<PAGE>
Filed Pursuant to Rule 424(b)(4)
Registration No. 333-95293
Registration No. 333-30906
Prospectus
3,205,000 SHARES
[MAXIM LOGO]
COMMON STOCK
Maxim Pharmaceuticals, Inc. is offering all of the shares of common stock. Our
common stock is listed on the American Stock Exchange under the symbol "MMP" and
on the Stockholm Stock Exchange under the symbol "MAXM." On February 22, 2000,
the closing price of our common stock on the American Stock Exchange was
$55.00 per share.
Investing in our common stock involves risks. See "Risk Factors" beginning on
page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public Discount Maxim
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Per Share $55.00 $3.30 $51.70
- -------------------------------------------------------------------------------------------
Total $176,275,000 $10,576,500 $165,698,500
- -------------------------------------------------------------------------------------------
</TABLE>
J.P. Morgan & Co.
Prudential Vector Healthcare
a unit of Prudential Securities
Aragon Securities AB
February 22, 2000
<PAGE>
Maxamine-Registered Trademark- Clinical Trial Status
<TABLE>
<CAPTION>
Phase I/II Phase III
Indication Research Preclinical Clinical Clinical Market
- --------------------------------------------- -------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Malignant Melanoma X X X * NDA filing
planned for
mid 2000
Acute Myelogenous Leukemia X X X *
Renal Cell Carcinoma X X *
Hepatitis C X X *
Colorectal Adenocarcinoma X X
Prostate Adenocarcinoma X X
</TABLE>
X Completed
* In Process
How Maxamine Therapy Works
WITHOUT MAXAMINE -- SUPRESSION OF NK AND T CELLS
[GRAPHIC ILLUSTRATING THE INFORMATION INCLUDED IN THE FOLLOWING PARAGRAPH]
Our drug MAXAMINE protects critical immune cells and is administered in
combination with immunotherapeutic agents such as cytokines that stimulate these
same immune cells. Two kinds of immune cells, Natural Killer (NK) cells and
cytotoxic T cells, possess an ability to kill and support the killing of cancer
cells and virally infected cells. Without MAXAMINE however, NK cells and T cells
are suppressed by phagocytic cells, another class of white blood cells found in
abundant quantities in and around tumors and areas of infection.
MAXAMINE IMMUNE-ENHANCEMENT TECHNOLOGY
[GRAPHIC ILLUSTRATING THE INFORMATION INCLUDED IN THE FOLLOWING PARAGRAPH]
MAXAMINE attaches to phagocytes and prevents the production and release of free
radicals, thereby protecting NK and T cells. MAXAMINE'S protective effect allows
immune-stimulating agents, such as the cytokines IL-2 and IFN-(alpha), to more
effectively activate NK cells and T cells to enhance the killing of tumor cells
or virally infected cells. Because MAXAMINE improves basic immune functions, it
may be used in combination with many cytokines and other immunotherapeutic
agents, and it has the potential to be used in a broad range of cancers and
infectious diseases that can be recognized by the immune system.
<PAGE>
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock.
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Prospectus Summary................... 1
Risk Factors......................... 5
Forward-Looking Statements........... 12
Price Range of Common Stock.......... 13
Dividend Policy...................... 13
Use of Proceeds...................... 14
Capitalization....................... 15
Selected Financial Data.............. 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 17
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
Business............................. 21
Management........................... 37
Material U.S. Federal Tax
Considerations for Non-U.S. Holders
of Common Stock.................... 39
Underwriting......................... 41
Legal Matters........................ 42
Experts.............................. 42
Where You Can Find More
Information........................ 43
</TABLE>
------------------------
In this prospectus, "Maxim," "we," us" and "our" refer to Maxim
Pharmaceuticals, Inc.
We own or have the right to various trademarks, service marks and trade names
used in our business. These include MAXAMINE-REGISTERED TRADEMARK-, MAXAMINE
THERAPY-TM-, MAXDERM-TM-, MAXVAX-TM- and the Maxim logo. This prospectus also
includes trademarks, service marks and trade names owned by other companies.
<PAGE>
Prospectus Summary
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS. IT
IS NOT COMPLETE, AND DOES NOT CONTAIN ALL THE INFORMATION YOU SHOULD CONSIDER
BEFORE INVESTING IN OUR COMMON STOCK. TO FULLY UNDERSTAND THIS OFFERING AND ITS
CONSEQUENCES TO YOU, YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING
THE "RISK FACTORS" SECTION, THE FINANCIAL DATA AND THE DOCUMENTS THAT WE
INCORPORATE BY REFERENCE INTO THIS PROSPECTUS.
Maxim Pharmaceuticals, Inc.
Maxim is developing a new generation of drugs, therapies and vaccines for
cancer, infectious diseases and topical disorders.
Our lead drug candidate, MAXAMINE, has the potential to greatly improve the
ability of the immune system to fight cancer and viral infections. MAXAMINE,
which is based on the naturally occuring molecule histamine, is designed to
improve immunotherapy by protecting critical immune cells. MAXAMINE is
administered in combination with cytokines, a class of proteins that stimulate
these same immune cells. More than 1,000 patients have participated in our
completed and ongoing clinical trials in advanced malignant melanoma, acute
myelogenous leukemia, hepatitis C and renal cell carcinoma. Our clinical results
to date suggest that MAXAMINE THERAPY, the administration of MAXAMINE in
combination with cytokines, is a safe, at-home treatment that can improve
patient survival.
MAXAMINE is currently being tested in three Phase III cancer clinical trials:
- - Our most advanced Phase III trial of MAXAMINE is a 305-patient study based in
the United States for the treatment of advanced malignant melanoma, the most
deadly form of skin cancer. We expect to complete this trial in the first
half of 2000 and plan to file a New Drug Application for advanced malignant
melanoma with the Food and Drug Administration, or FDA, in mid 2000.
- - We are conducting a second Phase III trial of MAXAMINE in advanced malignant
melanoma. This trial is based in Europe, Australia, Canada and Israel and is
designed to broaden the exposure of clinicians outside the United States to
our drug and to prepare the international markets for our expected product
launch.
- - Our third Phase III trial is a study of MAXAMINE as a remission therapy for
acute myelogenous leukemia, the most common acute adult leukemia. This trial
is being conducted in 12 countries including the United States.
In November 1999, clinicians from the largest enrolling site in our U.S. Phase
III melanoma trial submitted an abstract to an upcoming cancer conference
describing preliminary survival data from the 40 patients enrolled at their
center. The preliminary single-center results demonstrated a statistically
significant increase in overall survival for patients treated with MAXAMINE as
compared to the control group.
We conducted a series of Phase II clinical trials in which patients with
malignant melanoma and acute myelogenous leukemia were treated with MAXAMINE.
These studies showed a more than doubling of survival and remission times for
patients treated with MAXAMINE as well as the ability to maintain patient
quality of life during treatment. Earlier-stage clinical studies also suggested
promise in renal cell carcinoma, a cancer of the kidneys, and multiple myeloma,
a cancer of the bone marrow.
MAXAMINE is also under clinical development for the treatment of hepatitis C, a
viral infection targeting the liver. Hepatitis C is more easily transmitted than
HIV and is now the leading blood-borne infection in the United States. More than
4.5 million people are estimated to be infected with hepatitis C in the United
States, and more than 200 million people are estimated to be infected worldwide.
1
<PAGE>
In November 1999, we announced preliminary 12-week results from a 129-patient
Phase II study of MAXAMINE in combination with the cytokine interferon for the
treatment of hepatitis C. After 12 weeks of therapy, the combination of MAXAMINE
and interferon achieved a complete biochemical and viral response in 70% of all
patients, compared to the 20-30% response that is commonly observed in patients
with similar profiles treated with interferon alone.
Assuming FDA approval of MAXAMINE, we plan to directly market the drug in the
United States, potentially under an alliance with a pharmaceutical company or
other collaborator. In addition, we expect to establish alliances with
pharmaceutical companies for the marketing of MAXAMINE in key international
markets. In 1999, we entered into agreements with two pharmaceutical companies
to market MAXAMINE in Australia and New Zealand, and Israel, respectively. We
are currently in the process of evaluating, and are in discussions with,
pharmaceutical companies to serve as marketing collaborators.
We are also developing MAXDERM, a MAXAMINE-related series of drug candidates for
the treatment of certain topical disorders. Randomized, blinded,
placebo-controlled pilot studies have been conducted in more than 75 patients.
Studies in patients with oral mucositis and in patients with herpes labialis, or
cold sores, suggested that topical gels based upon the MAXDERM technology
resolved lesions more effectively than placebo controls. In January 2000, we
reported the results of two preclinical trials of a gel based on our MAXDERM
technology in the treatment of oral mucositis. Our preclinical trials showed
significantly reduced healing time for this serious side effect of chemotherapy
and radiation therapy. Other clinical data suggest that gels based on the
MAXDERM technology may be beneficial in the treatment of bed sores, shingles,
burns, eye infections and other related conditions.
Our third technology platform, MAXVAX, is currently in preclinical development
and is designed to facilitate a new class of needle-free mucosal vaccines for
several infectious diseases including respiratory infections, sexually
transmitted diseases and gastrointestinal tract diseases.
Among the proprietary protection surrounding our MAXAMINE technology are U.S.
and international patents and patent applications covering the use of MAXAMINE
or other molecules with similar immunotherapeutic characteristics in the
treatment of cancer and infectious diseases in combination therapies. We also
own or have rights to patent applications covering the method of producing
MAXAMINE, its mechanism of action and the use of these molecules in other
medical applications. We own or have rights to 19 U.S. patents, including seven
U.S. patents relating to MAXAMINE. We own or have rights to 16 U.S. patent
applications, including nine U.S. patent applications relating to MAXAMINE.
Corresponding international patents or patent applications have been issued or
are pending.
Our principal executive offices are located at 8899 University Center Lane,
Suite 400, San Diego, California 92122 and our telephone number is (858)
453-4040.
2
<PAGE>
The Offering
The following information is based on 16,543,797 shares of common stock
outstanding on February 16, 2000 and includes the conversion of our series B
preferred stock into 2,676,640 shares of common stock and the issuance of
335,540 shares of common stock as dividends in connection with that conversion.
It excludes 1,236,258 shares of common stock issuable upon the exercise of
outstanding stock options, 2,071,900 shares of common stock issuable upon the
exercise of redeemable common stock purchase warrants and 647,024 shares of
common stock issuable upon the exercise of other common stock purchase warrants.
It also excludes an additional 140,516 shares of common stock available for
future issuance under our stock option and other employee benefit plans.
<TABLE>
<S> <C>
Common Stock Offered............................ 3,205,000 shares
Common Stock Outstanding After the Offering..... 19,748,797 shares
Use of Proceeds................................. We intend to use the net proceeds of this
offering for:
- clinical trials and other development
activities for MAXAMINE;
- the planned market launch of MAXAMINE;
- product research and development activities
for MAXDERM and MAXVAX; and
- working capital and general corporate
purposes.
Dividend Policy................................. We have not paid cash dividends on our common
stock and have no intention to do so in the
foreseeable future.
American Stock Exchange Symbol.................. "MMP"
Stockholm Stock Exchange Symbol................. "MAXM"
</TABLE>
3
<PAGE>
Summary Financial Data
The as adjusted condensed balance sheet data below is adjusted to reflect the
sale of 3,205,000 shares of common stock in this offering at the public offering
price of $55.00 per share and our receipt of the net proceeds therefrom after
deducting underwriting discounts and offering expenses.
<TABLE>
<CAPTION>
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Three Months Ended
Year Ended September 30, December 31,
------------------------------ -------------------
<CAPTION>
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
IN THOUSANDS, EXCEPT PER SHARE DATA
Condensed Statements of Operations Data:
Research and collaboration revenue.................... $ -- $ 181 $ 1,078 $ 88 $ 140
Operating expenses:
Research and development............................ 5,353 20,147 36,638 8,779 9,051
Business development and marketing.................. 384 1,313 1,683 453 558
General and administrative.......................... 1,992 2,660 2,880 694 844
------- -------- -------- ------- --------
Total operating expenses.......................... 7,729 24,120 41,201 9,926 10,453
Other income, net..................................... 834 2,084 897 390 284
------- -------- -------- ------- --------
Net loss before preferred stock dividends............. (6,895) (21,855) (39,226) (9,448) (10,029)
Dividends on preferred stock........................ -- -- 483 -- 2,413
------- -------- -------- ------- --------
Net loss applicable to common stock................... $(6,895) $(21,855) $(39,709) $(9,448) $(12,442)
======= ======== ======== ======= ========
Basic and diluted net loss per share applicable to
common stock........................................ $ (1.03) $ (2.37) $ (3.94) $ (0.95) $ (1.09)
Weighted average shares outstanding................... 6,671 9,215 10,079 9,903 11,401
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
As of December 31,
As of September 30, 1999
------------------------------ ----------------------
1997 1998 1999 Actual As Adjusted
-------- -------- -------- -------- -----------
(unaudited)
IN THOUSANDS
Condensed Balance Sheet Data:
Cash, cash equivalents and investments........... $ 12,160 $ 35,769 $ 17,942 $ 32,850 $197,799
Working capital.................................. 8,505 24,812 7,979 20,640 185,589
Total assets..................................... 15,858 42,022 24,515 39,893 204,842
Long-term debt, less current portion............. 555 977 908 788 788
Deficit accumulated during the development
stage.......................................... (20,832) (42,687) (81,913) (91,942) (91,942)
Total stockholders' equity....................... 13,393 31,116 10,843 23,479 188,428
</TABLE>
4
<PAGE>
Risk Factors
YOU SHOULD CAREFULLY CONSIDER EACH OF THE RISKS AND UNCERTAINTIES DESCRIBED
BELOW AND ALL OF THE OTHER INFORMATION IN THIS PROSPECTUS OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS BEFORE DECIDING TO INVEST IN SHARES OF OUR COMMON
STOCK. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES WE
FACE. ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US, OR THAT WE
CURRENTLY BELIEVE TO BE IMMATERIAL, MAY ALSO ADVERSELY AFFECT OUR BUSINESS OR
THE TRADING PRICE OF OUR STOCK. IF ANY OF THE FOLLOWING RISKS AND UNCERTAINTIES
DEVELOP INTO ACTUAL EVENTS, OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF
OPERATIONS COULD BE MATERIALLY AND ADVERSELY AFFECTED. IN SUCH CASE, THE TRADING
PRICE OF OUR COMMON STOCK COULD DECLINE.
Risks Related to Maxim
THE DEVELOPMENT OF OUR PRODUCTS IS SUBJECT TO UNCERTAINTIES, MANY OF WHICH ARE
BEYOND OUR CONTROL. IF WE FAIL TO SUCCESSFULLY DEVELOP OUR PRODUCTS, OUR ABILITY
TO GENERATE REVENUES WILL BE SUBSTANTIALLY IMPAIRED.
Potential products based on our MAXAMINE, MAXDERM and MAXVAX technologies will
require extensive clinical testing, regulatory approval and substantial
additional investment before we can sell them. We cannot assure you that any of
our 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 commercially viable;
- - be eligible for third party reimbursement from governmental or private
insurers; or
- - be successfully marketed or achieve market acceptance.
We have not completed final testing for efficacy or safety in humans for any of
our products, and any delay in our expected testing and development schedules,
or any elimination of a product development program in its entirety, will
negatively impact our ability to generate revenues in the future from the sale
of our products.
BECAUSE WE ARE DEPENDENT ON OUR COLLABORATIVE PARTNERS AND CONTRACTORS FOR
CLINICAL TESTING AND FOR CERTAIN RESEARCH AND DEVELOPMENT ACTIVITIES, THE
RESULTS OF OUR CLINICAL TRIALS AND SUCH RESEARCH ACTIVITIES ARE, TO A CERTAIN
EXTENT, BEYOND OUR CONTROL.
Our business strategy requires us to rely on our collaborative partners and
contractors to assist us with clinical testing and certain research and
development activities. As a result, our success is dependent upon the success
of these outside parties in performing their responsibilities. Although we
believe our collaborative partners are economically motivated to perform on
their contractual obligations, we cannot control the adequacy and timeliness of
the resources and expertise applied to these activities by our collaborators. In
addition, we may not be able to negotiate acceptable collaborative arrangements
required to implement our business strategy, and even if we are able to enter
into further collaborative arrangements in the future, we cannot be sure that
these arrangements will be successful.
5
<PAGE>
OUR PRODUCTS MAY NOT BE ACCEPTED, PURCHASED OR USED BY DOCTORS, PATIENTS OR
PAYORS.
MAXAMINE, and any of our other products in development, may not achieve market
acceptance even if they are approved by the FDA and similar foreign regulatory
agencies. The degree of market acceptance of our products will depend on a
number of factors, including:
- - the scope of regulatory approvals;
- - the establishment and demonstration of the clinical efficacy, safety and
advantages of our products by the medical community;
- - the potential advantages of our products over existing treatment methods; and
- - reimbursement policies of government and other third-party payors.
We cannot guarantee that physicians, patients, payors or the medical community
in general will accept and utilize any products that we develop.
WE HAVE YET TO MARKET OR SELL ANY OF OUR PRODUCTS.
Although we currently intend to market or co-market MAXAMINE in the United
States, we have never before marketed or sold any pharmaceutical product. In
order to market or co-market MAXAMINE or our other products, we will need to
hire a significant number of people with relevant pharmaceutical experience to
staff our sales force and marketing group, and possibly also to make appropriate
arrangements with strategic partners. If we cannot develop the required
marketing and sales expertise both internally and through our partnering
arrangements, our ability to generate revenue from product sales will likely
suffer.
We intend to rely on our collaborative partners to market and sell MAXAMINE in
international markets, and such arrangements may be sought to market MAXDERM and
MAXVAX in all markets. We have not yet entered into any collaborative
arrangement with respect to marketing or selling MAXAMINE with the exception of
agreements relating to Australia, New Zealand and Israel, and have not entered
into any agreements regarding the marketing or selling of MAXDERM or MAXVAX. We
cannot guarantee that we will be able to enter into any such arrangements on
terms favorable to us, or at all. If we are able to enter into marketing and
selling arrangements with collaborative partners, we cannot assure you that such
marketing collaborators will apply adequate resources and skills to their
responsibilities, or that their marketing efforts will be successful.
WE WILL BE DEPENDENT ON THIRD PARTY MANUFACTURERS OF OUR PRODUCTS. OUR ABILITY
TO SELL OUR PRODUCTS MAY BE HARMED TO THE EXTENT ADEQUATE QUANTITIES OF OUR
PRODUCTS ARE NOT MANUFACTURED ON A TIMELY BASIS.
We do not intend to acquire or establish our own dedicated manufacturing
facilities for MAXAMINE in the foreseeable future. We have contracted and expect
to continue to contract with established pharmaceutical manufacturers for the
production of MAXAMINE. If we are unable to continue to contract with
third-party manufacturers on acceptable terms or our manufacturers do not comply
with applicable regulatory requirements, our ability to conduct clinical testing
and to produce commercial quantities of MAXAMINE and other products will be
adversely affected. If we cannot adequately manufacture our products, it could
result in delays in submissions for regulatory approval and in commercial
product launches, which in turn could materially impair our competitive position
and the possibility of achieving profitability. We cannot guarantee that we will
be able to maintain our existing contract manufacturing relationships, or
acquire or establish new, satisfactory third-party relationships to provide
adequate manufacturing capabilities in the future.
6
<PAGE>
WE ARE NOT PROFITABLE AND EXPECT TO CONTINUE TO INCUR LOSSES. IF WE DO NOT
BECOME PROFITABLE, WE MAY ULTIMATELY BE FORCED TO DISCONTINUE OUR OPERATIONS.
We are a development-stage enterprise. We have experienced net losses every year
since our inception and, as of December 31, 1999, had an accumulated deficit of
approximately $91.9 million. We anticipate incurring substantial additional
losses over at least the next several years related to developing and testing
our product candidates and preparing for commercialization and planned market
launches of our products. If we do not become profitable, our stock price will
be negatively affected, and we may ultimately be forced to discontinue our
operations.
WE WILL LIKELY NEED TO RAISE ADDITIONAL FUNDS IN THE FUTURE. IF WE ARE UNABLE TO
OBTAIN THE FUNDS NECESSARY TO CONTINUE OUR OPERATIONS, WE MAY BE REQUIRED TO
DELAY, SCALE BACK OR ELIMINATE ONE OR MORE OF OUR PRODUCT DEVELOPMENT PROGRAMS.
We have already spent substantial funds developing our products and business. We
expect to continue to have negative cash flow from our operations for at least
the next several years. We will likely have to raise additional funds to
complete the development of our products and to bring them to market. Our future
capital requirements will depend on numerous factors, including:
- - the results of our clinical trials;
- - the timing and scope of any additional clinical trials undertaken;
- - the scope and results of our research and development programs;
- - the time required to obtain regulatory approvals;
- - our ability to establish marketing alliances and collaborative agreements;
- - the cost of our internal marketing activities; and
- - the cost of filing, prosecuting and, if necessary, enforcing patent claims.
Additional financing may not be available on acceptable terms, if at all. If
adequate funds are not available, we may be required to delay, scale back or
eliminate one or more of our product development programs or obtain funds
through arrangements with collaborative partners or others that may require us
to relinquish rights to certain of our technologies or products that we would
not otherwise relinquish.
WE COMPETE AGAINST MANY COMPANIES AND RESEARCH INSTITUTIONS THAT ARE DEVELOPING
PRODUCTS TO TREAT THE SAME DISEASES AS OUR PRODUCTS. TO THE EXTENT THESE
COMPETITORS ARE SUCCESSFUL IN DEVELOPING AND MARKETING SUCH PRODUCTS, OUR FUTURE
POTENTIAL MARKET SHARE AND REVENUES COULD BE REDUCED.
There are many companies, both publicly and privately held, including well-known
pharmaceutical companies and academic and other research institutions, engaged
in developing pharmaceutical products for the treatment of cancer and infectious
diseases. Products developed by any of these companies or institutions may
demonstrate greater safety or efficacy than our products or be more widely
accepted by doctors, patients or payors. Many of our competitors and potential
competitors have substantially greater capital, research and development
capabilities and human resources than we do. Many of these competitors also have
significantly greater experience than we do in undertaking preclinical testing
and clinical trials of new pharmaceutical products and obtaining FDA and other
regulatory approvals. If any of our products are approved for commercial sale,
we will also be competing with companies that have greater resources and
experience in manufacturing, marketing and selling pharmaceutical products. To
the extent that any of our competitors succeed in developing products that are
more effective, less costly or have better side effect profiles than our
7
<PAGE>
products, then our future potential market share could decrease which may have a
negative impact on our business.
Industry Risks
OUR PRODUCT CANDIDATES ARE SUBJECT TO SIGNIFICANT GOVERNMENT REGULATION WHICH
COULD INCREASE THE COST OF DEVELOPING OUR PRODUCTS AND DELAY OR PREVENT THE
SALES OF OUR PRODUCTS.
Our product candidates are subject to significant regulation by the FDA as well
as similar agencies in countries outside the United States. Satisfaction of the
lengthy and detailed laboratory and clinical testing procedures required to
submit an application for regulatory approval is costly and may take a number of
years. If we do not receive FDA approval for our products under development, we
will not be able to market or sell our products in the United States. This would
prevent us from generating product revenue in the United States and would be
extremely detrimental to our business and financial condition. European and
other international regulatory approvals are subject to similar risks and
uncertainties as regulatory approvals in the United States.
We are devoting substantial time and financial resources to our clinical trials,
but we cannot be sure that the results of our clinical trials will support the
submission of a New Drug Application, or NDA, or a Product License Application,
or that any applications we do file will be approved by the FDA or any similar
foreign agency on a timely basis, or at all.
Once we do receive regulatory approval, we will still be subject to ongoing
regulatory requirements. Moreover, government regulation may increase at any
time, creating additional costs and delays for us.
IF WE FAIL TO SECURE ADEQUATE PROTECTION OF OUR INTELLECTUAL PROPERTY OR THE
RIGHT TO USE CERTAIN INTELLECTUAL PROPERTY OF OTHERS, WE MAY NOT BE ABLE TO
PROTECT OUR PRODUCTS AND TECHNOLOGIES FROM COMPETITORS.
Our success depends in large part on our ability to obtain, maintain and protect
patents and trade secrets and to operate without infringing upon the proprietary
rights of others. If we are unable to do so, our products and technologies may
not provide us with any competitive advantage.
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.
As a result, patents may not issue from any of our patent applications. Further,
patent applications in the United States are secret until a patent issues, and
we cannot be certain that others have not filed patent applications for
technology covered by our pending applications or that we were the first to file
patent applications for this technology. In addition, patents currently held by
us or issued to us in the future, or to licensors from whom we have licensed
technology rights, may be challenged, invalidated or circumvented so that our
intellectual property rights may not protect our technologies or provide
commercial advantage to us. In addition, we also rely on unpatented trade
secrets and proprietary know-how, and we cannot be sure that others will not
obtain access to or independently develop such trade secrets and know-how.
Enforcement of our intellectual property rights against any infringers of our
patents relating to MAXAMINE will be costly and time-consuming. Because of the
nature of those patents, we could be required to bring lawsuits against many
different entities such as hospitals or clinics. This would have the effect of
increasing the costs of enforcing our rights.
The pharmaceutical industry has experienced extensive litigation regarding
patent and other intellectual property rights. Although, to date, we are not
aware of any intellectual property claims against us, in the future we could be
forced to incur substantial costs in defending ourselves in lawsuits that are
brought against us claiming that we have infringed the patent rights of others
or in asserting our patent rights in lawsuits against other parties. We may also
be required to participate in interference proceedings declared by the U.S.
Patent and Trademark Office for the purpose of determining the priority of
inventions in connection with our patent applications or
8
<PAGE>
other parties' patent applications. Adverse determinations in litigation or
interference proceedings could require us to seek licenses that may not be
available on commercially reasonable terms or subject us to significant
liabilities to third parties.
THE TECHNOLOGY IN OUR SECTOR IS DEVELOPING RAPIDLY, AND OUR FUTURE SUCCESS
DEPENDS ON OUR ABILITY TO KEEP ABREAST OF TECHNOLOGICAL CHANGE.
We are 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. Research and discoveries by others may
render some or all of our proposed programs or products noncompetitive or
obsolete. Our business strategy is subject to the risks inherent in the
development of new products using new technologies and approaches. Unforeseen
problems may develop with these technologies or applications, and we may not be
able to successfully address technological challenges we encounter in our
research and development programs. This may result in our inability to develop
commercially feasible products.
THE MARKETABILITY OF OUR PRODUCTS MAY DEPEND ON REIMBURSEMENT AND REFORM
MEASURES IN THE HEALTH CARE INDUSTRY.
Our success may depend, in part, on the extent to which reimbursement for the
costs of therapeutic products and related treatments will be available from
third-party payors such as government health administration authorities, private
health insurers, managed care programs and other organizations. Over the past
decade, the cost of health care has risen significantly, and there have been
numerous proposals by legislators, regulators and third-party health care payors
to curb these costs. Some of these proposals have involved limitations on the
amount of reimbursement for certain products. We cannot guarantee that similar
federal or state health care legislation will not be adopted in the future or
that any products sought to be commercialized by us will be considered
cost-effective or that adequate third-party insurance coverage will be available
for us to establish and maintain price levels sufficient for realization of an
appropriate return on our investment in product development. Moreover, the
existence or threat of cost control measures could have an adverse effect on the
willingness of potential collaborators to pursue research and development
programs related to our products.
Offering Risks
THERE ARE SUBSTANTIAL SHARES ELIGIBLE FOR FUTURE SALE. THE SALE OF THESE SHARES
MAY DEPRESS OUR STOCK PRICE.
Sales of substantial amounts of our common stock in the public market could
adversely affect prevailing market prices for our common stock and our ability
to raise equity capital in the future. As of February 16, 2000, we had
outstanding 16,543,797 shares of common stock. Of these shares, an aggregate of
15,644,292 shares are freely tradable in the public market, unless acquired by
our affiliates. The remaining 899,505 shares are "restricted securities" as that
term is defined in Rule 144 under the Securities Act of 1933, of which 897,422
shares are eligible for immediate sale in the public market pursuant to
Rule 144, subject to certain volume and manner of sale limitations. As of
February 16, 2000, we also had outstanding redeemable common stock purchase
warrants exercisable for 2,071,900 shares of common stock, all of which have
been registered and will be eligible for immediate sale in the public market
upon issuance.
As of February 16, 2000, approximately 562,412 shares of common stock underlying
warrants, 796,258 shares underlying stock options outstanding under our
long-term incentive plan and 40,522 shares reserved for issuance under our
401(k) plan will be available for immediate sale in the public market. There
were 84,612 shares of common stock underlying certain warrants and 440,000
shares of common stock reserved for issuance under other option grants
outstanding as of February 16, 2000, none of which have been registered for
public
9
<PAGE>
sale and all of which will be subject to the public sale restrictions of
Rule 144 or Rule 701 under the Securities Act, where applicable.
OUR STOCK PRICE MAY BE HIGHLY VOLATILE DUE TO EXTERNAL FACTORS.
Our common stock currently trades on the American Stock Exchange and on the
Stockholm Stock Exchange. Historically, our common stock has generally
experienced relatively low daily trading volumes in relation to the aggregate
number of shares outstanding. Sales of substantial amounts of our common stock
in the public market could adversely affect the prevailing market prices of our
common stock and our ability to raise equity capital in the future.
Factors that may have a significant impact on the market price or the liquidity
of our common stock also include:
- - actual or potential clinical trial results relating to products under
development by us or our competitors;
- - delays in our testing and development schedules;
- - events or announcements relating to our collaborative relationships with
others;
- - announcements of technological innovations or new products by us or our
competitors;
- - developments or disputes concerning patents or proprietary rights;
- - regulatory developments in both the United States and foreign countries;
- - economic and other external factors, as well as period-to-period fluctuations
in our financial results;
- - market conditions for pharmaceutical and biotechnology stocks; and
- - publicity regarding actual or potential medical results relating to products
under development by us or our competitors.
External factors may also adversely affect the market price for our common
stock. The price and liquidity of our common stock may be significantly affected
by the overall trading activity and market factors on the American Stock
Exchange and the Stockholm Stock Exchange, and these factors may differ between
the two markets. In addition, 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. 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.
INVESTORS IN THIS OFFERING WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION.
The public offering price of our common stock in this offering will be
substantially higher than the net tangible book value per share of our
outstanding common stock. As of December 31, 1999, our net tangible book value
was approximately $21.5 million, or $1.71 per share of common stock, and on a
pro forma basis for this offering, based on the public offering price of
$55.00 per share, and the conversion of our series B preferred stock, will be
approximately $186.4 million, or $9.94 per share of common stock. The amount of
the increase in net tangible book value to existing stockholders will be
approximately $8.23 per share of common stock. Purchasers of our common stock in
this offering will experience immediate and substantial dilution of
approximately $45.06 per share of common stock.
10
<PAGE>
CERTAIN OF OUR CHARTER AND BY-LAW PROVISIONS MAY DETER A THIRD PARTY FROM
ACQUIRING US.
Certain provisions of our charter and by-laws may make it more difficult for a
third party to acquire control of us. These provisions include:
- - a staggered or classified board;
- - the inability of stockholders to act by written consent; and
- - no right to remove directors other than for cause.
Our board of directors has the authority to issue, at any time, without further
stockholder approval and after conversion of the series B preferred stock, up to
5,000,000 shares of preferred stock, and to determine the price, rights,
privileges and preferences of those shares. These shares could be used in
connection with a stockholder rights plan or "poison pill." Any issuance of
preferred stock could discourage a third party from acquiring a majority of our
outstanding voting stock.
Furthermore, we are subject to the provisions of Section 203 of the Delaware
General Corporation Law, an anti-takeover law, which may also dissuade a
potential acquiror of our common stock.
11
<PAGE>
Forward-Looking Statements
This prospectus contains and incorporates by reference certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements give our current expectations or forecasts of
future events. You can identify these statements by the fact that they do not
relate strictly to historical or current facts. Such statements may include
words such as "anticipate," "estimate," "expect," "project," "intend," "plan,"
"believe" and other words or terms of similar meaning in connection with any
discussion of future operating or financial performance. In particular, these
forward-looking statements include statements relating to:
- - our history of operating losses and anticipation of future losses;
- - our need for additional capital and uncertainty of additional funding;
- - uncertainty of our product development;
- - government regulation and uncertainties of obtaining regulatory approval on a
timely basis or at all;
- - uncertainties related to our patent and proprietary rights;
- - our dependence on key personnel;
- - uncertainties relating to clinical trials;
- - collaborative partners and contractors;
- - our lack of experience in marketing or selling pharmaceutical products;
- - our dependence on third-party manufacturers of our products;
- - uncertainties regarding the acceptance, purchase and use of our products;
- - intense competition and rapid technological change in the biopharmaceutical
industry;
- - the value and price of our common stock; and
- - uncertainties relating to health care reform measures and third-party
reimbursement.
Any or all of our forward-looking statements in this prospectus may turn out to
be wrong. They can be affected by inaccurate assumptions we might make or by
known or unknown risks and uncertainties. Many factors mentioned in our
discussion in this prospectus will be important in determining future results.
Consequently, no forward-looking statement can be guaranteed. Actual future
results may vary materially.
We will not update these forward looking statements, whether as a result of new
information, future events or otherwise. You should, however, review additional
disclosures we make in our Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and Annual Reports on Form 10-K filed with the SEC.
12
<PAGE>
Price Range of Common Stock
Our common stock began trading publicly on the American Stock Exchange under the
symbol "MMP" on July 10, 1996. The following table sets forth the high and low
intraday sales price for our common stock by quarter, as reported by the
American Stock Exchange, for the periods indicated:
<TABLE>
<CAPTION>
-------------------------
<S> <C> <C>
High Low
--- ---
Year Ended September 30, 1998:
First Quarter........................................... $19 1/4 $12 1/4
Second Quarter.......................................... 16 5/8 13 3/4
Third Quarter........................................... 23 14 1/8
Fourth Quarter.......................................... 20 1/2 14
Year Ended September 30, 1999:
First Quarter........................................... $16 1/2 $11 5/8
Second Quarter.......................................... 15 5/8 10 1/2
Third Quarter........................................... 11 3/8 9
Fourth Quarter.......................................... 10 5/8 7 1/2
Year Ending September 30, 2000:
First Quarter........................................... $20 1/8 $ 8
Second Quarter (through February 22, 2000).............. $60 5/8 $18 1/4
</TABLE>
On February 22, 2000, the last sale price of our common stock, as reported by
the American Stock Exchange, was $55.00 per share. As of that date, there were
approximately 4,230 holders of record of our common stock. Our common stock is
also traded on the Stockholm Stock Exchange under the ticker symbol "MAXM."
Dividend Policy
Since our initial public offering, we have not paid cash dividends on our common
stock. We currently anticipate that any earnings will be retained for the
continued development of our business and we do not anticipate paying any cash
dividends on our common stock in the foreseeable future. We have entered into a
bank loan agreement which has the potential to restrict our ability to pay
dividends.
13
<PAGE>
Use of Proceeds
Our net proceeds from the sale of 3,205,000 shares of common stock in this
offering are estimated to be approximately $164.9 million, after deducting
underwriting discounts and estimated offering expenses, based upon the public
offering price of $55.00 per share.
We intend to use the net proceeds of this offering, together with our current
cash balances, cash equivalents and marketable securities, for:
- - product development activities related to MAXAMINE including ongoing and
planned clinical trials, manufacturing development, regulatory application
and other research and development;
- - the planned market launch of MAXAMINE including the establishment of a U.S.
sales force;
- - other research and development primarily for our MAXDERM and MAXVAX
technologies; and
- - working capital and general corporate purposes.
We may also use a portion of the net proceeds to acquire technologies or
products complementary to our business, although no material expenditures in
connection with any acquisitions are anticipated as of the date of this
prospectus. Pending application of the net proceeds as described above, we
intend to invest the net proceeds from this offering in investment grade
instruments.
14
<PAGE>
Capitalization
The following table sets forth as of December 31, 1999 unaudited information
about our cash, cash equivalents and investments and capitalization:
- - on an actual basis; and
- - as adjusted to give effect to
- the conversion of our series B preferred stock into 2,676,640 shares of
our common stock,
- the issuance of an additional 335,540 shares of common stock as dividends
to the holders of the series B preferred stock in connection with that
conversion, and
- our receipt of the estimated net proceeds from the sale of the 3,205,000
shares of common stock in this offering at the public offering price of
$55.00 after deducting underwriting discounts and estimated offering
expenses.
The actual information is based on 12,529,925 shares of common stock outstanding
on December 31, 1999. It excludes 1,306,441 shares of common stock issuable upon
the exercise of outstanding stock options, 2,676,640 shares of common stock
issuable upon the conversion of our series B preferred stock, 2,483,000 shares
of common stock issuable upon the exercise of redeemable common stock purchase
warrants and 1,450,098 shares of common stock issuable upon the exercise of
other common stock purchase warrants. It also excludes an additional 151,391
shares of common stock available for future issuance under our stock option and
other employee benefit plans.
<TABLE>
<CAPTION>
------------------------
As of December 31, 1999
------------------------
Actual As Adjusted
---------- -----------
<S> <C> <C>
IN THOUSANDS, EXCEPT SHARE DATA
Cash, cash equivalents and investments...................... $ 32,850 $197,799
======== ========
Long-term debt, less current portion........................ $ 788 $ 788
Stockholders' equity:
Preferred Stock, $.001 par value, 5,000,000 shares
authorized, 267,664 shares issued and outstanding
actual; zero shares issued and outstanding as
adjusted................................................ -- --
Common Stock, $.001 par value, 35,000,000 shares
authorized, 12,529,925 shares issued and outstanding
actual; 18,747,105 shares issued and outstanding as
adjusted................................................ 12 19
Additional paid-in capital................................ 115,472 280,414
Deficit accumulated during the development stage.......... (91,942) (91,942)
Deferred compensation..................................... (2) (2)
Accumulated other comprehensive loss...................... (61) (61)
-------- --------
Total stockholders' equity.............................. 23,479 188,428
-------- --------
Total capitalization.................................. $ 24,267 $189,216
======== ========
</TABLE>
15
<PAGE>
Selected Financial Data
The selected financial data presented below under the captions "Statements of
Operations Data" and "Balance Sheet Data" for, and as of the end of, each of the
years in the five-year period ended September 30, 1999, are derived from the
financial statements of Maxim Pharmaceuticals, Inc., which financial statements
have been audited by KPMG LLP, independent certified public accountants. The
financial statements as of September 30, 1998 and 1999, and for each of the
years in the three-year period ended September 30, 1999 and the report thereon,
are incorporated by reference in this prospectus. The selected financial data
presented below for the three months ended December 31, 1998 and 1999 and as of
December 31, 1999 are derived from unaudited interim financial statements of
Maxim Pharmaceuticals, Inc. incorporated by reference in this prospectus and
have been prepared on the same basis as the audited financial statements and in
the opinion of management contain all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the financial
position at that date and the results of operations for these periods. The
results of operations for the three months ended December 31, 1999 are not
necessarily indicative of the results to be expected in subsequent periods or
for the year as a whole. The as adjusted balance sheet data reflects the sale of
3,205,000 shares of common stock offered hereby at the price of $55.00 per share
and the receipt of the estimated net proceeds therefrom. 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 to the financial statements in our Annual Report on
Form 10-K for the fiscal year ended September 30, 1999 and our Quarterly Report
on Form 10-Q for the three months ended December 31, 1999 incorporated by
reference in this prospectus.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Three Months Ended
Year Ended September 30, December 31,
---------------------------------------------------- -------------------------
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- ----------- -----------
(unaudited)
IN THOUSANDS, EXCEPT PER SHARE DATA
Statements of Operations Data:
Research and collaboration revenue........... $ -- $ -- $ -- $ 181 $ 1,078 $ 88 $ 140
Operating expenses:
Research and development................... 985 1,609 5,353 20,147 36,638 8,779 9,051
Business development and marketing......... -- 112 384 1,313 1,683 453 558
General and administrative................. 1,116 1,243 1,992 2,660 2,880 694 844
------- ------- ------- -------- -------- ----------- -----------
Total operating expenses................. 2,101 2,964 7,729 24,120 41,201 9,926 10,453
Other income (expense):
Investment income.......................... 5 260 927 2,247 1,023 429 304
Interest expense........................... (487) (197) (78) (89) (146) (39) (31)
Other income (expense)..................... (207) (220) (15) (74) 20 -- 11
Gain on sale of subsidiary................. -- 2,288 -- -- -- -- --
------- ------- ------- -------- -------- ----------- -----------
Total other income (expense)............. (689) 2,131 834 2,084 897 390 284
------- ------- ------- -------- -------- ----------- -----------
Net loss before preferred stock dividends.... (2,790) (833) (6,895) (21,855) (39,226) (9,448) (10,029)
Dividends on preferred stock............... -- -- -- -- 483 -- 2,413
------- ------- ------- -------- -------- ----------- -----------
Net loss applicable to common stock.......... $(2,790) $ (833) $(6,895) $(21,855) $(39,709) $ (9,448) $ (12,442)
======= ======= ======= ======== ======== =========== ===========
Basic and diluted net loss per share of
common stock............................... $ (0.87) $ (0.20) $ (1.03) $ (2.37) $ (3.94) $ (0.95) $ (1.09)
======= ======= ======= ======== ======== =========== ===========
Weighted average shares outstanding.......... 3,209 4,075 6,671 9,215 10,079 9,903 11,401
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
As of December 31,
1999
As of September 30, ---------------------
---------------------------------------------------- As
1995 1996 1997 1998 1999 Actual Adjusted
-------- -------- -------- -------- -------- -------- ----------
(unaudited)
IN THOUSANDS
Balance Sheet Data:
Cash, cash equivalents and investments..... $ 513 $ 19,144 $ 12,160 $ 35,769 $ 17,942 $ 32,850 $197,799
Working capital (deficit).................. (5,324) 16,212 8,505 24,812 7,979 20,640 185,589
Total assets............................... 2,454 21,255 15,858 42,022 24,515 39,893 204,842
Long-term debt, less current portion....... 247 -- 555 977 908 788 788
Deficit accumulated during the development
stage.................................... (13,103) (13,937) (20,832) (42,687) (81,913) (91,942) (91,942)
Total stockholders equity (deficit)........ (3,644) 20,124 13,393 31,116 10,843 23,479 188,428
</TABLE>
16
<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
OPERATION SHOULD BE READ IN CONJUNCTION WITH THE "SELECTED FINANCIAL DATA" AND
OUR FINANCIAL STATEMENTS AND RELATED NOTES THERETO INCORPORATED BY REFERENCE IN
THIS PROSPECTUS. THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS AND OTHER PARTS OF THIS PROSPECTUS CONTAIN
FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING
STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS."
Overview
During the periods encompassed by this prospectus, we have devoted substantially
all of our resources to our MAXAMINE, MAXDERM and MAXVAX product development
programs. We conduct our research and product development efforts through a
combination of internal and collaborative programs. In addition to internal
management and staff, we rely upon arrangements with universities, other
clinical research sites and contract research organizations for a significant
portion of our product development efforts. Oversight of all external and
collaborative programs is conducted by our executive officers and other staff
from our headquarters located in San Diego, California.
Our products are in the development stage and we do not expect revenue from
product sales in the near future. We expect to continue to incur losses as we
continue our research and development activities, particularly those relating to
Phase III and Phase II clinical trials using MAXAMINE and the preparation for
the planned market launch of MAXAMINE. Losses may fluctuate from quarter to
quarter and such fluctuations may be substantial as a result of, among other
factors, 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. We cannot
assure you that we will successfully develop, commercialize, manufacture or
market our products or ever achieve or sustain product revenues or
profitability.
Results of Operations
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
RESEARCH AND COLLABORATION REVENUE. Research and collaboration revenue for the
quarter ended December 31, 1999 was $140,000, compared to $88,000 for the same
period in the prior year. The revenue consists of collaborative support related
to our clinical trials, and the increase relates to the expansion of such
trials.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses for the
quarter ended December 31, 1999 were $9,051,000, an increase of $272,000, or 3%,
over the same period in the prior year. The expenses were primarily attributable
to increased activity related to three Phase III cancer clinical trials of
MAXAMINE initiated in prior years and continuing into the current year. In
addition to these and other cancer trials, the current quarter includes efforts
associated with a Phase II clinical trial in hepatitis C commenced in mid 1999.
Costs associated with these trials include clinical trial site and contract
research organization costs, hiring additional clinical and development
personnel and other clinical costs.
BUSINESS DEVELOPMENT AND MARKETING AND GENERAL AND ADMINISTRATIVE
EXPENSES. Business development and marketing expenses for the quarter ended
December 31, 1999 were $558,000, an increase of $105,000, or 23%, over the same
period in the prior year. This increase was due to additional personnel and
other resources devoted to preparation for the potential market launch of
MAXAMINE, including market evaluations, sales launch planning and corporate
partnering efforts. For the quarter ended December 31, 1999, general and
17
<PAGE>
administrative expenses were $844,000, an increase of $150,000, or 22%, over the
same period in the prior year due to general expenses associated with our
expanded operations.
OTHER INCOME (EXPENSE). Investment income was $304,000 for the quarter ended
December 31, 1999, a decrease of $125,000, or 29%, from the same period in the
prior year. This decrease was a result of the reduction in the average principal
balance of interest-bearing investments. Interest expense for the quarter ended
December 31, 1999 was $31,000, a decrease of $8,000, or 20%, from the same
period in the prior year. This decrease was a result of the reduction in the
outstanding principal balance under bank loan agreements.
NET LOSS. Net loss before preferred stock dividends for the quarter ended
December 31, 1999 totaled $10,029,000, an increase of $581,000, or 6%, over the
same period in the prior year. The increase was due to the expansion of our
research and development and general corporate activities described above. Net
loss attributable to common stock for the quarter ended December 31, 1999
totaled $12,442,000, an increase of $2,994,000, or 32%, over the same period in
the prior year. The increase was primarily the result of $2,413,000 in dividends
associated with our series A and series B preferred stock. Of the total
dividends, $2,015,000 was associated with the series A preferred stock that was
converted to common stock during the quarter and was no longer outstanding at
December 31, 1999.
During the quarter ended December 31, 1999, we exercised our right to call for
an automatic conversion of our series A preferred stock into common stock. As
required in the event of an automatic conversion, we were required to pay the
holders upon conversion, in cash or additional shares of series A preferred
stock at the option of the holder, an amount equal to the dividends that would
have been paid had the series A preferred stock remained outstanding for one
year after issuance. We recorded $2,015,000 in dividends associated with the
series A preferred stock during the three months ended December 31, 1999, of
which $1,894,000 related to the settlement of dividend obligations resulting
from the automatic conversion to common stock. Of the total series A preferred
stock dividends recorded during the quarter, $63,000 were paid in cash, and the
remainder were paid through the issuance of securities.
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
RESEARCH AND COLLABORATION REVENUE. For the year ended September 30, 1999,
research and collaboration revenue consisting of collaborative support and fees
for exclusive MAXAMINE marketing rights for the territories of Australia, New
Zealand and Israel totaled $1,078,000, compared to $181,000 for the year ended
September 30, 1998. There was no such revenue earned in the year ended
September 30, 1997.
RESEARCH AND DEVELOPMENT EXPENSES. For the year ended September 30, 1999,
research and development expenses were $36,638,000, an increase of $16,491,000,
or 82%, over the prior year. This increase was primarily attributable to
increased activity related to late-stage cancer clinical trials of MAXAMINE,
including clinical trial site and contract research organization costs, hiring
additional clinical and development personnel and other clinical costs. These
clinical trials include a Phase III clinical trial in malignant melanoma
commenced in the United States in July 1997, an international Phase III
malignant melanoma clinical trial commenced in November 1997, a global Phase III
clinical trial in acute myelogenous leukemia commenced in February 1998 and a
European Phase II clinical trial in hepatitis C commenced in May 1999. For the
year ended September 30, 1998, research and development expenses were
$20,147,000, an increase of $14,793,000, or 276%, over the prior year. This
increase was primarily due to increased activity in cancer clinical trials of
MAXAMINE.
BUSINESS DEVELOPMENT AND MARKETING AND GENERAL AND ADMINISTRATIVE
EXPENSES. Business development and marketing expenses for the year ended
September 30, 1999 were $1,683,000, an increase of $370,000, or 28%, over the
prior year. This increase was due to additional personnel and other resources
devoted to preparation for the potential market launch of MAXAMINE, including
corporate partnering efforts, market evaluations and
18
<PAGE>
third-party reimbursement evaluations. For the year ended September 30, 1999,
general and administrative expenses were $2,880,000, an increase of $220,000, or
8%, over the prior year. This increase was due to general expenses associated
with our expanded operations. Business development and marketing expenses for
the year ended September 30, 1998 were $1,313,000, an increase of $929,000, or
242%, over the prior year. General and administrative expenses for the year
ended September 30, 1998 totaled $2,660,000, an increase of $667,000, or 33%,
over the prior year. Both of these increases resulted from the expanded
activities described above.
OTHER INCOME (EXPENSE). Investment income was $1,023,000 for the year ended
September 30, 1999, a decrease of $1,225,000, or 54%, from the prior year. This
decrease was a result of the reduction in the principal balance of
interest-bearing investments used to finance our operations. Investment income
for the year ended September 30, 1998 totaled $2,247,000, an increase of
$1,320,000 over the prior year. This increase primarily resulted from income on
the proceeds of our follow-on public offering completed in October 1997.
Interest expense for the year ended September 30, 1999 was $146,000, an increase
of $57,000, or 64%, over the prior year. This increase was primarily
attributable to interest incurred on additional advances made under our line of
credit agreement used to finance qualified equipment purchases. Interest expense
for the year ended September 30, 1998 increased slightly over with that of the
prior year and totaled $89,000.
NET LOSS. Net loss for the year ended September 30, 1999 totaled $39,709,000,
an increase of $17,855,000, or 82%, over the prior year. The increase was
primarily due to the expansion of our research and development and general
corporate activities described above, and also includes $483,000 of accrued
dividends on preferred stock included in the net loss applicable to common
stock. Net loss for the year ended September 30, 1998 totaled $21,855,000, an
increase of $14,959,000, or 217%, over the prior year.
Liquidity and Capital Resources
We, as a development stage enterprise, anticipate incurring substantial
additional losses over at least the next several years due to, among other
factors, the need to expend substantial amounts on our ongoing and planned
clinical trials, preparation for the planned market launch of MAXAMINE, other
research and development activities, and related business development and
general corporate expenses. We have financed our operations primarily through
the sale of our equity securities, including an initial public offering in 1996,
an international follow-on public offering in 1997 and private offerings of
preferred stock in 1999 that provided us with net proceeds of approximately
$22.3 million (including proceeds from the exercise of warrants), $34.7 million
and $40.8 million, respectively.
As of December 31, 1999, we had cash, cash equivalents and investments totaling
approximately $32.8 million. For the three months ended December 31, 1999, net
cash used in our operating activities was approximately $7.2 million. For the
year ended September 30, 1999, net cash used in our operating activities was
approximately $36.0 million. Our cash requirements may fluctuate in future
periods as we conduct additional research and development activities including
clinical trials, other research and development activities, and efforts
associated with the commercial launch of any products that are approved for sale
by government regulatory bodies. Among the activities that may result in an
increase in cash requirements are three Phase III cancer clinical trials and
four Phase II clinical trials of MAXAMINE currently underway and preparation for
the planned market launch of MAXAMINE.
Our cash requirements may vary materially from those now planned because of the
results and scope of clinical trials and other research and development
activities, the time required to obtain regulatory approvals, the cost of
filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights, our ability to establish marketing alliances and
collaborative arrangements and the cost of our internal marketing activities. As
a result of these factors, it is difficult to predict accurately the timing and
amount of our cash requirements. We plan to pursue the issuance of additional
equity securities, as well as corporate marketing alliances and
19
<PAGE>
collaborative agreements, as required to meet our cash requirements. The
issuance of additional equity securities could result in substantial dilution to
our stockholders. We cannot assure you that additional funding will be available
on terms acceptable to us, if at all. The failure to fund our capital
requirements would have a material adverse effect on our business, financial
condition and results of operations. We have never paid a cash dividend on our
common stock and do not contemplate the payment of cash dividends on our common
stock in the foreseeable future.
20
<PAGE>
Business
Overview
We are developing a new generation of drugs, therapies and vaccines for cancer,
infectious diseases and topical disorders. Our lead drug candidate, MAXAMINE,
has the potential to greatly improve the ability of the immune system to fight
cancer and viral infections. MAXAMINE, which is based on the naturally occuring
molecule histamine, is designed to improve immunotherapy by protecting critical
immune cells. MAXAMINE is administered in combination with cytokines, a class of
proteins that stimulate these same immune cells. More than 1,000 patients have
participated in our completed and ongoing clinical trials in advanced malignant
melanoma, acute myelogenous leukemia, hepatitis C and renal cell carcinoma. Our
clinical results to date suggest that MAXAMINE THERAPY, the administration of
MAXAMINE in combination with other cytokines, is a safe, at-home treatment that
can improve patient survival.
Our most advanced Phase III trial of MAXAMINE is a 305-patient study based in
the United States for the treatment of advanced malignant melanoma, the most
deadly form of skin cancer. We expect to complete this trial in the first half
of 2000 and plan to file a NDA with the FDA for this cancer in mid 2000. We also
are conducting a Phase III trial of MAXAMINE in acute myelogenous leukemia, the
most common acute adult leukemia, and have Phase II trials of MAXAMINE underway
in hepatitis C and renal cell carcinoma. We expect to pursue supplemental NDAs
in each of these diseases subsequent to our NDA in melanoma.
We conducted a series of Phase II clinical trials in which patients with
malignant melanoma and acute myelogenous leukemia were treated with MAXAMINE.
These Phase II studies have shown a more than doubling of survival and remission
times for patients treated with MAXAMINE as well as the ability to maintain
patient quality of life during treatment. Earlier-stage clinical studies have
also suggested promise in renal cell carcinoma, a cancer of the kidneys, and
multiple myeloma, a cancer of the bone marrow.
MAXAMINE is also under clinical development for the treatment of hepatitis C,
the leading blood-borne infection in the United States. We are currently
conducting a 129-patient trial in hepatitis C, and preliminary results showed
that after 12 weeks of treatment the combination of MAXAMINE and the cytokine
interferon achieved a complete response in 70% of all patients compared to the
20-30% response commonly observed in patients with similar profiles treated with
interferon alone.
We are also developing MAXDERM, a MAXAMINE-related series of drug candidates for
the treatment of certain topical disorders. Our third technology platform,
MAXVAX, is currently in preclinical development and is designed to facilitate a
new class of needle-free mucosal vaccines for several infectious diseases.
Maxamine
MAXAMINE has the potential to greatly improve the ability of the immune system
to fight cancer and viral infections. In many patients with cancer and chronic
infectious diseases, the capacity of the patient's immune system to detect and
destroy tumor cells or virally infected cells is compromised. In recent years,
significant research has focused on mechanisms to enhance the immune system's
ability to combat cancer and infectious diseases, a treatment approach known as
immunotherapy. Current immunotherapy is largely based on the use of cytokines,
such as interleukin-2 (IL-2) and interferon-alpha (IFN-(alpha) ), naturally
occurring proteins that stimulate certain key immune cells. However, cytokines
only demonstrate a clinically significant tumor response in a small portion of
cancer patients, often produce severe adverse side effects and do not produce
sustained responses in the majority of hepatitis C patients.
MAXAMINE THERAPY combines the administration of MAXAMINE, an immuno-modulator
that protects critical immune cells, with the administration of cytokines such
as IL-2 and IFN-(alpha) that stimulate these same immune cells. This combination
of action is designed to improve the immune system's ability to identify,
disable and destroy malignant or infected cells. MAXAMINE is based on histamine,
a naturally occurring molecule, and
21
<PAGE>
its usefulness in immunotherapy was first discovered by our collaborative
scientists at the University of Goteborg, Sweden.
Two kinds of immune cells, Natural Killer (NK) cells and cytotoxic T cells,
possess an ability to kill and support the killing of cancer cells and virally
infected cells, and much of the current practice of immunotherapy is based on
the fact that IL-2 and IFN-(alpha) are potent stimulators of NK cells and T
cells. Our researchers have shown, however, that NK cells and T cells are
suppressed by phagocytic cells, another component of the body's immune system.
Phagocytes are a class of white blood cells, which include monocytes,
macrophages and neutrophils, found in abundant quantities in and around tumors
and areas of infection. The release of free radicals by phagocytes results in
apoptosis, or programmed cell death, of NK cells and T cells, thereby destroying
their cytotoxic capability and rendering the immune response against the tumor
or virus largely ineffective.
Programmed Cell Death of NK and T Cells Without MAXAMINE
[GRAPHIC ILLUSTRATING THE INFORMATION INCLUDED IN PRECEDING PARAGRAPH]
MAXAMINE is designed to modulate the immune system to protect NK cells and T
cells, allowing immunotherapy to be more effective. When histamine, a natural
molecule present in the body, or other molecules in the class known as histamine
type-2 (H(2)) receptor agonists bind to the H(2) receptor on the phagocytes, the
production and release of free radicals is temporarily prevented. The prevention
of the release of free radicals allows immune-stimulating agents, such as IL-2
and IFN-(alpha) , to activate NK cells and T cells more effectively, thus
enhancing the killing of tumor cells or virally infected cells.
MAXAMINE Immune-Enhancement Technology
[GRAPHIC ILLUSTRATING THE INFORMATION INCLUDED IN PRECEDING PARAGRAPH]
22
<PAGE>
MAXAMINE increases the effectiveness of basic immune functions and may be used
in combination with, and improve the effectiveness of, many cytokines and other
immunotherapeutic agents. Because MAXAMINE impacts basic immune functions, it
has the potential to be used in a broad range of cancers and infectious diseases
that can be recognized by the immune system. This potential broad applicability
is highlighted by our preliminary favorable results obtained to date in the
treatment of patients with malignant melanoma, acute myelogenous leukemia, renal
cell carcinoma and hepatitis C. In addition, because MAXAMINE has been shown to
increase the effectiveness of cytokines, lower doses of cytokines such as IL-2
and IFN-(alpha) can potentially be used in MAXAMINE THERAPY without compromising
therapeutic effectiveness, thereby reducing serious side effects associated with
the cytokines. Moreover, we have designed MAXAMINE THERAPY so that it may be
delivered to patients through a subcutaneous injection, thereby permitting
treatment at home.
Among the proprietary protection surrounding our MAXAMINE technology are U.S.
and international patents and patent applications covering the use of histamine,
upon which MAXAMINE is based, or any H(2) receptor agonist in the treatment of
cancer and infectious diseases in combination therapies, as well as patent
applications covering the method of producing MAXAMINE, its mechanism of action
and the use of H(2) receptor agonists in other medical applications.
POTENTIAL BENEFITS OF MAXAMINE
We believe that MAXAMINE may 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:
- - EXTENDING LIFE. Late-stage clinical trials of MAXAMINE provided evidence of
substantially improved therapeutic efficacy (extended survival and remission
intervals) over approved therapies or standards of care.
- - MAINTAINING QUALITY OF LIFE. Late-stage clinical trials indicated that
MAXAMINE is safe and may reduce the toxic side effects of cytokines and other
biological response modifiers, thereby allowing the maintenance of the
patient's quality of life during outpatient therapy.
- - OUTPATIENT ADMINISTRATION. MAXAMINE can be safely administered subcutaneously
on an outpatient basis, in contrast to the in-hospital administration
required for many other therapies.
- - COST EFFECTIVE. The delivery of MAXAMINE THERAPY on an outpatient basis may
eliminate the costs associated with in-hospital patient care. These factors,
combined with the potential improvements in efficacy, contribute favorably to
the assessment of benefit versus cost for this therapy.
23
<PAGE>
MAXAMINE CLINICAL TRIAL STATUS
The table below summarizes our current and completed clinical trial activities
for each disease we currently target or may target in the future with MAXAMINE.
We have 11 Phase I/II trials and three Phase III trials completed or currently
underway and expect to file a NDA for advanced malignant melanoma in mid 2000.
Our clinical trials are staged so that, if these trials are successful,
additional product approvals may follow in the periods subsequent to our initial
product launch in melanoma.
MAXAMINE Clinical Trial Status
<TABLE>
Indication Trial Phase Status Location
- --------------------------- ---------------------------- -------------------- ----------------
<S> <C> <C> <C>
Advanced Malignant Melanoma Phase III Ongoing, patient United States
enrollment completed
Phase III Ongoing Europe,
Australia,
Canada and
Israel
Phase II advanced research Ongoing United States
Phase II liver metastases Completed Europe
Phase II low-dose Completed Europe
Phase II high-dose Completed Europe
Acute Myelogenous Leukemia Phase III Ongoing United States,
Europe,
Australia,
Canada and
Israel
Phase II Completed Europe
Renal Cell Carcinoma Phase II controlled Ongoing Europe
Phase II single arm Ongoing Europe
Phase I Completed Europe
Multiple Myeloma Phase I Completed Europe
Hepatitis C Phase II Ongoing Europe and
Israel
Phase I Completed Europe
</TABLE>
CANCER INDICATIONS FOR MAXAMINE
Cancer comprises a large and diverse group of diseases resulting from the
uncontrolled proliferation of abnormal, or 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 unless effectively
treated. To be effective, cancer treatment must target not only the primary
tumor site but also distant metastases. A report from the American Cancer
Society, 1999 CANCER FACTS AND FIGURES, estimates that a total of approximately
1,220,000 new cases and approximately 560,000 deaths were expected for invasive
cancers in the United States in 1999. 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. These
following estimates are for the cancers initially targeted by MAXAMINE based
upon the American Cancer Society's 1999 CANCER FACTS AND FIGURES for the United
States.
24
<PAGE>
Estimated Incidence for Selected Cancers for 1999 for the United States
<TABLE>
<CAPTION>
--------------------
<S> <C> <C>
Annual
--------------------
New Cases Deaths
--------- --------
Malignant Melanoma................................... 44,000 7,300
Acute Myelogenous Leukemia........................... 10,000 7,300
Renal Cell Carcinoma................................. 30,000 12,000
All Invasive Cancers................................. 1,220,000 560,000
</TABLE>
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 after other treatment.
Surgery may be successful in removing visible tumors but may leave smaller
undetectible nests of cancer cells in the patient which continue to proliferate.
Radiation and chemotherapy are relatively imprecise methods for the destruction
of cancer cells because such therapies can kill both cancer cells and normal
cells. Radiation and chemotherapy also have toxic side effects which may
themselves be lethal to the patient. These toxic side effects may also restrict
the application of these treatments to less than optimal levels required to
ensure eradication of the cancer.
The high number of cancer-related deaths indicates the need for more efficacious
therapies for many patients. Many existing therapies have been approved on the
basis that they shrink or limit the growth of tumors for a short period of time,
but they have failed to demonstrate that they provide a survival benefit to
patients. We believe, however, that increased patient survival is becoming the
most important measurement of a drug's effectiveness.
ADVANCED MALIGNANT MELANOMA. Malignant melanoma is the most serious form of
skin cancer and is one of the most rapidly increasing cancers in the world.
There are more than 44,000 new cases of melanoma and 7,300 deaths from the
disease each year in the United States.
Our initial Phase II clinical trial in malignant melanoma was conducted in
Sweden at the Sahlgrenska University Hospital in Goteborg. In that study, 15
patients with advanced metastatic malignant melanoma were treated with a
high-dose regimen of IL-2 together with daily injections of IFN-(alpha) in
five-day cycles. Eight of the patients were also given MAXAMINE injections twice
daily in combination with IL-2 and IFN-(alpha) .
The results of the initial Phase II clinical trial indicated that MAXAMINE may
be given as an effective adjuvant to treatment with IL-2 and IFN-(alpha) . 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 patients treated with MAXAMINE, four
partial and two mixed responses were observed. Notably, two of the MAXAMINE
patients had complete resolution of their extensive liver metastases. Sites of
response in the MAXAMINE patients also included skin, lymph nodes, skeleton,
spleen and muscle. Depending upon the characteristics of the patient group being
studied, the survival results of advanced-stage cancer trials are typically
measured by either mean or median survival. Mean survival represents the average
duration of survival for the group. Median survival represents the point in time
at which 50% of the patients are still surviving. In patients receiving MAXAMINE
in the initial trial, there was a statistically significant improvement in
overall survival (p < 0.03). The MAXAMINE patients had a mean survival of
14.7 months, more than double the mean survival of 6.8 months in the control
group. One patient remained completely free of detectable disease more than four
years after the commencement of treatment with MAXAMINE.
25
<PAGE>
A second advanced malignant melanoma study was undertaken at the Sahlgrenska
University Hospital in Sweden to determine if MAXAMINE, in combination with a
lower-dose regimen of the same cytokines (IL-2 and IFN-(alpha) , would retain
the efficacy seen in the first study, while reducing the side effects of the
cytokine portion of the treatment. 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 median
survival time of patients with advanced (stage IV) malignant melanoma using
conventional treatments is historically reported to be six to seven months. In
this second, low-dose malignant melanoma study, 11 patients had a median
survival time of 15.5 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, the combination of MAXAMINE with low-dose cytokines was well-tolerated,
and patients were treated at home on an out-patient basis.
A third study in malignant melanoma was conducted in Sweden and consisted
primarily of advanced-stage patients with metastases of their cancer to the
liver. This patient group historically has a poor prognosis for survival. In our
three completed Phase II malignant melanoma trials, a total of 16 patients had
liver metastases. The 16 patients treated with MAXAMINE had a substantially
improved survival outcome with a mean of 14 months survival as a group compared
to the typically reported mean survival time of four months or less for these
patients.
Our multi-center Phase III clinical trial of MAXAMINE in the United States for
the treatment of advanced malignant melanoma commenced in 1997 and is nearing
completion. 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 the same dose of IL-2 alone. The primary
endpoints of the study are overall patient survival and survival of patients
with liver metastases, and the secondary endpoints include quality of life,
tumor response rate and duration of response. More than 50 clinical sites in the
United States participated in the study, and enrollment was completed in
February 1999.
Two clinical events in 1999 highlighted the progress of the trial:
- - In March 1999, the Data Safety Monitoring Board, an independent group
monitoring the safety of the Phase III trial, performed an interim analysis
of data from the study and concluded that there were no safety concerns with
continuing the trial. The Data Safety Monitoring Board also concluded that
the trial had the opportunity to meet its principal endpoints relevant to
regulatory approval and should continue under its approved protocol.
- - In November 1999, clinicians from the largest enrolling site in the Phase III
trial submitted an abstract to an upcoming cancer conference describing
preliminary survival data from the 40 patients enrolled at their center. The
preliminary single-center results demonstrated a statistically significant
increase in overall survival for patients treated within the MAXAMINE as
compared to the control group.
We expect to complete this Phase III trial in the first half of 2000 and expect
to file a NDA with the FDA in mid 2000.
We commenced a second Phase III trial of MAXAMINE for the treatment of advanced
malignant melanoma in November 1997 based in Europe, Australia, Canada and
Israel. Patients in the MAXAMINE group receive a co-administration of MAXAMINE
plus low-dose IL-2 and IFN-(alpha) , while patients in the control group receive
dacarbazine (DTIC), the most commonly used chemotherapeutic agent for the
treatment of advanced malignant melanoma, particularly in Europe and Australia.
The endpoints of this study are the same as the U.S. study described above, and
this international study is designed to include approximately 200 patients.
26
<PAGE>
The two Phase III malignant melanoma trials complement each other by addressing
separate clinical and marketing issues:
- - The U.S. Phase III trial is designed to seek regulatory approval as an
adjunct to IL-2 in the U.S., Europe, Australia and other markets by
demonstrating that the combination of MAXAMINE and IL-2 is better at
extending patient survival than the administration of the same dose of IL-2
alone.
- - The European trial is designed to broaden the exposure of the drug outside
the United States, prepare the international markets for our expected launch
and provide a comparison of immunotherapy with chemotherapy.
ACUTE MYELOGENOUS LEUKEMIA. Acute Myelogenous Leukemia (AML) is the most common
form of acute leukemia in adults, and prospects for long-term survival are poor
for the majority of patients. There are approximately 10,000 new cases of AML
and 7,300 deaths caused by the cancer each year in the United States. Once
diagnosed with AML, patients are typically treated with chemotherapy, and the
majority achieve complete remission. Unfortunately, 75-80% of patients who
achieve their first complete remission will relapse, and the median time in
remission before relapse is only 12 months with current treatments. The
prospects for these relapsed patients is poor, and less than five percent
survive long term. There are currently no effective remission therapies for AML
patients.
MAXAMINE is designed to augment the body's ability to scavenge, attack and
eliminate residual leukemic cells. We conducted a Phase II study in Sweden in
which 39 AML patients in remission were treated with the combination of MAXAMINE
and low-dose IL-2. The objective of the therapy with MAXAMINE is to prevent
relapse and prolong leukemia-free survival while maintaining a good quality of
life for patients during treatment.
In the Phase II study, 26 patients in their first complete remission were
treated with MAXAMINE and IL-2 and experienced a substantial increase in
leukemia-free survival. The patients treated with MAXAMINE had achieved a median
time to relapse through the last date of evaluation in December 1999 of
28 months compared to 12 months under the current standard of care. The median
time to relapse of the MAXAMINE patients has the potential to increase as
leukemia-free patients are still under evaluation. These results were achieved
despite the fact that the patients treated with MAXAMINE were a relatively older
group of patients and more than half (15 of 26) of the patients were categorized
as high risk with the poorest prognosis for long-term survival.
Also treated in the Phase II study were 13 patients who were in their second or
subsequent complete remission. Prior to entering the study, these patients had
suffered a relapse of AML and were treated with an additional round of
chemotherapy to induce a complete remission. These subsequent remissions
normally have a shorter duration than the prior complete remission, with a
median time to relapse of only six months in the case of patients in their
second complete remission. Less than five percent of these patients survive long
term. The 13 patients treated with the combination of MAXAMINE and IL-2
experienced a substantial increase in remission duration, and the median time to
relapse for the MAXAMINE patients was 16 months, more than double the six-month
historic median.
Also notable in the study was the fact that the patients safely
self-administered more than 8,000 doses of MAXAMINE at home. No unexpected side
effects from the drug have been identified during the study, and 75% of the
evaluable patients returned to work while taking MAXAMINE.
27
<PAGE>
In early 1998, we commenced a Phase III AML clinical trial based in 12
countries, including clinical sites in the United States, Europe, Australia,
Canada and Israel. The trial is designed as a remission therapy to demonstrate
that MAXAMINE can prolong leukemia-free remission time and prevent relapse in
AML patients compared to the current standard of care, which is no therapy
during remission. In the study, patients in their second or greater complete
remission will be evaluated for up to 18 months, while patients in their first
complete remission will be evaluated for up to 24 months. The trial is designed
to include approximately 300 patients and we expect to complete enrollment in
2000.
The FDA has granted orphan drug status to MAXAMINE for the treatment of AML.
Orphan drug status provides for U.S. marketing exclusivity for seven years upon
marketing approval by the FDA. The status also provides certain tax benefits and
exempts us from certain FDA application fees.
RENAL CELL CARCINOMA. There are approximately 30,000 new cases each year of
renal cell carcinoma (RCC), cancer of the kidneys, in the United States.
Metastatic RCC often is resistant to radiation therapy and chemotherapy, and the
disease results in more than 12,000 deaths each year.
We conducted a pilot study of six RCC patients in Sweden to evaluate the safety
and feasibility of MAXAMINE in this patient group. In this small study, three
patients were treated with MAXAMINE and cytokines (IFN-(alpha) and IL-2) and
achieved a mean survival of 29 months, while the other three patients were
treated with the cytokines alone and achieved a mean survival of four months.
We have two European Phase II studies underway in RCC, the objectives of which
are to provide support for the promotion and potential amendment to labeling of
MAXAMINE for the treatment of RCC. The first is a study of the combination of
MAXAMINE, IL-2 and interferon in 40 patients in Sweden and Denmark. The second
is a randomized trial of the combination of MAXAMINE and IL-2 versus IL-2 alone
in 120 patients in the United Kingdom and Denmark. This second trial is being
funded by our clinical collaborators.
HEPATITIS C INDICATION FOR MAXAMINE
Hepatitis C is more easily transmitted than HIV and is now the leading
blood-borne infection in the United States. The U.S. Center for Disease Control
and Prevention estimates that over 4.5 million Americans are infected with the
hepatitis C virus. The World Health Organization and other sources estimate that
at least 200 million people are infected worldwide. Hepatitis is a disease
characterized by inflammation of the liver and, in many cases, permanent
cirrhosis (scarring) of the liver tissues. The cycle of disease from infection
to significant liver damage can take 20 years or more. Some experts estimate
that without substantial improvements in treatment, deaths from hepatitis C will
surpass those from HIV. Hepatitis C is the leading cause of liver cancer and the
primary reason for liver transplantation in many countries. The majority of
patients do not effectively respond to existing therapies or to therapies known
by us to be under development.
The standard treatment for hepatitis C is interferon, an immunotherapeutic agent
often given in combination with the anti-viral drug
Ribavirin-Registered Trademark-. The majority of patients do not attain a
sustained response with current therapies. Several factors can influence the
patient's response to therapy including the patient's viral load and the
genotype of the virus with which the patient is infected. Of the several
variations, or genotypes, of hepatitis C, genotype-1 is the most common type in
the United States. Patients infected with this genotype, and those with viral
levels greater than two million copies per milliliter of blood, typically have
the poorest response to treatment.
In 1998, we announced results from a Phase I feasibility study in hepatitis C
patients using MAXAMINE. In the study, ten patients who were characterized as
nonresponders after a year of treatment with IFN-(alpha) were put back on
treatment with the same dose of IFN-(alpha) plus MAXAMINE for 12 weeks. The
study indicated that the combination of MAXAMINE with IFN-(alpha) is safe in the
treatment of hepatitis C patients, and that
28
<PAGE>
MAXAMINE may enhance the efficacy of IFN-(alpha) in patients who were previously
nonresponsive to IFN-(alpha) therapy.
In May 1999, we commenced a Phase II clinical trial of MAXAMINE in the treatment
of patients with hepatitis C. The trial is designed to evaluate the combination
of MAXAMINE and IFN-(alpha) , in the treatment of chronic hepatitis C patients
who had not previously received treatment with IFN-(alpha) . The primary purpose
of this study is to determine the most appropriate dose regimen for MAXAMINE in
the treatment of chronic hepatitis C. We also hope to provide further evidence
that MAXAMINE may benefit cytokines such as IFN-(alpha) in the treatment of
hepatitis C. The trial is based in the United Kingdom, Belgium, Israel and
Russia, and 129 patients were enrolled. Patients were randomly assigned to one
of four treatment groups, and each patient received MAXAMINE, in one of four
dosing regimens, plus IFN-(alpha) . The study will evaluate the efficacy and
safety of each of the four dosing regimens of MAXAMINE. The primary measures of
efficacy in the study will be reduction in viral load and normalization of liver
function, measured by the liver enzyme ALT, a standard measure of liver
function.
Patients responding during the first 12 weeks of treatment will continue
treatment through 48 weeks, with evaluations at 24, 48 and 72 weeks. The study
includes a high percentage of patients that would normally be considered
difficult to treat as characterized by high viral loads and a genotype-1
infection. The mean viral load of the patients in this study was 6.7 million
copies per milliliter of blood, and 50% of the patients were infected with
genotype-1.
After 12 weeks of treatment, 70% of the patients treated with MAXAMINE in
combination with IFN-(alpha) attained complete biochemical and viral response. A
complete biochemical response is defined as normalization of liver enzyme
levels; a complete viral response is defined by virus levels that are below the
limit of detection using a validated PCR-RNA technique. Published reports
suggest that 20-30% of patients with similar profiles achieve a complete
biochemical and viral response when treated with interferon therapy alone.
In addition, study results showed that after four weeks of treatment, 80% of
patients showed rapid responses characterized by a 2 log reduction in viral load
or a complete viral and ALT response. Lastly, the results also suggested that
MAXAMINE provided a benefit even in the patients expected to have a poor
prognosis. After 12 weeks of treatment, a complete viral response was achieved
by 61% of the patients with a genotype-1 infection, and by 62% of the patients
having greater than two million viral copies per milliliter of blood.
MAXDERM Topical Therapies
Our MAXDERM technology expands our product pipeline into therapies for a number
of key medical conditions for which topical delivery is preferred. For millions
of patients, topical disorders such as herpes labialis, herpes zoster, oral
mucositis, canker sores and decubitus ulcers result in prolonged pain, suffering
and slow healing times that can lead to an increased risk of secondary
infection. The patient's immune response, localized inflammation and
wound-healing status may contribute to the difficulty in treating many of these
disorders.
The MAXDERM technology and pipeline of potential products is based on research
on the active molecules underlying MAXAMINE. The MAXDERM discovery may be able
to address the underlying mechanisms that cause many of the above disorders, and
may enhance the cellular immune response, reduce inflammation and enhance the
wound healing process. This discovery is novel and differs from the anti-viral,
pain relieving and anti-bacterial approaches underlying many existing and
proposed treatments.
Randomized, blinded, placebo-controlled pilot studies have been conducted in
more than 75 patients with oral mucositis, herpes labialis, or cold sores,
decubitus ulcers, shingles, burns and conjunctivitis. Patients experienced
improved healing times when treated with gels based on the MAXDERM technology
compared to a placebo control. We are currently evaluating the MAXDERM
technology and assessing current and anticipated medical needs to determine the
appropriate disorders in which to conduct more extensive clinical studies.
29
<PAGE>
ORAL MUCOSITIS
Oral mucositis (stomatitis) is a common and debilitating side effect of
chemotherapy or head and neck radiation used in the treatment of cancer. There
are possibly a million new cases each year in the United States and major
international markets with no effective treatments yet available.
Mucositis includes the formation of canker sore-like lesions within the mouth
that may extend to the tongue and throat and result in mild to severe discomfort
and difficulty eating and drinking. The lesions may last two to three weeks, and
in severe cases patients require hospitalization, morphine to alleviate pain and
limitations to their cancer treatment. We believe that a product that would
assist patients with this discomforting condition would fit with our objective
of maintaining the quality of patients' lives during therapy, and would fit
strategically with our proposed marketing plans for MAXAMINE.
During 1999, we completed two preclinical trials of a gel based on the MAXDERM
technology in oral mucositis which suggested that the drug candidate can prevent
and significantly reduce the time required to heal oral lesions. In addition, a
small pilot human study was conducted in which nine patients with oral mucositis
were randomized and treated with one of two doses of our gel or a placebo. The
patients treated with our gel experienced complete healing of lesions in a mean
time of three to four days, depending upon the dosage. Patients treated with the
placebo experienced no reduction in lesions during the treatment period.
Patients treated with our gel also reported a reduction in the discomfort
associated with eating and drinking.
HERPES LABIALIS
A pilot study of gels based on the MAXDERM technology was also conducted in 18
patients with herpes labialis, or cold sores. In the randomized, blinded study,
patients with herpes labialis treated with a formulation of our gel containing
the highest concentration of active ingredient demonstrated a 99% improvement of
their lesions following only four days of administration. Patients treated with
the placebo, conversely, experienced an increase in mean lesion size during the
study period.
MAXVAX Mucosal Vaccine Carrier/Adjuvant Platform
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. We believe 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 our proprietary recombinant form of CTB with vaccine
antigens and/or genes, we believe that we may be able to develop effective, new
needle-free mucosal-based vaccines.
The MAXVAX approach to therapeutic and protective vaccines has been shown to
elicit both mucosal and systemic immunity and is based upon "non-injectable"
administration. We believe that there are numerous important potential clinical
and commercial advantages to mucosal immunization compared with traditional
injected vaccine products, including greater clinical efficacy, higher level of
safety, lower cost of administration and improved vaccine utilization.
Product Development and Collaborative Relationships
We conduct our research and other product development efforts through a
combination of internal personnel and collaborative programs. For MAXAMINE, we
rely upon our clinical management personnel in extensive collaboration with
universities and other clinical research sites, contract research organizations
and similar
30
<PAGE>
service providers and persons. We expect to rely upon a similar combination of
internal personnel and collaborators as we expand the clinical and other
development of MAXDERM. Current research and development efforts related to
MAXVAX are primarily conducted in our internal laboratories, although we expect
to rely heavily on pharmaceutical company collaborative relationships to advance
the clinical development of the technology.
We have relied upon licensing and other transactions to gain access to certain
of our proprietary technologies. Our current and planned clinical trials of
MAXAMINE rely heavily upon contractual relationships with universities and other
clinical trial sites, contract research organizations, home nursing
organizations and regulatory and other consultants. Our strategy for
development, commercialization and marketing of each of our product candidates
will involve, where appropriate, the establishment of marketing and other
collaborative relationships with pharmaceutical industry partners.
During 1998, we entered into clinical collaborations with Chiron Corporation,
Amgen Inc. and BioNative AB. Each of these companies possess cytokines that may
benefit from use in combination with MAXAMINE. Under each of these agreements,
we receive economic and other support for important clinical trials without
giving up any marketing or other future rights to MAXAMINE. For example, Chiron
is providing the IL-2 drug (Proleukin-Registered Trademark-) requirements and
other assistance related to our Phase III AML clinical trial. These
collaborations reinforce our belief that MAXAMINE is complementary rather than
competitive with many existing and future drugs, and may be the key to the
successful use of many biotherapeutic agents.
We expect to pursue additional collaborations to further the expanded use and
development of MAXAMINE. We will also seek other collaborative relationships for
the further development of MAXDERM and MAXVAX or in other situations where we
believe that the clinical testing, marketing, manufacturing and other resources
of pharmaceutical or other collaborators will enable us to more effectively
develop particular products or access geographic markets.
Marketing and Sales
Assuming FDA approval of MAXAMINE, we plan to directly market the drug in the
United States, potentially under an alliance with a pharmaceutical company or
other collaborator. In addition, we expect to establish alliances with
pharmaceutical companies for the marketing of MAXAMINE in key international
markets. We are currently in the process of evaluating, and are in discussions
with, pharmaceutical companies to serve as marketing collaborators.
We are currently undertaking efforts to prepare to market MAXAMINE in the United
States, and we have built a core marketing group with experience in planning and
managing successful U.S. launches of pharmaceutical products. As we move closer
to the potential market launch of MAXAMINE, we have and will continue to
undertake activities required to prepare for launch including market evaluations
and reimbursement analysis. We will also continue to build awareness of the drug
among leading clinicians. 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 approximately 1,500 major medical centers.
Marketing MAXAMINE directly in the United States will require us to build and/or
access a marketing infrastructure, including sales representatives, through a
combination of the recruitment of personnel to us, an alliance with a
co-promotion partner and/or the retention of a contract sales organization. Our
plan is to defer the build up of this infrastructure until we complete a review
of Phase III clinical data and an assessment of the regulatory process related
to the potential approval to market MAXAMINE in the United States.
In 1999, we entered into an agreement granting F. H. Faulding & Co., Ltd. the
right to market MAXAMINE in Australia and New Zealand. During 1999, we also
entered into an agreement granting MegaPharm, Ltd. the right to market MAXAMINE
in Israel. In other international markets, we are in the process of evaluating,
and are
31
<PAGE>
in discussions with, pharmaceutical companies to serve as marketing
collaborators for major geographic regions, including Europe and the Pacific
Rim.
Our marketing strategy for MAXDERM will be developed over time based upon, among
other factors, the specific indications targeted for therapy. Due to the nature
of the vaccine markets, we intend to establish agreements with pharmaceutical
companies with large distribution systems for MAXVAX and do not expect to
establish a direct sales capability in the vaccine area.
Manufacturing
We do not intend to acquire or establish our own dedicated manufacturing
facilities for MAXAMINE in the foreseeable future. There are a number of
facilities in compliance with FDA Good Manufacturing Practice available for
contract manufacturing, and we have contracted with established pharmaceutical
manufacturers for the production of MAXAMINE. These manufacturers are supplying
the MAXAMINE required for our current clinical trial activities, and have
demonstrated the capability to supply commercial quantities of the product for
the potential market launch.
We believe that, in the event of the termination of an agreement with any single
supplier or manufacturer, we would likely be able to enter into agreements with
other suppliers or manufacturers on similar terms. We are currently establishing
relationships with additional manufacturers to provide alternate sources of
supply for MAXAMINE.
Patents, Licenses and Proprietary Rights
We own or have the rights to 19 issued or allowed U.S. patents and 16 U.S.
patent applications. Corresponding patent applications have been filed, and in a
number of instances patents have been issued, in major international markets,
including Europe, Australia and Japan. Our policy is to file, where possible,
patent applications to protect technologies, inventions and improvements that
are important to the development of our business. We have devoted substantial
attention and resources to our patent and license portfolio. Maintaining patents
and licenses and conducting an assertive patent prosecution strategy is a
priority for us.
KEY GRANTED PATENTS AND PENDING APPLICATIONS
We hold the following U.S. patents or allowed applications related to MAXAMINE,
a technology platform based upon histamine, a naturally occurring H(2) receptor
agonist:
- - a U.S. patent relating to the combination of IL-2 and H(2) receptor agonists
(H(2)RAs);
- - a U.S. patent relating to the combination of IFN-(alpha) and H(2)RAs;
- - an allowed U.S. patent relating to a method for treating cancer or infectious
disease using certain NK cell activators in combination with certain
compounds that inhibit the production or release of hydrogen peroxide,
including histamine, or a hydrogen peroxide scavenger;
- - an allowed U.S. patent relating to methods of treating cancer in a patient
receiving radiation therapy or chemotherapy, using certain NK cell activators
in combination with a compound that inhibits the production or release of
hydrogen peroxide, including histamine, or a hydrogen peroxide scavenger;
- - a U.S. patent encompassing certain treatment with histamine in combination
with any NK cell activating cytokine or chemotherapeutic agent;
- - a U.S. patent relating to compositions comprising interferon-(alpha) and
histamine or related compounds and methods of treating viral infections using
the claimed compositions; and
32
<PAGE>
- - an allowed U.S. patent relating to methods for the therapeutic administration
of histamine and related compounds, the combination of histamine or related
compounds and a controlled release carrier, and a device for the
administration of histamine and related compounds.
Corresponding patents have also issued in international markets.
We also hold nine other patent applications in the United States relating to the
use of MAXAMINE with other cytokines and biotherapies, method of production,
mechanisms, rates and routes of administration, and other proprietary claims
that have also been filed internationally.
We also hold a worldwide, exclusive license to Professional Pharmaceuticals,
Inc.'s (PPI) five issued or allowed U.S. patents or applications for material
compositions and other rights underlying the MAXDERM technology. We also hold
one U.S. patent application related to the MAXDERM technology. Corresponding
patents for the above have also been filed internationally.
In the MAXVAX area, we hold a worldwide exclusive license to the U.S. and
international patents of Vitec AB and SBL Vaccin for recombinantly producing CTB
for use in infectious diseases other than cholera, bacterial related diarrheas
and HIV (we hold non-exclusive rights to this patent with regard to HIV). We
also hold exclusive license rights to related patent applications as well as a
patent application with respect to certain therapeutic and anti-inflammatory
properties of CTB.
We have also filed three of our own U.S. and an international patent
applications related to MAXVAX covering the use of CTB to make vaccines against
chlamydia and other sexually transmitted diseases and methods for developing
CTB-based vaccines.
TECHNOLOGY RIGHTS
In 1993, we entered into a technology transfer agreement under which we
purchased certain intellectual property and patent rights related to our
MAXAMINE technology. The technology transfer agreement requires that we pay
certain royalty obligations to the two inventors of the technology, although, as
part of a subsequent agreement with us, one of the inventors waived his royalty
rights. We have also filed a number of additional patent applications and
received additional patents encompassing the MAXAMINE technology as described
above.
In 1998, we entered into a license agreement with PPI for an exclusive,
worldwide license to technology related to material compositions and other
patent rights underlying the MAXDERM technology. The license agreement requires
that we pay certain royalty obligations to PPI. We have also filed an additional
patent application related to the MAXDERM technology.
In 1993, we entered into an option and license agreement with Vitec and SBL,
under which we exercised an option for an exclusive, worldwide license to
technology related to CTB for use in a chlamydia vaccine. Under the agreement,
we are required to use our best efforts to engage SBL to manufacture any
products which result from the application of the licensed technology. We also
have 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. Under 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, we 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 us), cholera and bacterial-related diarrheas. Under the
agreement, we have agreed to use our best efforts to engage SBL to manufacture
any products which result from the application of licensed technology, and both
Vitec and Maxim will 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 us.
33
<PAGE>
In 1998, we filed arbitration in Sweden relating to the licensors' performance
under the above agreements. The arbitration alleges certain causes of action
against the licensors, among other things, misstatements regarding the scope of
our licensed rights, and seeks damages and declaratory relief. The arbitration
also seeks specific performance of the licensors' obligations under the
agreements, including full disclosure of relevant manufacturing information. In
1999, the arbitration panel ruled that the scope of our licensed rights under
the agreements is identical to the rights understood and asserted by us. The
panel is expected to rule on the remaining issues in 2000. We cannot determine
what impact, if any, an unfavorable resolution of the existing concerns would
have on the commercial value of the MAXVAX technology.
We also hold 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.
Government Regulation
Regulation by governmental authorities in the United States and other countries
is a significant factor in the development, manufacture and marketing of our
proposed products and in our ongoing research and product development
activities. The nature and extent to which such regulation applies to us will
vary depending on the nature of any products which may be developed by us. We
anticipate that many, if not all, of our 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 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 money. Any failure by us or our collaborators to obtain, or any delay in
obtaining, regulatory approval could adversely affect the marketing of any
products developed by us, and prevent us from generating product revenues and
obtaining adequate cash to continue present and planned operations.
FDA APPROVAL PROCESS
Prior to commencement of clinical studies involving humans, 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 application, which must become effective before
clinical testing in humans can begin. Typically, human clinical evaluation
involves a time consuming and costly three-phase process. In Phase I, clinical
trials are conducted with a small number of people to assess safety and to
evaluate the pattern of drug distribution and metabolism within the body. 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. Monitoring of
all aspects of the study to minimize risks is a continuing process. Reports of
all adverse events must be made to the FDA.
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 NDA for
approval prior to commencement of commercial sales. In the case of vaccines, the
results of clinical trials are submitted as a Biologics License Application. In
responding to a NDA or Biologics License Application, 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, for any of our products. Similar procedures are in place in
countries outside the United States.
34
<PAGE>
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 regulatory authorities in the European Union
countries and other developed countries have lengthy approval processes for
pharmaceutical products. The process for gaining 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. 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
licensing within one member country followed by mutual recognition by the other
member countries.
OTHER REGULATIONS
We are also subject to various U.S. federal, state, 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 our 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 United States, there have been, and we expect 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 United States has and will continue to increase the pressure on
pharmaceutical pricing. While we cannot predict whether any such legislative or
regulatory proposals will be adopted or the effect such proposals or managed
care efforts may have on our business, the announcement of such proposals or
efforts could have a material adverse effect on our ability to raise capital,
and the adoption of such proposals or efforts could have a material adverse
effect on our 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 us,
our ability to establish corporate collaborations may be adversely affected. In
addition, in both the United States 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. Third-party payors
are increasingly challenging the prices charged for medical products and
services. If we succeed in bringing one or more products to the market, we
cannot assure you that these products will be considered cost effective and that
reimbursement to the consumer will be available or will be sufficient to allow
us to sell our 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
35
<PAGE>
products for the treatment of cancer and infectious disease. These include
surgical approaches, new pharmaceutical products and new biologically derived
products. We expect to encounter significant competition for the principal
pharmaceutical products we plan to develop. Companies that complete clinical
trials, obtain regulatory approvals and commence commercial sales of their
products before us 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 us, particularly hepatitis C. In some instances,
our competitors already have products in late-stage clinical trials. In
addition, certain pharmaceutical companies are currently marketing drugs for the
treatment of the same diseases being targeted by us, and may also be developing
new drugs to address these disorders.
In the area of immunotherapy, the impact of competition for MAXAMINE may be
reduced by the fact that the drug may be complementary to many other
biotherapeutic agents. MAXAMINE THERAPY combines the administration of MAXAMINE
with the administration of biotherapeutic agents. Accordingly, MAXAMINE and
these biotherapeutic agents may not be competitive but may play complementary
and synergistic roles in enhancing the immune system. For this reason, we
believe that continuing advancements in the overall field of immunotherapy may
create new opportunities for MAXAMINE.
Many of our competitors have substantially greater financial, clinical testing,
regulatory compliance, manufacturing, marketing, human and other resources.
Additional mergers and acquisitions in the pharmaceutical industry may result in
even more resources being concentrated with our competitors. We believe that our
competitive success will be based on our ability to create and maintain
scientifically advanced technology, develop proprietary products, attract and
retain scientific personnel, obtain patent or other protection for our products,
obtain required regulatory approvals, obtain orphan drug status for certain
products and manufacture and successfully market our products either
independently or through outside parties.
Employees and Consultants
As of December 31, 1999, we had 52 employees, all but three of whom were based
at our two facilities in San Diego, California. We believe our relationship with
our employees is satisfactory. We expect to hire other experienced professionals
in 2000 to, among other things, address the requirements of the planned market
launch of MAXAMINE and other commercialization efforts.
In addition to our employees, we have engaged a number of experienced
consultants in North America, Europe and Australia with pharmaceutical and
business backgrounds to assist in our product development efforts. We plan to
leverage our key personnel by making extensive use of contract laboratories,
development consultants, and collaborations with pharmaceutical companies to
expand our preclinical and clinical trials.
Properties
We currently lease approximately 35,000 square feet of laboratory and office
space in two facilities in San Diego, California. Approximately 5,000 square
feet of laboratory space is subleased to a third party. We believe that our
existing facilities will be adequate to accommodate the implementation of our
current business strategies.
Legal Proceedings
We are not engaged in any material legal proceedings other than the arbitration
relating to MAXVAX described above under "--Patents, Licenses and Proprietary
Rights."
36
<PAGE>
Management
Executive Officers and Directors
The names of our executive officers and directors as of February 22, 2000 and
their ages are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Name Age Position
- ----------------------------------------------------------------------------------------------------------
Chairman of the Board, President and Chief
Larry G. Stambaugh........................ 53 Executive Officer
Vice President, Development and Chief Technical
Kurt R. Gehlsen, Ph.D..................... 43 Officer
Chief Financial Officer, Vice President, Finance
Dale A. Sander............................ 40 and Secretary
Geoffrey B. Altman........................ 38 Vice President, Marketing and Sales
Colin B. Bier, Ph.D....................... 54 Director
Gary E. Frashier.......................... 63 Director
Theodor H. Heinrichs...................... 73 Director
Per-Olof Martensson....................... 62 Director
F. Duwaine Townsen........................ 66 Director
</TABLE>
Larry G. Stambaugh has served as our 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 us 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 us 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., a biotechnology company. From 1991 to
1993, Mr. Sander served as Chief Financial Officer of Tactyl
Technologies, Inc., a medical device manufacturer. Prior to 1991, Mr. Sander
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.
Geoffrey B. Altman joined us in 1997 and serves as Vice President, Marketing and
Sales. From 1997 to 1998, Mr. Altman served as Senior Director, Marketing and
Sales of the Company. From 1994 to 1997, Mr. Altman served as Director of
Worldwide Marketing Development and Director of U.S. Sales and Marketing of
Agouron Pharmaceuticals, a biopharmaceutical company. Prior to 1994, Mr. Altman
worked for six years with Amgen Inc., a biopharmaceutical company, as Product
Manager for the launch of the drug Neupogen-Registered Trademark- and as
Associate Director responsible for the U.S. marketing of Neupogen. Mr. Altman
received a B.A. in Chemistry with a Biochemistry concentration from the
University of California San Diego and a M.B.A. in Marketing and Finance from
the University of Chicago.
37
<PAGE>
Colin B. Bier, Ph.D. has served as one of our directors 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. and NYMOX Pharmaceuticals Corporation.
Gary E. Frashier has served as one of our directors since 1999. Mr. Frashier
served as Chief Executive Officer of OSI Pharmaceuticals, a drug discovery
company, from 1990 until his retirement in 1998. He has served as Chairman of
the Board of Directors of OSI since 1997. Prior to OSI, Mr. Frashier served as
Chief Executive Officer of Genex Corporation, led a management buy-out and
served as Chief Executive Officer of Continental Water Systems, Inc., and served
as Executive Vice President of Millipore Corporation. Mr. Frashier also serves
as Principal of Management Associates, a provider of consulting services to
entrepreneurial companies and on the Board of Directors of Cytoclonal
Pharmaceutics, Inc.
Theodor H. Heinrichs has served as one of our directors since 1999.
Mr. Heinrichs served as General Partner of the Hambrecht & Quist Life Science
Venture from 1985 to 1997. Previously, Mr. Heinrichs also served as Chairman and
Chief Executive Officer of Cutter Laboratories, Inc. and Chairman and Chief
Executive Officer of Miles Laboratories, Inc.
Per-Olof Martensson has served as one of our directors from 1993 to 1995 and
again beginning in 1996. Since 1998, and from 1991 to 1997, Mr. Martensson has
served as President and Chief Executive Officer of Karo Bio AB, a pharmaceutical
company; he is also a director of the company. From 1997 to 1998 Mr. Martensson
served as Chairman of Karo Bio. Since 1990, Mr. Martensson has owned and
operated POM Advisory Services AB, an independent consulting firm. 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 AB Elekta.
F. Duwaine Townsen has served as one of our directors since 1993. Mr. Townsen
has served as a Managing Partner of Ventana Growth Funds, a group of five
venture capital funds, since 1983. Additionally, Mr. Townsen serves as General
Partner of Endpoint, a late stage healthcare and biotechnology fund. Prior to
joining Ventana, 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 also a director emeritus of Cymer, Inc.
38
<PAGE>
Material U.S. Federal Tax Considerations for
Non-U.S. Holders of Common Stock
The following is a general discussion of certain material U.S. federal income
and estate tax consequences of the ownership and disposition of our common stock
by a beneficial owner thereof that is a "Non-U.S. Holder." A "Non-U.S. Holder"
is a person or entity that, for U.S. federal income tax purposes, is a
non-resident alien individual, a foreign corporation or a foreign estate or
trust.
This discussion is based on the U.S. Internal Revenue Code of 1986, as amended,
and administrative interpretations as of the date of this prospectus, all of
which are subject to change, including changes with retroactive effect. This
discussion does not address all aspects of U.S. federal income and estate
taxation that may be relevant to Non-U.S. Holders in light of their particular
circumstances (including, without limitation, Non-U.S. Holders who are
pass-through entities or who hold their common stock through pass-through
entities) and does not address any tax consequences arising under the laws of
any state, local or foreign jurisdiction. Prospective holders should consult
their tax advisors with respect to the particular tax consequences to them of
owning and disposing of our common stock, including the consequences under the
laws of any state, local or foreign jurisdiction.
Dividends
Subject to the discussion below, dividends, if any, paid to a Non-U.S. Holder of
our common stock generally will be subject to withholding tax at a 30% rate or
such lower rate as may be specified by an applicable income tax treaty. For
purposes of determining whether tax is to be withheld at a 30% rate or at a
reduced rate as specified by an income tax treaty, we ordinarily will presume
that dividends paid on or before December 31, 2000 to an address in a foreign
country are paid to a resident of such country absent knowledge that such
presumption is not warranted.
Under U.S. Treasury Regulations applicable to dividends paid after December 31,
2000 (the "New Regulations"), to obtain a reduced rate of withholding under a
treaty, a Non-U.S. Holder generally will be required to provide an Internal
Revenue Service Form W-8 BEN certifying such Non-U.S. Holder's entitlement to
benefits under a treaty. The New Regulations also provide special rules to
determine whether, for purposes of determining the applicability of a tax
treaty, dividends paid to a Non-U.S. Holder that is an entity should be treated
as paid to the entity or those holding an interest in that entity.
There will be no withholding tax on dividends paid to a Non-U.S. Holder that are
effectively connected with the Non-U.S. Holder's conduct of a trade or business
within the United States if a Form 4224 or, after December 31, 2000, a Form W-8
ECI, stating that the dividends are so connected is filed with us. Instead, the
effectively connected dividends will be subject to regular U.S. income tax in
the same manner as if the Non-U.S. Holder were a U.S. resident unless a specific
treaty exemption applies. A non-U.S. corporation receiving effectively connected
dividends may also be subject to an additional "branch profits tax" which is
imposed, under certain circumstances, at a rate of 30% (or such lower rate as
may be specified by an applicable treaty) of the non-U.S. corporation's
effectively connected earnings and profits, subject to certain adjustments.
Generally, we must report to the U.S. Internal Revenue Service the amount of
dividends paid, the name and address of the recipient, and the amount, if any,
of tax withheld. A similar report is sent to the holder. Pursuant to tax
treaties or certain other agreements, the U.S. Internal Revenue Service may make
its reports available to tax authorities in the recipient's country of
residence.
Dividends paid to a Non-U.S. Holder at an address within the United States may
be subject to backup withholding imposed at a rate of 31% if the Non-U.S. Holder
fails to establish that it is entitled to an exemption or to provide a correct
taxpayer identification number and certain other information to us.
Under current U.S. federal income tax law, backup withholding generally does not
apply to dividends paid on or before December 31, 2000 to a Non-U.S. Holder at
an address outside the United States, unless the payer
39
<PAGE>
has knowledge that the payee is a U.S. person. Under the New Regulations,
however, a Non-U.S. Holder will be subject to backup withholding unless
applicable certification requirements are met.
We have not paid cash dividends on our common stock and have no intention to do
so in the foreseeable future.
Gain on Disposition of Common Stock
A Non-U.S. Holder generally will not be subject to U.S. federal income tax with
respect to gain realized on a sale or other disposition of our common stock
unless (i) the gain is effectively connected with a trade or business of such
holder in the United States and a specific treaty exemption does not apply, (ii)
in the case of certain Non-U.S. Holders who are non-resident alien individuals
and hold our common stock as a capital asset, such individuals are present in
the United States for 183 or more days in the taxable year of the disposition,
(iii) the Non-U.S. Holder is subject to tax pursuant to the provision of the
U.S. Internal Revenue Code regarding the taxation of U.S. expatriates, or (iv)
we are or have been a "U.S. real property holding corporation" within the
meaning of Section 897(c)(2) of the U.S. Internal Revenue Code at any time
within the shorter of the five-year period preceding such disposition or such
holder's holding period. We believe that we are not, and do not anticipate
becoming, a U.S. real property holding corporation. Even if we are treated as a
U.S. real property holding corporation, gain realized by a Non-U.S. Holder on a
disposition of our common stock will not be subject to U.S. federal income tax
so long as (i) the Non-U.S. Holder is considered to have beneficially owned no
more than five percent of the common stock at all times within the shorter of
(a) the five year period preceding the disposition or (b) the holder's holding
period and (ii) our common stock is regularly traded on an established
securities market (within the meaning of Section 897(c)(3) of the U.S. Internal
Revenue Code and the temporary Treasury Regulations thereunder) at some time
during the calendar year in which the disposition occurs. There can be no
assurance that our common stock will continue to qualify as regularly traded on
an established securities market.
Information Reporting Requirements and Backup and Withholding on Disposition of
Common Stock
Under current U.S. federal income tax law, information reporting and backup
withholding imposed at a rate of 31% will apply to the proceeds of a disposition
of our common stock effected by or through a U.S. office of a broker unless the
disposing holder certifies as to its non-U.S. status or otherwise establishes an
exemption. Generally, U.S. information reporting and backup withholding will not
apply to a payment of disposition proceeds where the transaction is effected
outside the United States through a non-U.S. office of a non-U.S. broker.
However, U.S. information reporting requirements (but not backup withholding)
will apply to a payment of disposition proceeds where the transaction is
effected outside the United States by or through an office outside the United
States of a broker that fails to maintain documentary evidence that the holder
is a Non-U.S. Holder and that certain conditions are met, or that the holder
otherwise is entitled to an exemption, and the broker is (i) a U.S. person, (ii)
a foreign person which derived 50% or more of its gross income for certain
periods from the conduct of a trade or business in the United States, (iii) a
"controlled foreign corporation" for U.S. federal income tax purposes, or (iv)
effective after December 31, 2000, a foreign partnership (A) at least 50% of the
capital or profits interest in which is owned by U.S. persons, or (B) that is
engaged in a U.S. trade or business.
Effective after December 31, 2000, backup withholding will apply to a payment of
those disposition proceeds if the broker has actual knowledge that the holder is
a U.S. person.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the U.S.
Internal Revenue Service.
Federal Estate Tax
An individual Non-U.S. Holder who is treated as the owner of, or has made
certain lifetime transfers of, an interest in our common stock will be required
to include the value thereof in his gross estate for U.S. federal estate tax
purposes, and may be subject to U.S. federal estate tax unless an applicable
estate tax treaty provides otherwise.
40
<PAGE>
Underwriting
Maxim and the underwriters named below have entered into an underwriting
agreement covering the common stock to be offered in this offering. J.P. Morgan
Securities Inc., Prudential Securities Incorporated and Aragon
Fondkommission AB are acting as representatives of the underwriters. Each
underwriter has agreed to purchase the number of shares of common stock opposite
its name below.
<TABLE>
<CAPTION>
---------
<S> <C>
Number of
Underwriters Shares
---------
J.P. Morgan Securities Inc.................................. 1,674,613
Prudential Securities Incorporated.......................... 913,425
Aragon Fondkommission AB.................................... 456,712
AP Anlage & Privatbank AG................................... 160,250
---------
Total..................................................... 3,205,000
=========
</TABLE>
The underwriting agreement provides that if the underwriters take any of the
shares presented in the table above, then they must take all of these shares. No
underwriter is obligated to take any shares allocated to a defaulting
underwriter except under limited circumstances.
The underwriters are offering the shares of common stock, subject to the prior
sale of shares, and when, as and if such shares are delivered to and accepted by
them. The underwriters will initially offer to sell shares to the public at the
public offering price shown on the cover page of this prospectus. The
underwriters may sell shares to securities dealers at a discount of up to
$1.98 per share from the public offering price. Any of these securities dealers
may resell shares to other brokers or dealers at a discount of up to $0.10 per
share from the public offering price. After the initial offering, the
underwriters may vary the public offering price and other selling terms.
The following table shows the per share and total underwriting discounts that we
will pay to the underwriters.
<TABLE>
<CAPTION>
-----------
<S> <C>
Paid by
Maxim
-----------
Per share................................................... $3.30
-----------
Total..................................................... $10,576,500
===========
</TABLE>
The underwriters may purchase and sell shares of common stock in the open market
in connection with this offering. These transactions may include short shares,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
shares than they are required to purchase in this offering. Stabilizing
transactions consist of bids or purchases made for the purpose of preventing or
slowing a decline in the market price of the common stock while the offering is
in progress. The underwriters may also impose a penalty bid, which means that an
underwriter must repay to the other underwriters a portion of the underwriting
discount received by it. An underwriter may be subject to a penalty bid if the
representatives of the underwriters, while engaging in stabilizing or short
covering transactions, repurchase shares sold by or for the account of that
underwriter. These activities may stabilize, maintain or affect the market price
of the common stock. As a result, the price of the common stock may be higher
than the price that might exist in the open market. If the underwriters commence
these activities, they may discontinue them at any time.
We estimate that the total expenses of this offering payable by us, excluding
underwriting discounts, will be $750,000.
41
<PAGE>
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
It is expected that delivery of the shares will be made to investors on or about
February 28, 2000.
We and our executive officers and directors have agreed, with limited
execptions, that, during the period beginning from the date of this prospectus
and continuing to and including the date 90 days after the date of this
prospectus, none of us will, directly or indirectly, offer, sell, offer to sell,
contract to sell or otherwise dispose of any shares of common stock or any of
our securities which are substantially similar to the common stock, including
but not limited to any securities that are convertible into or exchangeable for,
or that represent the right to receive, common stock or any such substantially
similar securities or enter into any swap, option, future, forward or other
agreement that transfers, in whole or in part, the economic consequence of
ownership of common stock or any securities substantially similar to the common
stock, other than pursuant to the exercise of stock options and warrants
outstanding on the date of this prospectus and the conversion of our preferred
stock, without the prior written consent of J.P. Morgan Securities Inc.
From time to time in the ordinary course of their respective businesses, certain
of the underwriters and their affiliates have engaged in and may in the future
engage in commercial banking and/or investment banking transactions with us and
our affiliates.
Legal Matters
Arnold & Porter, Washington, D.C., will render an opinion for us that the shares
of common stock offered hereby, when sold in connection with this offering, will
be validly issued, fully paid and non-accessible. Legal matters in connection
with the offering will be passed upon for the underwriters by Cahill Gordon &
Reindel, New York, New York.
Experts
The financial statements of Maxim Pharmaceuticals, Inc. as of September 30, 1998
and 1999, and for each of the years in the three-year period ended
September 30, 1999, and for the period from inception (October 23, 1989) through
September 30, 1999, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
42
<PAGE>
Where You Can Find More Information
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549.
You can request copies of these documents by contacting the SEC and paying a fee
for the copying cost. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from the SEC's website at www.sec.gov.
This prospectus is part of a registration statement on Form S-3, including
amendments, that we have filed with the SEC relating to the common stock offered
by this prospectus. This prospectus does not contain all of the information set
forth in the registration statement, the exhibits and schedules, some portions
of which the SEC allows us to omit. Statements contained in this prospectus as
to the contents of any contract or other document referred to are not
necessarily complete and in each instance reference is made to the copy of that
contract or other document filed as an exhibit to the registration statement.
For further information about us and the common stock offered by this prospectus
we refer you to the registration statement and its exhibits and schedules which
may be obtained as described above.
The SEC allows us to "incorporate by reference" the information contained in
documents that we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information in this prospectus supersedes information incorporated by reference
that we filed with the SEC before the date of this prospectus, while information
that we file later with the SEC will automatically update and supersede prior
information. We incorporate by reference the documents listed below and any
future filings we will make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until all of the shares being
offered in this propsectus are sold:
- - our Annual Report on Form 10-K for the fiscal year ended September 30, 1999;
- - our Quarterly Report on Form 10-Q for the quarter ended December 31, 1999; and
- - our registration statement on Form 8-A filed on June 28, 1996 which includes a
description of our common stock.
You may request copies of these filings, at no cost, by writing or telephoning
us at:
Maxim Pharmaceuticals, Inc.
Attention: Investor Relations
8899 University Center Lane, Suite 400
San Diego, CA 92122
Telephone (858) 453-4040
43
<PAGE>
[MAXIM LOGO]
