Research - Maxygen

Maxygen

Updated May 15, 2000

Years	Q1 2001	Dec 2000	Dec 99	Dec 98	Dec 97
Sales (Mln US$)	7	25	14	3	0.3
Net Loss (Mln US$, excl spec. items)	-5	-11	-6	-9	-4
Special Items (Mln US$)	-6	-48	-8
R&D (Mln US$)	13	39	19	8	3
Cash Flow / Debt

Market Cap.:                                   600        million US$     (Jan 18, 2001)
Cash & Short Term Investment:    258         million US$     (Dec 31, 2000)
Total Assets:                                    302
Long Term Debt:                             1
Total Liabilities:                               20
Shareholders Equity:                       282

Profile

- established in 1997 as an indepeendent spin-off from Affymax Research Institue, a wholly owned subsidiary of Galxo Wellcome
- listed in 1999
- a biotech company specialized in directed molecular evolution
- to produce better proteins (like enzymes, hormones and antibodies) by creating numerous mutation in genes
- employee 145
- 35% of its revenues are grants from US National Institute of Standards and Technology - Adavanced Technology Program and Defense Advanced Research Projects Agency

How does it make money?

Currently its revenues are come from collaboration with larger chemical, agricultural and pharmaceutical companies. Because of the huge market of drugs and extremely high profit margin, in the long run its earnings will mostly be come from drug making. It doesn't have any human clinical trial yet, the real significant profit could only be seen at least 10 years from now.

Does it have a strong demand? How big is the market?

Its directed evolution technology has the potential to apply on the following target market::

Protein Pharmaceuticals
Its technology could improve the existing pharmaceutical proteins in the following ways:
-   to improve desirable biological activities
-   to alter receptor specificity and binding activity
-   to reduce harmful side effects
-   to reduce toxicities
Sales of protein drugs in 2000 is about US$ 19 billion.

Vaccines
Vaccines are typically comprised of two elements:
antigens - components of the invading pathogen that are recognized by cells of the immune system and trigger the body’s defenses;
adjuvants - immune system boosters.
The development of vaccines has been hindered because existing antigens and adjuvants are limited in their ability to generate the required immune responses. The Company is developing novel vaccines that have the potential to overcome the limitations of traditional vaccine development.
Sales of vaccines in 1998 exceeded US$ 4 billion.

Chemicals
The technology of directed evolution helps overcome the limitations of natural enzymes and leads to more cost-effective and more environmentally friendly production systems for plastics, vitamins, pharmaceuticals, fibers and adhesives.
In 1998, chemicals in about US$ 50 billion were produced by biological processing.

Agriculture
The Company is developing improved proteins for:
- Crops with increased yields which require less fertilizers, herbicides or insecticides.
- . Plants which can thrive on land where they could not otherwise survive, for example because of lack of water, high salt level or extreme temperatures.

Is it the market leader? Who are its competitors?

In directed molecular evolution, there are some other companies using different technology:
Applied Molecular Evolution
Diversa
Enchira

What are its competitive advantages?

    Like farmers breeding a new generation of cows by combining better traits, Maxygen breeds genes. Instead of marrying 2 parent genes, scientists can sexually recombine up to 26 parents genes to get a new offspring.
    Maxygen's method of breeding is called "DNA Shuffling".
    Started with a few different versions of gene for a protein you'd like to improve, cut them up and mixed the pieces together to generate a diverse pool of new versions of the gene, fish out the ones you like best, and start all over again. (MIT Technology Review, Nov 2000)
    From its collaborations with other larger companies, we may have some idea of how well they are doing:

Partners	Projects	Remarks
Novo Nordisk	To improve the performance of industrial enzymes used in food preparation, detergents, pulp & paper manufacturing. shown improvement of Subtilisin, an industrial enzyme	Novo Nordisk is the world's largest producer of industrial enzymes
DuPont/Poineer Hi-bred	To generate new gene products for use in the development of specific crop protection and quality grain traits in corn, soybeans and certain other crops
DSM	To evolve new enzymes for use in the manufacture of certain class of penicillin antibiotics
AstraZeneca	To improve the yield and quality of several AstraZeneca's strategic crops
Rio Tinto	To develop enzymatic systems for use in carbon dioxide fixation for use in chemical bioprocessing
Chevron	To develop specific petrochemical products with cheaper and more environmentally friendly bioprocesses
Lundbeck	To develop a protein pharmaceutical for central nervous system diseases, like multiple sclerosis
Scripps Research Institue	To identify potential vaccine candidates for treatment and prevention of HIV
Pfizer	To improve the selectivity of an enzyme required for the manufacture of a pharmaceutical product sold by Pfizer
Natural Cancer Institute	To develop certain pharmaceutical proteins for treatment of certain cancers
Defense Advanced Research Agency	To develop vaccines against a broad spectrum of micro-organisms which cause diseases
ALK-Abello	To develop recombinant allergy therapeutics
International AID Vaccine Initiative	To develop HIV vaccine

Its technology has been sucessful in industrial chemicals, could it be not that feasible in pharmaceuticals?

Maxygen is developing improved versions of proteins, potentially less side effects, that are being used as drugs such as insulin, growth hormones and alpha interferons.
By cloning more than 20 human genes involved in making interferon, Maxygen scientists have come up with a family of 10 new interferon genes that packed a cancer-killing punch while potentially lowering toxic side effects. (Forbes, May 2000)