8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 8, 2006

Maxygen, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-28401	77-0449487
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

515 Galveston Drive

Redwood City, CA 94063

(Address of principal executive offices)

(650) 298-5300

(Registrant’s telephone number, including area code)

Not Applicable.

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On February 8, 2006, Maxygen, Inc. issued a press release announcing its financial results for the three months and year ended December 31, 2005. A copy of the press release announcing these financial results and certain other information is attached as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1 Press Release dated February 8, 2006

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MAXYGEN, INC.
Date: February 8, 2006	By:	/s/ Michael Rabson
		Michael Rabson
		Senior Vice President

EX-99.1

Exhibit 99.1

Maxygen Reports Fourth Quarter and Year End 2005 Financial Results

Redwood City, Calif., February 8, 2006 – Maxygen, Inc. (Nasdaq: MAXY) today reported financial results for the fourth quarter and year ended December 31, 2005.

Maxygen reported a loss applicable to common stockholders of $18.6 million, or $0.52 per share, for the year ended December 31, 2005, as compared to income applicable to common stockholders of $8.3 million, or $0.24 per share, for the prior year. Maxygen reported a loss from continuing operations of $35.1 million, or $0.98 per share, for the year ended December 31, 2005, compared to a loss from continuing operations of $49.1 million, or $1.40 per share, in 2004.

As a result of the change in Maxygen’s accounting for its investment in Codexis on the equity accounting basis, Maxygen does not include the operating results of Codexis in its financial statements after February 28, 2005. Financial results for 2004 contained herein include the operating results of Codexis for the three and twelve month periods reported.

Revenue for the year ended December 31, 2005 was $14.5 million compared to $16.3 million in 2004, a decrease of eleven percent. The decrease in revenue was primarily due to the change to the equity method of accounting for Maxygen’s investment in Codexis, as of February 28, 2005, and reduced activities related to the scheduled wind-down of Maxygen’s collaborative research programs as it focused its efforts on development of its product candidates. This decrease was partially offset by the two milestones received from Roche in 2005 for Maxygen’s next-generation interferon alpha product candidate and an increase in grant revenues.

At December 31, 2005, cash, cash equivalents and marketable securities totaled $188.3 million.

Maxygen reported a loss applicable to common stockholders of $5.9 million, or $0.16 per share, for the fourth quarter of 2005 compared to a loss applicable to common stockholders of $15.6 million, or $0.44 per share, in the comparable period of 2004.

*********************

“In 2005 we made significant achievements on many fronts, “said Russell Howard, Ph.D., Chief Executive Officer of Maxygen. “Maxygen advanced the preclinical development of MAXY-G34, our next-generation G-CSF product candidate, and we received two significant milestones from our partner Roche for the advancement of our MAXY-alpha next-generation interferon alpha product candidate towards clinical development. We established a second alliance with Roche for co-development of our next-generation factor VII product candidates and we received $14.4 million in grant and contract funding of our HIV vaccine research. We believe that 2006 will be an important year for Maxygen with our next-generation G-CSF and interferon alpha product candidates expected to enter clinical development and the advancement of our next-generation factor VII product for acute indications”.

2005 Highlights

• Two preclinical milestones for the advancement of Maxygen’s next-generation IFN-alpha in collaboration with Roche.

• $14.4 million in government grant and contract funding for HIV vaccine research.

• Co-development alliance with Roche for next-generation factor VII for acute indications.

About Maxygen

Maxygen, Inc., headquartered in Redwood City, California, is focused on creating novel products using its integrated proprietary technologies for human therapeutics. Maxygen’s technologies bring together advances in molecular biology and protein modification to create novel biotechnology products.

Forward-Looking Statements

This news release contains forward-looking statements about our research and business prospects, including those relating to: our ability to advance our next-generation G-CSF, interferon alpha or factor VII product candidates, or any other pharmaceutical products, into clinical development; the timing or success of the filing of an IND for any such product candidate; the success or continuation of any existing or future alliance, collaboration or research program; and whether we will achieve any future milestones or receive any payments or grants for any existing or future product candidates or research programs. Such statements involve risks and uncertainties that may cause results to differ materially from those set forth in these statements. Among other things these risks and uncertainties include, but are not limited to: changing research and business priorities of Maxygen and/or its collaborators; the inherent uncertainties of biological research; our ability to develop human therapeutic drugs in an increasingly competitive biotechnology industry and the uncertain timing of such development; competitors producing superior products; and our future ability to enter into and/or maintain research and commercialization collaborations. These and other risk factors are more fully discussed in our Form 10-K for the year ended December 31, 2004, including under the caption “Risk Factors,” and in our other periodic SEC reports, all of which are available from Maxygen at www.maxygen.com. Maxygen disclaims any obligation to update or revise any forward-looking statement contained in this release as a result of new information or future events or developments. Maxygen is a registered trademark of Maxygen, Inc. The Maxygen logo is a trademark of Maxygen, Inc.

Selected Consolidated Financial Information

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2005(1)			2004(3)			2005(2)			2004(3)
	(unaudited)						(unaudited)			(Note 1)
Revenues:
Collaborative research and development revenue	$	5,085		$	3,246		$	11,594		$	14,333
Grant revenue		1,186			675			2,907			1,942
Total revenues		6,271			3,921			14,501			16,275
Expenses:
Research and development		10,814			16,253			41,789			53,294
General and administrative		3,015			4,422			13,153			14,372
Stock compensation expense		62			8			183			355
Total operating expenses		13,891			20,683			55,125			68,021
Loss from operations		(7,620	)		(16,762	)		(40,624	)		(51,746	)
Interest income, net		1,764			1,769			5,572			4,055
Equity in losses of minority investee		—			(395	)		—			(1,395	)
Loss from continuing operations		(5,856	)		(15,388	)		(35,052	)		(49,086	)
Net income from discontinued operations		—			—			—			58,428
Cumulative effect adjustment		—			—			16,616			—
Net income (loss)	$	(5,856	)	$	(15,388	)	$	(18,436	)	$	9,342
Net income (loss)	$	(5,856	)	$	(15,388	)	$	(18,436	)	$	9,342
Subsidiary preferred stock accretion		—			(250	)		(167	)		(1,000	)
Income (loss) applicable to common stockholders	$	(5,856	)	$	(15,638	)	$	(18,603	)	$	8,342
Basic and diluted earnings (loss) per common share:
Continuing operations	$	(0.16	)	$	(0.43	)	$	(0.98	)	$	(1.40	)
Discontinued operations	$	—		$	—		$	—		$	1.66
Cumulative effect adjustment	$	—		$	—		$	0.46		$	—
Applicable to common stockholders	$	(0.16	)	$	(0.44	)	$	(0.52	)	$	0.24
Shares used in computing basic and diluted earnings (loss) per common share		35,888			35,456			35,765			35,176

(1) Does not include operations of Codexis

(2) Includes operations of Codexis through February 28, 2005

(3) Includes operations of Codexis for all of period

Condensed Consolidated Balance Sheets

(in thousands)

	December 31, 2005		December 31, 2004
	(unaudited)		(Notes 1 and 2)
Cash, cash equivalents and marketable securities	$	188,323	$	232,893
Other current assets		9,606		8,781
Property and equipment, net		4,068		7,677
Goodwill and other intangibles, net		12,192		12,192
Other assets		334		1,562
Total assets	$	214,523	$	263,105
Current liabilities	$	11,652	$	16,080
Non-current deferred revenue		5,517		1,718
Long-term obligations		10		1,786
Minority Interest		—		32,180
Stockholders’ equity		197,344		211,341
Total liabilities and stockholders’ equity	$	214,523	$	263,105

Note 1: Derived from consolidated audited financial statements as of December 31, 2004.

Note 2: Cash, cash equivalents and marketable securities as of December 31, 2004 includes $17.2 million which may only be used for Codexis operations.

Footnotes

Reconciliation of GAAP loss from continuing operations to operating cash utilization (in thousands)

	Maxygen			Codexis			Total
Loss from continuing operations	$	(33,747	)	$	(1,305	)	$	(35,052	)
Stock Compensation		183						183
Depreciation Expense		3,268			262			3,530
Acquisition of property and equipment		(1,430	)		(810	)		(2,240	)
Operating Cash Utilization	$	(31,726	)	$	(1,853	)	$	(33,579	)