Issuance of common stock at $3.00
per share in exchange for
repayment of note payable to
bank.............................. 2,250,000
Receipt of subscription
receivable........................ 311,000
Issuance of common stock and
warrants at $3.75 per unit for
cash.............................. 1,740,498
Issuance of common stock at $4.50
per share for cash................ 1,800,000
Exercise of common stock options.... 3,000
Issuance of common stock at $7.50
per share and warrants at $.10 per
warrant in initial public
offering.......................... 18,220,090
Conversion of preferred stock to
common stock...................... -
Options granted to employees........ 231,875
Amortization of deferred
compensation...................... 44,385
Net loss............................ (833,488)
----------
Balance at September 30, 1996....... $20,123,648
----------
----------
</TABLE>

See Notes to Consolidated Financial Statements

F-5
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FROM INCEPTION
(OCTOBER 23,
1989)
YEAR ENDED SEPTEMBER 30, THROUGH
----------------------------------- SEPTEMBER 30,
1994 1995 1996 1996
---------- ---------- ----------- -----------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss................................................ $(2,432,623) $(2,790,122) $ (833,488) $ (13,936,903)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization....................... 42,916 53,581 128,719 781,144
Stock options issued as compensation................ - - 276,260 276,260
Gain on sale of subsidiary.......................... - - (2,288,474) (2,288,474)
Loss on write-off of patents........................ - - 189,068 189,068
Loss on disposal of property and equipment.......... - - 128,248 128,248
Loss on write-off of receivable from related
party............................................. - - 147,803 147,803
Other............................................... - - 27,032 27,032
Write-off of obsolete inventory..................... - 24,669 - 24,669
Gain on sale of diagnostic division................. (483,162) - - (483,162)
Loss on write-off of purchased research and
development....................................... - - - 2,646,166
Cumulative effect of reorganization................. - - - 1,152,667
Changes in operating assets and liabilities:
Accrued interest and other current assets......... 68,800 1,779 (695,609) (709,285)
Other assets...................................... 37,944 46,966 14,214 (151,200)
Accounts payable.................................. (281,559) 42,089 70,204 405,760
Accrued expenses.................................. (263,504) 17,105 150,629 499,833
---------- ---------- ----------- -----------------
Net cash used in operating activities........... (3,311,188) (2,603,933) (2,685,394) (11,290,374)
INVESTING ACTIVITIES:
Purchases of marketable securities...................... - - (15,073,988) (15,073,988)
Additions to patents.................................... (473,401) (274,901) (213,196) (1,842,787)
Purchases of property and equipment..................... - - (23,524) (808,241)
Cash acquired in acquisition of business................ - - - 985,356
Proceeds from sale of diagnostic division............... 496,555 - - 496,555
---------- ---------- ----------- -----------------
Net cash provided by (used in) investing
activities.................................... 23,154 (274,901) (15,310,708) (16,243,105)
FINANCING ACTIVITIES:
Payments on notes payable and long-term debt............ - - (2,603,000) (2,770,505)
Payments on notes payable to related parties............ - (1,079,885) (250,000) (1,329,885)
Proceeds from issuance of notes payable and long-term
debt.................................................. 1,588,178 3,427,992 81,675 4,576,423
Proceeds from issuance of notes payable to related
parties............................................... 930,000 925,000 - 4,982,169
Net proceeds from issuance of common stock and
warrants.............................................. 66,000 - 24,324,588 25,657,866
Net proceeds from issuance of preferred stock........... 487,500 - - 487,500
---------- ---------- ----------- -----------------
Net cash provided by financing activities....... 3,071,678 3,273,107 21,553,263 31,603,568
---------- ---------- ----------- -----------------
Net increase (decrease) in cash and cash equivalents.... (216,356) 394,273 3,557,161 4,070,089
Cash and cash equivalents at beginning of period........ 335,011 118,655 512,928 -
---------- ---------- ----------- -----------------
Cash and cash equivalents at end of period.............. $ 118,655 $ 512,928 $ 4,070,089 $ 4,070,089
---------- ---------- ----------- -----------------
---------- ---------- ----------- -----------------
</TABLE>

See Notes to Consolidated Financial Statements

F-6
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND BASIS FOR PRESENTATION

Maxim Pharmaceuticals, Inc. (the "Company") was incorporated in Delaware in
1954 under the name "Wilco Oil & Minerals, Corp." and has existed under various
names since then. From 1987 to 1993, the Company operated as a medical
diagnostics products company under the name "General Biometrics, Inc." In 1993,
the Company merged with Syntello Vaccine Development AB ("SVD"), a Swedish
biopharmaceutical company, in an exchange of stock accounted for as a reverse
acquisition. Upon completion of the reverse acquisition the Company changed its
name to "Syntello, Inc." and commenced its operations as a biopharmaceutical
company. The Company sold its medical diagnostic division in 1994 and sold SVD
in July 1996 as described in Note 12. Since December 1995 the Company has
operated under the name "Maxim Pharmaceuticals, Inc." The consolidated
statements of operations' inception-to-date information reflects the cumulative
operations of SVD from the date of its inception (October 23, 1989). The
consolidated statement of stockholders' equity (deficit) for the periods from
inception to the date of the 1993 reverse acquisition reflects the equity
activity of SVD.

The Company has devoted substantially all of its efforts to research and
development of proprietary technologies targeting the prevention and treatment
of cancer and infectious diseases. To date, the Company has conducted the
majority of its research and development in university laboratories and at
clinical sites through consulting arrangements with its collaborative
scientists; a significant portion of such work has been performed in Sweden.
Oversight and coordination of these programs has been managed by the Company's
personnel from its administrative offices located in San Diego, California.

The Company expects to incur losses as it expands its research and
development activity and sponsorship of clinical trials. The future success of
the Company is likely to be dependent on its ability to obtain additional
capital to develop and commercialize its proposed products and, ultimately, upon
its ability to attain future profitable operations. There can be no assurance
that the Company will be successful in obtaining such financing, or that it will
attain positive cash flow from operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DEVELOPMENT STAGE. The Company has not earned significant revenues from
planned principal operations. Accordingly, the Company's activities have been
accounted for as those of a "Development Stage Enterprise" as set forth in
Financial Accounting Standards Board Statement No. 7 ("FAS 7"). Among the
disclosures required by FAS 7 are that the Company's financial statements be
identified as those of a development stage company, and that the consolidated
statements of operations, stockholders' equity (deficit) and cash flows disclose
activity since the date of the Company's inception.

CONCENTRATION OF CREDIT RISK. The Company invests its excess cash in U.S.
government securities and other highly liquid debt instruments of financial
institutions and corporations with strong credit ratings. The Company has
established guidelines relative to diversification and maturities to maintain
safely an adequate level of liquidity.

CASH EQUIVALENTS AND INVESTMENTS. The Company has classified all
investments as held-to-maturity securities. Investments are carried at cost,
which approximates market. The investments mature at various dates through March
1998. Investments with original maturities of less than 90 days are considered
cash equivalents, and all other investments which mature within one year are
classified as short-term investments.

F-7
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT. Property and equipment are recorded at cost.
Depreciation on property and equipment is calculated on the straight-line method
over the estimated useful lives of the assets, generally five years.

PATENTS AND LICENSES. The Company capitalizes certain legal costs and
acquisition costs related to patents and licenses. Accumulated costs are
amortized over the lesser of the legal lives or the estimated economic lives of
the proprietary rights, generally seven to ten years, using the straight-line
method and commencing at the time the patents are issued or the license is
acquired. Capitalized costs are written off to expense at the time the
underlying proprietary rights are deemed to have no continuing value.

CAPITAL STOCK. On January 5, 1996, the Company effected a 1-for-2000
reverse stock split and changed the par value of the common stock from $.0001
per share to $.001 per share and changed the par value of the preferred stock
from $.01 per share to $.001 per share. On May 9, 1996, the Company effected a
100-for-1 stock split. On July 10, 1996, the effective date of its initial
public offering (Note 7), the Company effected a 2-for-3 reverse stock split of
its common stock. All common and preferred stock share amounts, par values and
the additional paid-in capital amounts have been restated to reflect the above
transactions.

LOSS PER SHARE OF COMMON STOCK. Loss per share of common stock is computed
by dividing the net loss by the weighted average number of shares of common
stock outstanding during the period. In accordance with Securities and Exchange
Commission Staff Accounting Bulletin No. 83, for periods preceding the effective
date of the initial public offering all common and common equivalent shares
issued during the twelve-month period prior to the effective date have been
included in the calculation as if they were outstanding for all such periods,
using the treasury stock method and the public offering price of common stock.
For periods subsequent to the initial public offering, common stock equivalents
have not been included as they are antidilutive.

FOREIGN CURRENCY TRANSLATION. The Company accounts for translation of
foreign currency in accordance with Statement of Financial Accounting Standards
No. 52 "Foreign Currency Translation." During the periods in which the Company
owned SVD, the U.S. dollar was considered the functional currency of this
Swedish subsidiary. Monetary assets and liabilities were translated using the
exchange rate in effect at the balance sheet date, and non-monetary assets and
liabilities were translated at historical rates. Revenue and expense accounts
were translated at the average rates in effect during the year. All translation
adjustments and transaction gains and losses were recognized in operations as
other income or expense.

FAIR VALUE OF FINANCIAL INSTRUMENTS. Statement of Financial Accounting
Standards No. 107, "Disclosures About Fair Value of Financial Instruments,"
requires that fair values be disclosed for the Company's financial instruments.
The carrying amount of cash and cash equivalents, accounts payable and accrued
expenses are considered to be representative of their respective fair values
because of the short-term nature of these financial instruments. The carrying
amount of the notes payable and long-term debt are reasonable estimates of fair
value as the loans bear interest based on market rates currently available for
debt with similar terms.

USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported

F-8
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
amounts of assets and liabilities at the date of the consolidated financial
statements and the reported amounts of expenses during the reporting period.
Actual results could differ from these estimates.

RECLASSIFICATIONS. Certain amounts in the prior years' financial statements
have been reclassified to conform with current year classifications.

3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
------------------------------
1995 1996
-------------- --------------
<S> <C> <C>
Furniture, fixtures and equipment................. $ 32,661 $ 56,187
Laboratory equipment.............................. 689,517 -
-------------- --------------
722,178 56,187
Less accumulated depreciation..................... (579,886) (25,150)
-------------- --------------
$ 142,292 $ 31,037
-------------- --------------
-------------- --------------
</TABLE>

During the year ended September 30, 1996, the Company transferred laboratory
equipment with a net book value of $128,248 to a former Swedish collaborating
scientist and former director of the Company.

4. SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
FROM INCEPTION
YEAR ENDED SEPTEMBER 30, THROUGH
---------------------------------------------- SEPTEMBER 30,
1994 1995 1996 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Noncash investing and financing activities:
Issuance of common stock to convert debt........ $ 5,934,007 $ 1,659,763 $ - $ 7,593,770
Sale of subsidiary:
Net patents sold.............................. - - 154,296 154,296
Other liabilities transferred................. - - (121,210) (121,210 )
Note payable transferred...................... - - (2,421,560) (2,421,560 )
Other accruals................................ - - 100,000 100,000

Acquisition of subsidiary:
Assets acquired............................... - - - 4,917,359
Liabilities assumed........................... - - - (5,911,481 )
Net equity effect of acquisition.............. - - - (994,122 )
Supplemental disclosure of cash flow information:
Cash paid for interest.......................... 266,819 202,627 341,126 1,393,124
</TABLE>

F-9
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. ACCRUED EXPENSES

Accrued expenses consist of the following:

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
------------------------------
1995 1996
-------------- --------------
<S> <C> <C>
Professional fees................................. $ - $ 201,179
Collaborator fees................................. - 100,000
Compensation...................................... 137,498 79,868
Interest.......................................... 149,703 5,605
Other............................................. 62,003 91,971
-------------- --------------
$ 349,204 $ 478,623
-------------- --------------
-------------- --------------
</TABLE>

6. NOTES PAYABLE AND LONG-TERM DEBT

NOTES PAYABLE. In 1991 the Company's subsidiary, SVD, arranged a Swedish
Industrial Fund loan from the Swedish government for the purpose of funding
research and development. In connection with the loan, the Swedish government
acquired a security interest in certain technology rights of SVD, such security
interest to remain in place until repayment of the loan. Certain stockholders of
the Company pledged as collateral to the Swedish Industrial Fund loan a portion
of their personal equity interest in the Company. The interest rate on the loan
was based on the Swedish discount rate plus 5%. The Swedish Industrial Fund loan
became due December 31, 1994 and was in default at the time that the Company
sold SVD in July 1996. As a result of the sale of SVD, described in Note 12, the
Company has no remaining liability or obligation in connection with the loan.

In August 1994, the Company obtained a bank line of credit in the amount of
$2,000,000, bearing interest at 6.9% and maturing February 25, 1996. In May
1995, the Company obtained a second bank line of credit, in the amount of
$250,000 bearing interest at 6.9% and maturing December 31, 1995. These bank
lines of credit were secured by $2,250,000 of certificates of deposit pledged by
certain stockholders of the Company. On December 7, 1995, the certificates of
deposit were assigned to the Company in exchange for the issuance of common
stock at a rate of $3.00 per share; the proceeds of these certificates of
deposit were used to pay off the bank lines of credit.

In March 1995, the Company issued a demand promissory note to a stockholder
in the amount of $250,000 bearing interest at prime plus 2%. This note was
secured by all the tangible and intangible assets of the Company. The note and
accrued interest of $39,056 were repaid on September 19, 1996.

LONG-TERM DEBT. Long-term debt consists of the following:

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
------------------------------
1995 1996
-------------- --------------
<S> <C> <C>
Note payable with interest at prime plus 2% per
annum, secured by a priority interest in certain
technology and rights........................... $ 600,000 $ 247,000
Less current portion.............................. (353,000) (247,000)
-------------- --------------
$ 247,000 $ -
-------------- --------------
-------------- --------------
</TABLE>

F-10
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
In July 1993, the Company issued the above note payable to a company, owned
in part by a former collaborating scientist and former director of the Company,
for $600,000 in partial consideration for certain worldwide exclusive rights
related to its cancer technology as described in Note 10. The note was
originally due December 31, 1995. In December 1995 the Company and the note
holder entered into an agreement to extend the term of the note; under the
amended terms, the Company made payments of principal aggregating $353,000
during the year ended September 30, 1996, and the remaining $247,000 is payable
on June 30, 1997.

7. STOCKHOLDERS' EQUITY

JULY 1996 INITIAL PUBLIC OFFERING. During July 1996 the Company completed
an initial public offering in which it sold 2,875,000 shares of common stock and
2,875,000 detachable warrants to purchase common stock ("Redeemable Warrants").
The Company received net proceeds of $18,220,090 after underwriting discounts
and other issuance costs of $3,629,910.

STOCK OPTIONS. In 1993, the Company established a stock option plan (the
"1993 Plan") under which incentive and nonqualified stock options have been
granted to key employees, directors and consultants of the Company. Under the
1993 Plan, options may be granted to purchase up to 800,000 shares of common
stock; options that are granted generally vest over five years and have a
maximum term of ten years. Option activity for the fiscal years ended September
30, 1994, 1995 and 1996 was as follows:

<TABLE>
<CAPTION>
NUMBER OF EXERCISE PRICE
SHARES PER SHARE
-------------- --------------
<S> <C> <C>
Outstanding September 30, 1993.................... 12,754 $60.00
Granted......................................... 33,533 $7.50
Exercised....................................... - -
Canceled........................................ (12,220 ) $7.50 - $60.00
-------
Outstanding September 30, 1994.................... 34,067 $7.50 - $60.00
Granted......................................... 3,333 $7.50
Exercised....................................... - -
Canceled........................................ (533 ) $60.00
-------
Outstanding September 30, 1995.................... 36,867 $7.50
Granted......................................... 527,334 $3.75
Exercised....................................... (400 ) $7.50
Canceled........................................ (53,134 ) $3.75 - $7.50
-------
Outstanding September 30, 1996.................... 510,667 $3.75
-------
-------
</TABLE>

At September 30, 1996, options for 314,132 shares of common stock were
exercisable and the remaining 196,535 become exercisable at various dates
through September 30, 2000.

In May 1996, the Company issued options to purchase 526,665 shares of common
stock under the 1993 Plan at an exercise price of $3.75 per share to members of
management, directors and consultants. Concurrently, the Company also canceled
previously issued options held by certain of these persons. Of the options
issued, 305,833 were immediately exercisable with the remaining options vesting
over a period

F-11
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. STOCKHOLDERS' EQUITY (CONTINUED)
of two to five years. In accordance with Accounting Principles Board Opinion No.
25, as a result of the issuance the Company expects to record compensation
expense of approximately $395,000 over the vesting period of the options. Such
compensation expense recorded during the fiscal year ended September 30, 1996
totaled $276,260.

WARRANTS. At September 30, 1996, warrants to purchase 3,707,642 shares of
the Company's common stock at a weighted average exercise price of $9.73 per
share are outstanding, of which warrants to purchase 672,584 shares are
exercisable.

Included in the above total warrants outstanding are 2,875,000 Redeemable
Warrants issued in connection with the aforementioned initial public offering.
Each Redeemable Warrant allows the holder thereof to purchase one share of
common stock at an exercise price of $10.50. The Redeemable Warrants may be
exercised at any time during the period commencing July 10, 1997 and terminating
July 10, 2001. Commencing January 10, 1998, the Company may redeem the
Redeemable Warrants at $0.01 per warrant upon 30 days prior written notice to
the holders if the average closing price of the common stock equals or exceeds
$12.00 per share for any 20 trading days within a period of 30 consecutive
trading days ending on the fifth trading day prior to the date of the notice of
redemption. In connection with the initial public offering the Company also
issued warrants to the underwriter of such offering under which the holders
thereof may purchase up to 250,000 shares of common stock at a price of $9.00
per share and/or up to 250,000 Redeemable Warrants at a price of $0.12 per
Redeemable Warrant.

The Company has also issued warrants to purchase common stock to certain
consultants of the Company and in connection with private placements of equity
securities. These warrants generally have terms ranging from five to seven
years, and some include vesting provisions. Such warrants to purchase 332,642
shares of the Company's common stock at an exercise price of $3.00 per share
were outstanding at September 30, 1996, of which warrants to purchase 172,584
shares were exercisable.

8. INCOME TAXES

The Company has deferred income taxes which have been fully reserved as
follows:

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
------------------------------
1995 1996
-------------- --------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards................ $ 5,526,000 $ 7,434,000
General business credit carryforwards........... 284,000 276,000
Other........................................... 24,000 87,000
-------------- --------------
Total net deferred tax assets................. 5,834,000 7,797,000
Valuation allowance for deferred tax assets....... (5,834,000) (7,797,000)
-------------- --------------
Net deferred tax assets....................... $ 0 $ 0
-------------- --------------
-------------- --------------
</TABLE>

At September 30, 1996, the Company has federal and California tax net
operating loss carryforwards of approximately $21,865,000 and $4,375,000,
respectively. The federal tax loss carryforwards will begin expiring in 2000
unless previously utilized. The California tax loss carryforwards will begin
expiring in 1997.

F-12
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. INCOME TAXES (CONTINUED)
As a result of the "change in ownership" provisions of the Tax Reform Act of
1986, utilization of the Company's tax net operating loss carryforwards and tax
credit carryforwards are subject to an annual limitation in future periods. As a
result of the annual limitation, a portion of these carryforwards may expire
before ultimately becoming available to reduce future taxable income.

9. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS. The Company leases an office facility under a
non-cancelable operating lease agreement that expires in July 1997. In November
1996 the Company entered into a five-year operating lease commencing December
1996 for laboratory and administrative office facilities. Future minimum lease
commitments approximate the following:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
- --------------------------------------------------
<S> <C>
1997.............................................. $ 326,000
1998.............................................. 374,000
1999.............................................. 385,000
2000.............................................. 397,000
2001.............................................. 409,000
Thereafter........................................ 69,000
--------------
$ 1,960,000
--------------
--------------
</TABLE>

Total rent expense for the fiscal years ended September 30, 1994, 1995 and 1996
was $180,090, $78,449 and $87,456, respectively.

10. LICENSES AND COLLABORATIVE AGREEMENTS

The Company's strategy for development of its technologies involves the
licensing of technologies and the establishment of collaborative relationships
with university, governmental and other entities. Material licensing and
collaborative agreements are described below.

In 1993, the Company entered into a technology transfer agreement with
Estero Anstalt, a Swedish corporation, pursuant to which the Company purchased
the core intellectual property and patent rights related to its MAXAMINE cancer
and infectious disease immunotherapy technology. The total purchase price under
the agreement was $700,000, of which $600,000 was paid pursuant to a promissory
note issued by the Company and secured by the MAXAMINE technology as described
in Note 6 above. At September 30, 1996, $247,000 remains payable under the note
and is due June 30, 1997. The technology transfer agreement also requires that
the Company pay certain royalty obligations to Drs. Kristoffer Hellstrand and
Svante Hermodsson, the two inventors of the technology.

In 1993, the Company entered into an agreement with Vitec AB and SBL Vaccin
AB ("SBL"), pursuant to which the Company obtained an exclusive, worldwide
license to technology, including two patent applications, related to use of the
MAXVAX vaccine technology for the treatment of Chlamydia. Under the agreement,
the Company is required to use its best efforts to engage SBL to manufacture any
products which result from the application of the licensed technology. The
Company has made payments of $150,000 to Vitec AB under this agreement, and has
agreed to make royalty payments on the net sales of

F-13
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. LICENSES AND COLLABORATIVE AGREEMENTS (CONTINUED)
products using the licensed technology and to make additional license and
milestone payments to Vitec AB upon the execution of any sublicenses.

In 1994, the Company entered into a second license agreement with Vitec AB
and SBL for an exclusive, worldwide license to technology rights related to the
MAXVAX technology for all infectious diseases with the exception of (i)
Chlamydia (governed by the agreement discussed above), (ii) HIV (governed by a
sublicense agreement held by the Company as described below) and (iii) cholera
and travelers' diarrhea. Under the agreement, the Company has agreed to use its
best efforts to engage SBL to manufacture any products which result from the
application of licensed technology, and both Vitec AB and the Company shall
receive a percentage of any profits that SBL derives from manufacturing such
products. The Company paid an initial license fee of $100,000 under the
agreement, and has agreed to make a minimum milestone payment of $400,000 by
December 31, 1996 to extend the exclusivity on the license. If the Company fails
to make the minimum milestone payment by such date, the Company's rights to the
technology shall convert to a non-exclusive license; if the Company fails to
make the minimum payment by December 31, 1998, the licensors shall have the
right to terminate the agreement. The agreement also requires the Company to
make royalty payments based on net sales of products which utilize the licensed
technology.

In 1995, the Company entered into a license agreement with Drs. Jan Holmgren
and Cecil Czerkinsky, inventors of the core technology underlying MAXVAX (the
"CTB" technology), and their affiliated companies, Duotol AB and Triotol AB, for
an exclusive, worldwide license to patent applications and related technology
rights with respect to the therapeutic and anti-inflammatory properties of CTB.
Under the agreement, the Company has agreed to make royalty payments based on
net sales of certain products which utilize the licensed technology for the
treatment of infectious diseases. Triotol AB has agreed to make royalty payments
to the Company based on net sales of certain other products which utilize the
licensed products for the treatment of certain autoimmune diseases. Duotol AB
may terminate the agreement upon a material breach by the Company and the
agreement will terminate automatically if the Company is liquidated.

11. RELATED PARTY TRANSACTIONS

In February 1996, the Company entered into an agreement with a business
consulting firm to provide strategic planning and advisory services for $10,000
per month for three years, and warrants to purchase up to 173,333 shares of
common stock at an exercise price of $3.00 per share vesting over 36 months. In
April 1996, the chief executive officer of this firm was elected as a director
of the Company. The Company made payments totaling $80,000 in connection with
the consulting agreement during the year ended September 30, 1996.

As described in Note 6, in September 1996 the Company repaid a $250,000 note
payable, and paid interest in the amount of 39,056, to a shareholder of the
Company.

As described in Note 12, in July 1996 the Company sold its ownership
interest in a subsidiary to a former director and shareholder of the Company for
$1.00, and recorded a gain on the disposal of $2,288,474. As described in Note
3, during the year ended September 30, 1996 the Company transferred laboratory
equipment with a net book value of $128,248 to this former director.

F-14
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. RELATED PARTY TRANSACTIONS (CONTINUED)
As part of its program of research and development, the Company has retained
certain Swedish scientists and other consultants to consult with the Company and
perform research and development services. Certain of these consultants were
considered related parties as they were holders of the Company's common stock
(or warrants, or options, to purchase common stock), and one such consultant was
formerly a director of the Company.

12. DISPOSAL OF CERTAIN OPERATIONS

SALE OF SVD SUBSIDIARY. On July 5, 1996, the Company sold its ownership
interest in its Swedish subsidiary, SVD, to a former Swedish collaborating
scientist and former director and shareholder of the Company for $1.00. The
Company recorded a gain on the disposal of SVD of $2,288,474, representing the
excess of SVD's liabilities over its assets as of the date of sale. SVD's
primary liability at the date of sale was a $2,421,560 Swedish Industrial Fund
loan from the Swedish government described in Note 6. SVD's assets consisted
primarily of capitalized patent costs. The sale transferred certain technology
rights related to certain peptides for use in vaccination and induction of
neutralizing antibodies against HIV. In connection with the sale, the Company
received a non-exclusive sublicense to the MAXVAX mucosal vaccine carrier for
development of vaccines for the treatment of HIV infection.

DISCONTINUED OPERATIONS. During fiscal 1994 the Company disposed of its
diagnostic division and certain assets and liabilities for cash of $496,555 and
the assumption of $700,000 of debt by the buyer. The loss on discontinued
operations and gain on disposition of the division was accounted for as
discontinued operations. Revenue for the diagnostic division was $1,273,170 in
1994.

13. SUBSEQUENT EVENT (UNAUDITED)

In April 1996, the Company received a demand letter from an attorney
representing the former President and Chief Operating Officer and the Chief
Financial Officer of the Company (the "Former Employees"). In the letter, the
Former Employees made claims for certain specified and unspecified damages in
contract and in tort arising out of the termination of the Former Employees'
employment with the Company.

In March 1997, the Former Employees filed a complaint in the Superior Court
in the State of California, County of San Diego (the "Complaint") seeking claims
for certain purported damages in contract and in tort arising from their
respective terminations of employment with the Company in March 1996. In
addition, the Former Employees asserted possible punitive damages and damages
based on emotional distress. The Former Employees also claimed the right to
vested options of the Company's Common Stock. According to the Complaint, each
of the Former Employees appears to be claiming compensatory damages in excess of
$2 million and punitive damages in excess of $3 million. In June 1997, the
Company filed an answer to the Complaint denying each of the allegations
therein. Pretrial discovery with respect to these legal proceedings has
commenced, and a trial date has been scheduled for May 1998. The Company
believes the Former Employees' claims are without merit and the Company intends
to contest any such claims vigorously. However, there can be no assurance as to
the eventual outcome of such claims or their effect on the Company's business,
financial condition and results of operations. In addition, an adverse
determination in any litigation arising from these claims or the settlement of
such claims could have a material adverse effect on the Company's business,
financial condition and results of operations.

F-15
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1996
------------------ AS OF
JUNE 30, 1997
--------------
(UNAUDITED)
<S> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents................................................... $ 4,070,089 $ 170,091
Short-term investments in marketable securities............................. 12,563,622 10,887,863
Accrued interest and other current assets................................... 709,285 549,247
------------------ --------------
Total current assets...................................................... 17,342,996 11,607,201

Investments in marketable securities.......................................... 2,510,366 3,216,603
Patents and licenses, net..................................................... 1,367,235 1,807,048
Property and equipment, net................................................... 31,037 681,898
Deposits...................................................................... 3,397 203,396
------------------ --------------
Total assets............................................................ $ 21,255,031 $ 17,516,146
------------------ --------------
------------------ --------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable............................................................ $ 405,760 $ 480,050
Accrued expenses............................................................ 478,623 549,599
Current portion of long-term debt........................................... 247,000 78,317
------------------ --------------
Total current liabilities................................................. 1,131,383 1,107,966

Long-term debt, less current portion........................................ - 548,216

Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized............... - -
Common stock, $.001 par value, 20,000,000 shares authorized; 6,671,237 and
6,671,246 shares issued and outstanding at September 30, 1996 and June 30,
1997, respectively........................................................ 6,672 6,672
Additional paid-in capital.................................................. 34,172,618 34,172,686
Deficit accumulated during the development stage............................ (13,936,903) (18,251,524)
Deferred compensation....................................................... (118,739) (67,870)
------------------ --------------
Total stockholders' equity................................................ 20,123,648 15,859,964
------------------ --------------
Total liabilities and stockholders' equity.............................. $ 21,255,031 $ 17,516,146
------------------ --------------
------------------ --------------
</TABLE>

See Notes to Financial Statements

F-16
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
FROM INCEPTION
NINE MONTHS ENDED (OCTOBER 23,
JUNE 30, 1989)
---------------------------- THROUGH
1996 1997 JUNE 30, 1997
------------- ------------- -----------------
<S> <C> <C> <C>
Operating expenses:
Research and development....................................... $ 1,078,306 $ 3,293,528 $ 13,294,786
Business development........................................... 79,810 284,895 346,895
General and administrative..................................... 946,727 1,394,716 8,920,523
------------- ------------- -----------------
Total operating expenses..................................... 2,104,843 4,973,139 22,562,204

Other income (expense):
Investment income.............................................. 22,843 732,142 1,019,872
Interest expense............................................... (176,667) (60,269) (1,964,078)
Other expense.................................................. (119,631) (13,355) (115,143)
Research grant revenue......................................... - - 2,946,001
Gain on sale of subsidiary..................................... - - 2,288,474
------------- ------------- -----------------
Total other income (expense)................................. (273,455) 658,518 4,175,126
------------- ------------- -----------------

Discontinued operations:
Loss from operations of discontinued diagnostic division....... - - (347,608)
Gain on sale of diagnostic division............................ - - 483,162
------------- ------------- -----------------
Net loss......................................................... $ (2,378,298) $ (4,314,621) $ (18,251,524)
------------- ------------- -----------------
------------- ------------- -----------------

Net loss per share of common stock............................... $ (0.42) $ (0.65)
------------- -------------
------------- -------------

Weighted average shares outstanding.............................. 5,655,594 6,671,240
------------- -------------
------------- -------------
</TABLE>

See Notes to Financial Statements

F-17
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
FROM INCEPTION
NINE MONTHS ENDED (OCTOBER 23,
JUNE 30, 1989)
------------------------------ THROUGH
1996 1997 JUNE 30, 1997
-------------- -------------- --------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss.......................................... $ (2,378,298) $ (4,314,621) $ (18,251,524 )
Adjustments to reconcile net loss to net cash used
for operating activities:
Depreciation and amortization................... 27,113 180,787 961,931
Amortization of premium on investments.......... - 123,664 123,664
Stock options issued as compensation............ 249,568 50,869 327,129
Gain on sale of subsidiary...................... - - (2,288,474 )
Loss on write-off of patents.................... - 53,339 242,407
Loss on disposal of property & equipment........ 128,248 - 128,248
Loss on write-off of receivable from related
party......................................... 100,000 - 147,803
Other........................................... - - 27,032
Write-off of obsolete inventory................. - - 24,669
Gain on sale of diagnostic division............. - - (483,162 )
Loss on write-off of purchased research and
development................................... - - 2,646,166
Cumulative effect of reorganization............. - - 1,152,667
Changes in operating assets and liabilities:
Accrued interest and other current assets..... 12,376 160,038 (549,247 )
Other assets.................................. 16,141 (200,000) (351,200 )
Accounts payable.............................. (55,220) 74,291 480,051
Accrued expenses.............................. - 70,974 570,807
-------------- -------------- --------------
Net cash used in operating activities....... (1,900,072) (3,800,659) (15,091,033 )

INVESTING ACTIVITIES:
Purchases of marketable securities................ - (10,340,141) (25,414,129 )
Maturities of marketable securities............... - 11,186,000 11,186,000
Additions to patents.............................. (145,227) (603,377) (2,446,164 )
Purchases of property and equipment............... (13,838) (721,422) (1,529,663 )
Cash acquired in acquisition of business.......... - - 985,356
Proceeds from sale of diagnostic division......... - - 496,555
-------------- -------------- --------------
Net cash used in investing activities........... (159,065) (478,940) (16,722,045 )

FINANCING ACTIVITIES:
Proceeds from issuance of notes payable and
long-term debt.................................. - 626,533 5,202,956
Payments on notes payable and long-term debt...... (2,141,293) (247,000) (3,017,505 )
Proceeds from issuance of notes payable to related
parties......................................... (106,000) - 4,982,169
Payments on notes payable to related parties...... - - (1,329,885 )
Net proceeds from issuance of common stock and
warrants........................................ 5,706,795 68 25,657,934
Net proceeds from issuance of preferred stock..... - - 487,500
-------------- -------------- --------------
Net cash provided by financing activities....... 3,459,502 379,601 31,983,169
-------------- -------------- --------------
Net increase (decrease) in cash and cash
equivalents..................................... 1,400,365 (3,899,998) 170,091
Cash and cash equivalents at beginning of
period.......................................... 512,928 4,070,089 -
-------------- -------------- --------------
Cash and cash equivalents at end of period........ $ 1,913,293 $ 170,091 $ 170,091
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

See Notes to Financial Statements.

F-18
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

1. PRINCIPLES OF INTERIM PERIOD REPORTING

Maxim Pharmaceuticals, Inc. (the "Company") has not earned significant
revenues from planned principal operations. Accordingly, the Company's
activities have been accounted for as those of a "Development Stage Enterprise"
as set forth in Financial Accounting Standards Board Statement No. 7 ("FAS 7").

In the opinion of the Company, the unaudited financial statements contain
all of the adjustments, consisting only of normal recurring adjustments and
accruals, necessary to present fairly the financial position of the Company as
of September 30, 1996 and June 30, 1997, and the results of operations for the
three months and nine months ended June 30, 1996 and 1997 and from inception
(October 23, 1989) to June 30, 1997. The results of operations for the three
months and nine months ended June 30, 1997 are not necessarily indicative of the
results to be expected in subsequent periods or for the year as a whole. For
further information, refer to the consolidated financial statements and
footnotes thereto for the year ended September 30, 1996.

2. LINE OF CREDIT AGREEMENT AND NOTE PAYABLE

LINE OF CREDIT AGREEMENT. In March 1997 the Company entered into a line of
credit agreement with a bank. Under the agreement the Company may borrow up to
$900,000 during 1997 to fund qualified equipment purchases. At January 1, 1998
any outstanding advances under the line of credit will convert to a term loan
payable in equal installments over 48 months, including interest at prime plus
0.5%. The loan is secured by all assets of the Company. The agreement restricts
the payment of dividends by the Company. At June 30, 1997, aggregate advances
under the line of credit totaled $626,533.

NOTE PAYABLE. In July 1993, the Company issued a note payable to a company
for $600,000 in partial consideration for certain worldwide exclusive rights
related to its Maxamine-TM- technology. In June 1997, the Company made the final
payment of principal of $247,000 due under the note.

3. CONTINGENCY

F-19
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

3. CONTINGENCY (CONTINUED)
contest any such claims vigorously. However, there can be no assurances as to
the eventual outcome of such claims or their effect on the Company's business,
financial condition and results of operations. In addition, an adverse
determination in any litigation arising from these claims or the settlement of
such claims could have a material adverse effect on the Company's business,
financial condition and results of operations.

F-20
<PAGE>
INSIDE BACK COVER

PHASE II CLINICAL TRIALS OF MAXAMINE

MAXAMINE THERAPY IN ADVANCED-STAGE MALIGNANT MELANOMA PATIENTS
INITIAL CLINICAL STUDY

<TABLE>
<CAPTION>
MEAN SURVIVAL TIME
------------------
<S> <C>
Control Group 6.8 Months
MAXAMINE and high-dose IL-2/IFN-a 14.7 Months
</TABLE>

MAXAMINE THERAPY IN ADVANCED-STAGE MALIGNANT MELANOMA PATIENTS
SECOND CLINICAL STUDY

<TABLE>
<CAPTION>
MEAN SURVIVAL TIME
------------------
<S> <C>
Normal course -- conventional treatment 7 Months
MAXAMINE and low-dose IL-2/IFN-a 16+ Months
</TABLE>

MAXAMINE THERAPY IN ACUTE MYELOGENOUS LEUKEMIA PATIENTS
ONGOING CLINICAL STUDY

<TABLE>
<CAPTION>
MEAN REMISSION TIME
--------------------
<S> <C>
Relapse ("CR2+") patients:
Normal course of disease 6 Months
Treatment with MAXAMINE & low-dose IL-2 20+ Months
First remission ("CR 1") patients:
Normal course of disease 12 Months
Treatment with MAXAMINE and low-dose IL-2/IFN-a 20+ Months
</TABLE>

See "Business--Maxamine Immunotherapy Platform--Advanced Malignant Melanoma" and
"--Acute Myelogenous Leukemia ("AML") for more complete description.
<PAGE>
See "Business--MAXAMINE Immunotherapy Platform--Advanced Malignant Melanoma"
and "-- Acute Myelogenous Leukemia ("AML") for more complete description.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF ANY OFFER TO BUY BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER TO SELL OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 6
Use of Proceeds................................ 13
Price Range of Common Stock.................... 14
Dividend Policy................................ 14
Capitalization................................. 15
Dilution....................................... 16
Selected Financial Data........................ 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 18
Business....................................... 22
Management..................................... 38
Principal Stockholders......................... 45
Certain Transactions........................... 47
Description of Securities...................... 50
Shares Eligible for Future Sale................ 52
Trading in the Swedish Securities Market....... 53
Underwriting................................... 56
Legal Matters.................................. 58
Experts........................................ 58
Available Information.......................... 59
Index to Financial Statements.................. F-1
</TABLE>

[LOGO]

2,500,000 SHARES

COMMON STOCK

--------------

PROSPECTUS
--------------

RODMAN & RENSHAW, INC.

ALFRED BERG

, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION AND AMENDMENT, DATED OCTOBER 20, 1997
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO AMENDMENT AND COMPLETION
<PAGE>
INTERNATIONAL PROSPECTUS

[LOGO]

2,500,000 SHARES OF COMMON STOCK

Of the 2,500,000 shares of Common Stock offered hereby, 2,000,000 shares are
being offered in Sweden and other countries outside the United States (the
"International Offering") and 500,000 shares are being offered in the United
States (the "U.S. Offering," and together with the International Offering, the
"Offering"). The number of shares offered in the International and the U.S.
Offerings shown above are indicative amounts only. The number of shares actually
sold in each Offering may be more or less than such amounts.

FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" COMMENCING
ON PAGE 6 HEREOF.

------------------------

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO PUBLIC DISCOUNT (1) COMPANY (2)
<S> <C> <C> <C>
Per Share................................. $ $ $
Total (3)................................. $ $ $
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the U.S. Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting offering expenses estimated to be $800,000 payable by the
Company.

------------------------

The shares of Common Stock are offered by the several Underwriters named
herein subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that delivery of such
shares will be made in book-entry form on or about , 1997.

------------------------

ALFRED BERG RODMAN & RENSHAW, INC.
<PAGE>
MAXAMINE CLINICAL TRIAL STATUS

*** Completed ** In-process * Planned for 1997 or 1998

* Note: Research and preclinical testing is completed or clinical trials are
being conducted in reliance upon work completed in other indications.

See "Business--MAXAMINE Immunotherapy Platform" for more complete description.

No action has been or will be taken in any jurisdiction by the Company or by
any underwriter that would permit a public offering of the shares or possession
or distribution of a prospectus in any jurisdiction where action for that
purpose is required, other than in the United States and Sweden. Persons into
whose possession this Prospectus comes are advised by the Company and the
Underwriters to inform themselves about, and to observe any restrictions as to,
the offering of the shares and the distribution of this Prospectus. See
"Underwriting."

This Prospectus does not constitute an offer to sell or the solicitation of
an offer to buy the shares in any jurisdiction in which such offer or
solicitation is unlawful.
--------------------------

MAXAMINE, MAXVAX AND THE MAXIM LOGO ARE TRADEMARKS OF THE COMPANY. ALL
TRADEMARKS AND TRADE NAMES REFERRED TO IN THIS PROSPECTUS ARE THE PROPERTY OF
THEIR RESPECTIVE OWNERS.

2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

------------------------

TABLE OF CONTENTS

[LOGO]

2,500,000 SHARES

COMMON STOCK

--------------

PROSPECTUS
--------------

ALFRED BERG

RODMAN & RENSHAW, INC.

, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBITS PAGE
- ----------- ---------
<C> <S> <C>
1.1 Form of Underwriting Agreement.(6)

3.1 Amended and Restated Certificate of Incorporation of Registrant.(1)

3.2 Bylaws of Registrant.(1)

4.1 Reference is made to Exhibits 3.1 and 3.2.

4.2 Form of Common Stock Certificate.(1)

5.1 Opinion of Cooley Godward LLP.(6)

10.1 Form of Indemnification Agreement for directors and officers of the Registrant.(1)

10.2 Form of Representative's Warrant Agreement between the Company and National Securities
Corporation, as representative of the several Underwriters (the "Representative"), including
form of Representative's Warrant Certificate.(1)

10.3 Form of Warrant Agreement between the Company, the Representative and American Stock Transfer &
Trust company, including form of Warrant Certificate.(1)

10.4 Option to Buy Technology and Rights Agreement, dated March 30, 1993, between the Registrant and
Estero Anstalt.(1)(2)

10.5 Security Agreement, dated July 27, 1993, between the Registrant and Estero Anstalt.(1)(2)

10.6 Exclusive License Agreement, dated June 14, 1995, among the Registrant, Jan Holmgren, M.D.,
Ph.D., Cecil Czerkinsky, Duotol AB and Triotol Ltd.(1)(2)

10.7 Option and License Agreement, dated May 19, 1993, among the Registrant, Vitec AB and SBL Vaccin
AB, as amended.(1)(2)

10.8 License Agreement dated January 14, 1994, among the Registrant, Vitec AB and SBL Vaccin AB, as
amended.(1)(2)

10.9 Agreement, dated December 2, 1995, among the Registrant, Syntello Vaccine Development AB and
Estero Anstalt.(1)(2)

10.10 Agreement, dated April 23, 1996, among the Registrant, Anders Vahlne, M.D., Ph.D. and Syntello
Vaccine Development AB.(1)(2)

10.11 Letter Agreement, dated February 15, 1996, between the Registrant and Burrill & Craves, Inc.(1)

10.12 $250,000 Promissory Note, dated March 31, 1995, executed by the Registrant in favor of Ventana
Growth Fund II L.P.(1)

10.13 Lease dated November 1, 1996 between DM Spectrum LLC, a California limited liability company, as
Landlord and the Registrant for 3099 Science Park Road, Suite 150, San Diego, California
92121.(3)

10.14 Stock Purchase Agreement, dated as of July 5, 1996, by and between Dr. Anders Vahlne and the
Registrant.(1)

10.15 Amended and Restated 1993 Long-Term Incentive Plan and forms of stock option agreements.(4)

10.16 Employment Agreement dated October 1, 1996 between the Registrant and Kurt R. Gehlsen(4)

10.17 Employment Agreement dated October 1, 1996 between the Registrant and Dale A. Sander.(4)

10.18 Employment Agreement dated October 1, 1996 between the Registrant and Larry G. Stambaugh.(4)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS PAGE
- ----------- ---------
<C> <S> <C>
10.19 Loan and Security Agreement between the Registrant and Silicon Valley Bank.(5)

10.20 Financial Advisory Services Agreement between the Registrant and Rodman & Renshaw, Inc. dated
September 17, 1997.(6)

11.1 Statement re: computation of pro forma loss per share.(6)

23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors.

23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.

23.3 Power of Attorney.(6)
</TABLE>

- ------------------------

(1) Previously filed together with the Registrant's Registration Statement on
Form SB-2 (File No. 333-4854-LA) as amended through the date hereof and
incorporated herein by reference.

(2) Certain confidential portions deleted pursuant to Order Granting Application
Under the Securities Act of 1933 and Rule 406 thereunder respecting
confidential treatment.

(3) Previously filed together with the Registrant's Annual Report on Form 10-K
(File No. 1-4430) dated September 30, 1996.

(4) Previously filed together with the Registrant's Quarterly Report on Form
10-Q (File No. 1-14430) dated December 31, 1996.

(5) Previously filed together with the Registrant's Quarterly Report on Form
10-Q (File No. 1-14430) dated March 31, 1997.

(6) Previously filed together with the Registrant's Registration Statement on
Form S-1 (File No. 333-35895) dated September 18, 1997.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts, payable by the Registrant in connection with the sale of
the Common Stock being registered. All amounts are estimates except the SEC
registration fee and the National Association of Securities Dealers, Inc. fee.

<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
----------
<S> <C>
SEC Registration Fee.............................................................. $ 11,000
National Association of Securities Dealers, Inc. Fee.............................. 4,130
Printing Fees and Expenses........................................................ 210,000
Underwriter Expense Reimbursement................................................. 75,000
Underwriters' Counsel Fees and Expenses........................................... 125,000
Issuer Counsel Fees and Expenses.................................................. 125,000
Accounting Fees and Expenses...................................................... 100,000
American Stock Exchange Listing Fee............................................... 17,500
Blue Sky Fees and Expenses........................................................ 5,000
Transfer Agent and Registrar Fees................................................. 2,500
Miscellaneous..................................................................... 124,870
----------
Total......................................................................... $ 800,000
----------
----------
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

In addition, the Company's Certificate of Incorporation provides that to the
fullest extent permitted by Delaware law, the Company's directors will not be
liable for monetary damages for breach of the directors' fiduciary duty of care
to the Company and its stockholders. This provision in the Certificate of
Incorporation does not eliminate the duty of care, and in appropriate
circumstances equitable remedies such as an injunction or other forms of
non-monetary relief would remain available under Delaware law. Each director
will continue to be subject to liability for breach of the director's duty of
loyalty to the Company or its stockholders, for acts or omissions not in good
faith or involving intentional misconduct or knowing violations of law, for any
transaction from which the director derived an improper personal benefit, and
for unlawful payments of dividends or unlawful stock purchase or redemption.
This provision also does not affect a director's responsibilities under any
other laws, such as the federal securities laws or state or federal
environmental laws.

Reference is also made to Section 7(b) of the Form of Underwriting Agreement
contained in Exhibit 1.1 hereto, indemnifying officers and directors of the
Company against certain liabilities.

II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since September 1994, the Registrant has issued and sold (without payment of
any selling commission to any person) the following unregistered securities:

1. Between September 1994 and July 1996, the Registrant granted
incentive and non-statutory stock options to employees, officers, directors
and consultants of the Company under its 1993 Long-Term Incentive Plan (the
"Incentive Plan") covering an aggregate of 530,396 shares of the Company's
Common Stock. Certain of these options vest over a period of time following
their respective dates of grant. On September 4, 1996 Registrant filed a
registration statement on Form S-8 covering the issuance of Common Stock
pursuant to the exercise of such options, as well as other shares of Common
Stock issuable in accordance with the Incentive Plan.

2. From August 1994 to May 1995, in connection with the pledge of
certificates of deposit by certain investors, the Registrant issued warrants
to purchase, at an exercise price of $3.00 per share, an aggregate of 39,999
shares of the Company's Common Stock to such investors.

3. In June 1995, the Registrant issued warrants to purchase, at an
exercise price of $3.00 per share, an aggregate of 13,332 shares of the
Company's Common Stock to certain consultants as partial consideration for
services rendered by such consultants.

4. In August 1995, the Registrant converted $463,205 of debt and
interest owed to Praktikertjanst AB into 154,400 shares of the Company's
Common Stock, issued 398,730 shares of the Company's Common Stock for
$1,189,000 in cash to certain investors pursuant to the terms of an equity
financing of the Company, and issued 1,137,332 shares of the Company's
Common Stock to certain investors pursuant to anti-dilution provisions in
the August 1994 bridge debt conversion agreements.

5. In October 1995, pursuant to the terms of an equity financing of the
Company, the Registrant issued 41,666 shares of the Company's Common Stock
for $125,000 in cash to certain investors.

6. In December 1995, the Registrant converted certificates of deposit
pledged by certain investors to pay off a bank line of credit in the amount
of $2,250,000 into 750,000 shares of the Company's Common Stock, and issued
62,000 shares of the Company's Common Stock for $186,000 in cash to certain
investors pursuant to an equity financing of the Company.

7. In January 1996, the Registrant effected a one-for-two thousand
reverse split of the outstanding shares of the Company's Common Stock. In
connection with the reverse stock split, the Registrant repurchased from
certain stockholders 5,332 shares of the Company's Common Stock.

8. In February 1996, pursuant to a business advisory agreement between
the Company and Burrill & Craves, Inc., the Registrant issued to Burrill &
Craves, Inc. warrants to purchase, at an exercise price of $3.00 per share,
an aggregate of 173,333 shares of the Company's Common Stock and, pursuant
to the terms of an equity financing of the Company, issued 473,333 shares of
the Company's Common Stock for $1,775,000 in cash, and issued warrants to
purchase, at an exercise price of $3.00 per share, an aggregate of 94,666
shares of the Company's Common Stock to certain investors.

9. On May 9, 1996, the Registrant effected a one hundred-for-one split
of its outstanding shares of Common Stock. On July 9, 1996, the Registrant
effected a two-for-three reverse split of the Company's outstanding shares
of Common Stock.

10. On May 17, 1996, pursuant to the terms of an equity financing of the
Company, the Registrant issued to SE Banken Lakemedelsfonder 40,000 shares
of the Company's Common Stock for $1,800,000 in cash.

II-2
<PAGE>
The sales and issuances of securities in the transactions described in
paragraphs 1 and 3 above were deemed to be exempt from registration under the
Securities Act by virtue of Rule 701 promulgated thereunder in that they were
offered and sold either pursuant to written compensatory benefit plans or
pursuant to a written contract relating to compensation, as provided by Rule
701.

The issuances of securities described in paragraphs 7 and 9 above, were
deemed to be exempt from registration under the Securities Act by virtue of
Section 2(3) thereof in that the securities were issued in transactions not
involving a "sale" of securities as such term is used in Section 2(3) of the
Securities Act.

The sales and issuances of securities in the transactions described in
paragraphs 2, 4, 5, 6, 8 and 10 above were deemed to be exempt from registration
under the Securities Act by virtue of Section 4(2), Regulation D and/or
Regulation S promulgated under the Securities Act. The purchasers in each case
represented their intention to acquire the securities for investment only and
not with a view to the distribution thereof. Appropriate legends are affixed to
the stock certificates issued in such transactions. Similar legends were imposed
in connection with any subsequent transfers of any such securities. All
recipients either received adequate information about the Registrant or had
access, through employment or other relationships, to such information.

There were no underwritten offerings employed in connection with any of the
transactions set forth in this Item 15.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

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1.1 Form of Underwriting Agreement.(6)

3.1 Amended and Restated Certificate of Incorporation of Registrant.(1)

3.2 Bylaws of Registrant.(1)

4.1 Reference is made to Exhibits 3.1 and 3.2.

4.2 Form of Common Stock Certificate.(1)

5.1 Opinion of Cooley Godward LLP.(6)

10.1 Form of Indemnification Agreement for directors and officers of the
Registrant.(1)

10.2 Form of Representative's Warrant Agreement between the Company and
National Securities Corporation, as representative of the several
Underwriters (the "Representative"), including form of Representative's
Warrant Certificate.(1)

10.3 Form of Warrant Agreement between the Company, the Representative and
American Stock Transfer & Trust Company, including form of Warrant
Certificate.(1)

10.4 Option to Buy Technology and Rights Agreement, dated March 30, 1993,
between the Registrant and Estero Anstalt.(1)(2)

10.5 Security Agreement, dated July 27, 1993, between the Registrant and Estero
Anstalt.(1)(2)

10.6 Exclusive License Agreement, dated June 14, 1995, among the Registrant,
Jan Holmgren, M.D., Ph.D., Cecil Czerkinsky, Duotol AB and Triotol
Ltd.(1)(2)

10.7 Option and License Agreement, dated May 19, 1993, among the Registrant,
Vitec AB and SBL Vaccin AB, as amended.(1)(2)

10.8 License Agreement dated January 14, 1994, among the Registrant, Vitec AB
and SBL Vaccin AB, as amended.(1)(2)

10.9 Agreement, dated December 2, 1995, among the Registrant, Syntello Vaccine
Development AB and Estero Anstalt.(1)(2)
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II-3
<PAGE>
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10.10 Agreement, dated April 23, 1996, among the Registrant, Anders Vahlne,
M.D., Ph.D. and Syntello Vaccine Development AB.(1)(2)

10.11 Letter Agreement, dated February 15, 1996, between the Registrant and
Burrill & Craves, Inc.(1)

10.12 $250,000 Promissory Note, dated March 31, 1995, executed by the Registrant
in favor of Ventana Growth Fund II L.P.(1)

10.13 Lease dated November 1, 1996 between DM Spectrum LLC, a California limited
liability company, as Landlord and the Registrant for 3099 Science Park
Road, Suite 150, San Diego, California 92121.(3)

10.14 Stock Purchase Agreement, dated as of July 5, 1996, by and between Dr.
Anders Vahlne and the Registrant.(1)

10.15 Amended and Restated 1993 Long-Term Incentive Plan and forms of stock
option agreements.(4)

10.16 Employment Agreement dated October 1, 1996 between the Registrant and Kurt
R. Gehlsen(4)

10.17 Employment Agreement dated October 1, 1996 between the Registrant and Dale
A. Sander.(4)

10.18 Employment Agreement dated October 1, 1996 between the Registrant and
Larry G. Stambaugh.(4)

10.19 Loan and Security Agreement between the Registrant and Silicon Valley
Bank.(5)

10.20 Financial Advisory Services Agreement between the Registrant and Rodman &
Renshaw, Inc. dated September 17, 1997.(6)

11.1 Statement re: computation of pro forma loss per share.(6)

23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors.

23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.

23.3 Power of Attorney.(6)
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- ------------------------

(1) Previously filed together with the Registrant's Registration Statement on
Form SB-2 (File No. 333-4854-LA) as amended through the date hereof and
incorporated herein by reference.

(2) Certain confidential portions deleted pursuant to Order Granting Application
Under the Securities Act of 1933 and Rule 406 thereunder respecting
confidential treatment.

(3) Previously filed together with the Registrant's Annual Report on Form 10-K
(File No. 1-4430) dated September 30, 1996.

(4) Previously filed together with the Registrant's Quarterly Report on Form
10-Q (File No. 1-14430) dated December 31, 1996.

(5) Previously filed together with the Registrant's Quarterly Report on Form
10-Q (File No. 1-14430) dated March 31, 1997.

(6) Previously filed together with the Registrant's Registration Statement on
Form S-1 (File No. 333-35895) dated September 18, 1997.

(B) FINANCIAL STATEMENT SCHEDULES

None

II-4
<PAGE>
ITEM 17. UNDERTAKINGS

Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act of 1933, as amended (the "Securities Act"), may be permitted
to directors, officers and controlling persons of the Registrant pursuant to the
provisions referenced in Item 14 of this Registration Statement, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act, and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

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<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the city of San Diego, state of
California, on October 20, 1997.

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MAXIM PHARMACEUTICALS, INC.

By: /s/ DALE A. SANDER
-----------------------------------------
Dale A. Sander
Chief Financial Officer,
Vice President, Finance and Secretary
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Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------

Chairman of the Board,
/s/ LARRY G. STAMBAUGH* President and Chief
- ------------------------------ Executive Officer October 20, 1997
Larry G. Stambaugh (PRINCIPAL EXECUTIVE
OFFICER)

Chief Financial Officer,
Vice President, Finance
/s/ DALE A. SANDER and Secretary
- ------------------------------ (PRINCIPAL ACCOUNTING October 20, 1997
Dale A. Sander OFFICER
AND FINANCIAL OFFICER)

/s/ COLIN B. BIER, PH.D.*
- ------------------------------ Director October 20, 1997
Colin B. Bier, Ph.D.

/s/ G. STEVEN BURRILL*
- ------------------------------ Director October 20, 1997
G. Steven Burrill

/s/ PER-OLOF MARTENSSON*
- ------------------------------ Director October 20, 1997
Per-Olof Martensson

/s/ F. DUWAINE TOWNSEN*
- ------------------------------ Director October 20, 1997
F. Duwaine Townsen

* By: /s/ DALE A.
SANDER
- ------------------------------
Dale A. Sander
ATTORNEY-IN-FACT

II-6

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EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Maxim Pharmaceuticals, Inc.:

We consent to the use of our reports included herein and to the reference to
our firm under the headings "Experts" and "Selected Financial Data" in the
prospectus.

/s/ KPMG Peat Marwick LLP

San Diego, California
October 17, 1997