UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.      )

Filed by the Registrant þ                             Filed by a Party other than the Registrant ¨

Check the appropriate box:

¨ Preliminary Proxy Statement

¨ Confidential, for Use of the Commission only (as permitted by Rule 14a-6(e)(2))

¨ Definitive Proxy Statement

¨ Definitive Additional Materials

þ Soliciting Material under Rule 14a-12

MAXYGEN, INC.

(Name of the Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

þ No Fee Required.

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1. Title of each class of securities to which transaction applies:

2. Aggregate number of securities to which transaction applies:

3. Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

4. Proposed maximum aggregate value of transaction:

5. Total fee paid:

¨ Fee paid previously with preliminary materials:

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

1. Amount Previously Paid:

2. Form, Schedule or Registration Statement No.:

3. Filing Party:

4. Date Filed:

Filed by Maxygen, Inc.

Pursuant to Rule 14a-12 under the Securities Exchange Act of 1934

Subject Company: Maxygen, Inc.

Commission File: 000-28401

HIGHLY CONFIDENTIAL

Employee Meeting

Nasdaq: MAXY

2

Confidential

Update on Strategic Transaction Process

Confidential Disclosure of Exciting Transaction

Anticipated to be signed very soon

Highly

Confidential

–

Any

premature

disclosure

could

jeopardize

the

transaction

Material

non-public

information

will

be

disclosed

which

will

prohibit

trading

of

Maxygen stock and “tipping”

in accordance with insider trader policy

Provide information on future employment plans

You will also receive a letter with the information presented today

The letter will also provide specifics for your own personal situation

We need to confirm acceptance of continued/new employment

We will be available to answer questions and ensure you fully understand your

future employment opportunity

3

Confidential

New Company to be Formed by Maxygen and Astellas

New Venture (referred to as “MPC”) to be formed by Maxygen and Astellas

MPC’s mandate will be to

Develop and commercialize Maxy-4 compounds

Via existing Astellas collaboration (through which Astellas recognizes the

quality of our science and collaborative spirit)

Discover and develop new protein therapeutics in immunosuppression for

Autoimmune disease

Transplant rejection

MPC is being formed with the following people and assets:

All Maxygen Human Therapeutics scientific staff

All protein therapeutic programs, excluding Maxy-G34, including current

Discovery programs and new project ideas

Access to shuffling for protein therapeutic applications

Assignment of Maxygen’s Maxy-4 agreement with Astellas

G&A staff sufficient to operate on a going forward basis

4

Confidential

MPC Formation and Fully-Diluted Ownership

Maxygen and Astellas to contribute $10 MM each of cash in exchange for

preferred equity

Maxygen to receive $40 MM preferred equity in exchange for contributed

assets (Maxy-4, Discovery programs and capability, shuffling license, etc.)

20% of MPC’s fully-diluted equity to be allocated to an employee equity

pool

Fully-Diluted Ownership percentage to be:

13.3% Astellas (16.7% non-fully diluted)

66.7% Maxygen (83.3% non-fully diluted)

20.0% MPC Employee Equity Plan

MPC to be managed by a board of managers

4 appointed by Maxygen’s Board

MPC’s CEO and 3 others TBD

1 appointed by Astellas

5

Confidential

New MPC Relationship with Astellas

Astellas to fund 100% of the costs associated with protein therapeutics discovery

programs in MPC for three year period

Excluding Maxy-4, which is funded by MPC and Astellas per existing agreement

Based upon jointly approved plan and budget

Subject to anticipated limitations (floors and caps)

MPC restricted from licensing discovery programs during such three-year period

Astellas Buy-Out Option to acquire Maxygen’s interest in MPC for 3 years

The exercise price increases quarterly from $53 to $123 million

Also provides for additional cash-out by Astellas of employee equity

Value of cash-out based on appreciation in value of MPC (shared w/ preferred equity)

Astellas Product Option to exclusively license one of MPC’s new product programs

(selected by Astellas) at the end of 3 years, if it does not exercise its Buy-Out

Option

Terms to be agreed in good faith or automatically results in a one-time, up-front payment of

$20 million if MPC has less than $20 million in net cash

MPC to receive opt-out funding via a loan if Buy-out Option and Product Options

both expire unexercised and certain conditions exist

6

Confidential

MPC Organizational Structure

Finalization of organizational structure pending deal completion

Plan is to keep R&D structure intact and unchanged with some limited

organizational changes to facilitate the achievement of MPC goals

Continued relationship between Maxygen and MPC

Maxygen 80+% ownership (non-diluted basis)

Sharing of building/facilities

Sharing of G&A staff

7

Confidential

MPC R&D Organizational Chart

R&D Organization Structure

G&A Staff NOT SHOWN

Dana F

Executive Asst

Project Management

Staff (1)

Project

Team

Leaders 

Stephanie L

Sr

Dir

Project Management

Molecular Biology

Staff (5)

Steve P

Dir

Molecular Biology

Erik K

Sr

Dir

Discovery/MolBio

Bio/Pharma/Tox

Staff (11)

Maggie N

Assoc Dir

Bio/Pharma/Tox

Bruce D

VP

Bio/Pharma/Tox

USP

Staff (5)

Sridhar R

Proc Dev Dir

Upstream

DSP

Staff  (5)

Claus K

Proc Dev Assoc Dir

Downstream

Process

Analytical Staff (6)

Brent L

Dir Protein

Analytic/Pharma

Sridhar V

Protein Science

Proc Dev/MFG

Grant Y

CEO

8

Confidential

MPC Product and Portfolio Management Team

Product Portfolio Management

G&A Staff  NOT SHOWN

Dana F

Executive Asst

Project Management

Staff (1)

Project

Team

Leaders

Stephanie L

Sr

Dir

Project Management

Molecular Biology

Staff (5)

Steve P

Dir

Molecular Biology

Erik K

Sr

Dir

Discovery / MolBio

Bio/Pharma/Tox

Staff (11)

Maggie N

Assoc Dir

Bio/Pharma/Tox

Bruce D

VP

Bio/Pharma/Tox

USP

Staff (5)

Sridhar R

Proc Dev Dir

Upstream

DSP

Staff  (5)

Claus K

Proc Dev Assoc Dir

Downstream

Process

Analytical Staff (6)

Brent L

Dir Protein

Analytic/Pharma

Sridhar V

VP

Proc Dev/MFG

Grant Y

CEO

9

Confidential

G&A Organizational Structure:

MPC and Maxygen will share G&A staff

IT will be managed by MPC with dual reporting to Maxygen

IT related work for Maxygen via cross-service agreement

Facilities will be managed by MPC with dual reporting to Maxygen

Facilities related work for Maxygen via cross-service agreement

HR will be managed by either MPC or Maxygen with dual reporting to the other

party

HR related work for the non-employing party via cross-service agreement

IP to remain within Maxygen with dual reporting to MPC

Shuffling patents will remain owned and prosecuted by Maxygen

license to MPC for protein therapeutics

IP related work for MPC via cross-service agreement

Finance to remain within Maxygen with dual reporting to MPC

Maxygen remains public company with associated reporting obligations

Accounting/finance/purchasing work for MPC via cross-service agreement

Legal to remain within Maxygen with dual reporting to MPC

Maxygen remains public company with SEC reporting and other legal obligations

Support for contracts for MPC via cross-service agreement

10

Confidential

Anticipated Timeline

We expect signature of the agreement soon

Closure of the transaction will be subject to stockholder approval, which we

anticipate being completed in 4Q 2009 depending upon interactions with

the SEC on the proxy

11

Confidential

Great Opportunity for Maxygen Stockholders

Decreases burn rate

Positions our assets for best potential value

12

Confidential

Maxygen will Retain Various Assets

Ownership of Shuffling IP and rights to technology in other fields

G&A operations to maintain its status as publicly-traded company

83% ownership of MPC

~22% ownership of Codexis

Maxy-G34 Cangene ARS license

Maxy-G34 for CIN and other indications

$30 MM milestone payment under the Bayer Agreement

Vaccines asset and operations

Significant cash position

Maxygen and MPC

Employment Plans

14

Confidential

Employment Plans

You are all in this meeting as you are all either

Continuing in your role at Maxygen

Being offered a new comparable position at MPC

You will be notified by your Department Manager of the specific terms and

conditions of your employment after the completion of this meeting

The plans being specified are contingent upon closing of the transaction

and also some of the items still may require approval of the Maxygen Board

15

Confidential

Maxygen Retained Employees and Employees Transferring to

MPC will Receive:

Written confirmation of continued employment with Maxygen or offer for new

employment in a “comparable position”

with MPC

Payment of 2009 Bonus within 90 days of closing of the transaction (but no later

than Jan 15, 2010) so long as you are employed at time of payment

Accelerated vesting of granted RSUs within 90 days of closing so

long as you

remain employed

New equity grants

Maxygen equity plan to be determined by year-end 2009

MPC will provide equity grants

16

Confidential

Benefit Plans for Maxygen and MPC Employees

MPC and Maxygen will share the same benefit plans which are anticipated to be

similar to or identical to Maxygen’s current benefits plans

The following changes are under consideration/likely to be implemented:

Elimination of the Maxygen stock match to the 401(k) plan

the 401(k) plan will still be available to employees

MPC employees will not be eligible to participate in Maxygen’s ESPP

no decision has been made whether or not such program will continue or not

Elimination of health club reimbursement and commuter reimbursement

Vacation/FTO will be carried over from Maxygen to MPC so MPC employees will

have their accrued vacation time available for use at MPC

Credit

for

service

time

spent

at

Maxygen

will

be

provided

to

MPC

employees

The benefit plans may be added to, changed or eliminated at any time

17

Confidential

MPC Equity Plan

MPC will be a Limited Liability Company (LLC) instead of a corporation as

this provides benefits for the parties to the transaction

As such, MPC’s equity plan may provide for award either as unit options or

some other type of award

e.g.,

unit

options

are

a

type

of

equity

award

permitted

for

LLCs

(and

similar

entities) and not corporations so they are less familiar than stock options

Unit options that may be granted by MPC would generally represent shares in the

future appreciation of the value of MPC.  As with a stock option, a unit option

would increase in value to the holder to the extent MPC increases in value

A unit option would entitle the holder to receive proportionate share of MPC

profits

distributed

in

a

sale,

IPO

or

other

“liquidity

event”

involving

MPC.

Unlike

a

stock option, no exercise or purchase price is required for a unit option

Typically, an employee is not taxed when a unit option is granted or vests 

An important advantage of unit options is that profits realized are taxed as capital

gains.  The capital gains are either short-term or long-term, depending on how

long the unit option has been held

18

Confidential

Why I am Excited about this Opportunity to Join MPC

Start of a new chapter with an outstanding team of scientists and professionals I

know and believe in

Proven technology tools we know are capable for protein therapeutic discovery

Existing discovery programs with reasonable and potentially test-able hypotheses

An exciting Maxy-4 program we created via DNA shuffling

Two shots on goal with two

significant commercial opportunities

Know the program and data intimately

Adequate cash runway in challenging fund-raising environment

Committed partner with complementary infrastructure that can be leveraged

We know we can work effectively with them

Attractive equity participation in successful buy-out outcome, if such occurs

Strong belief that I can help contribute to a successful outcome

19

Confidential

What I Will Commit to MPC and Maxygen Staff

I will seek to make decisions based upon what I feel is in the best interest of

MPC and expect MPC staff will do the same

It is useful and productive to debate when we disagree as to what is in MPC’s

best interest

I will be open regarding the challenges and activities facing the company so

we are working together on the same goals

I hope we can build upon the productive, team-oriented environment that

has produced outstanding science

I am fully committed to make MPC a successful entity

20

Confidential

Employment Letter

Your employment letter will be provided to you by your department

manager soon

Signed employment letter needs to be returned to Jim Shunk

21

Confidential

Your Department Manager will be meeting with you today or as soon as

practical

22

Confidential

Don’t Disclose any of this Highly Confidential Information

The information we have shared is Highly Confidential 

Any premature disclosure could jeopardize this

transaction

We have also disclosed material non-public information and no one should

disclose this information outside the company or trade Maxygen stock until

the proxy statement is filed and the Compliance Committee has cleared any

such trading

23

Confidential

Additional Information and Where You Can Find It

In connection with the transaction discussed herein, Maxygen will file a proxy statement with

the SEC. The proxy statement will be furnished to the stockholders of Maxygen. Investors and

security holders of Maxygen are urged to read the proxy statement when it becomes available

because it will contain important information about Maxygen and the proposed transaction.

The proxy statement (when it becomes available), and any other documents filed by Maxygen

with

the

SEC,

may

be

obtained

free

of

charge

at

the

SEC’s

web

site

at

www.sec.gov.

In

addition, investors and security holders may obtain free copies of the documents filed with the

SEC by Maxygen by contacting Maxygen at info@maxygen.com or via telephone at (650) 298-

5300.

Investors

and

security

holders

are

urged

to

read

the

proxy

statement

and

the

other

relevant materials when they become available before making any voting or investment

decision with respect to the proposed transaction.

Maxygen and its respective directors and executive officers may be deemed to be participants

in

the

solicitation

of

proxies

from

its

stockholders

in

favor

of

the

proposed

transaction.

Information about the directors and executive officers of Maxygen and their respective

interests in the proposed transaction will be available in the proxy statement.

24

Confidential

Cautionary Statement Regarding Forward-Looking

Statements

This

document

contains

forward-looking

statements

within

the

meaning

of

the

“safe

harbor”

provisions

of

the

Private Securities Litigation Reform Act of 1995.  These statements are based on management’s current

expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual

results to differ materially from those described in the forward-looking statements. The forward-looking

statements contained in this document include statements about the proposed transaction, the timing of the

transaction and the potential benefits of the transaction and the strategic restructuring.  These statements

are

not

guarantees

of

future

performance,

involve

certain

risks,

uncertainties

and

assumptions

that

are

difficult to predict, and are based upon assumptions as to future events that may not prove accurate. 

Therefore, actual outcomes and results may differ materially from what is expressed herein.  For example, if

Maxygen does not receive required stockholder approval or fails to satisfy other conditions to closing, the

joint venture will not be formed.  Further, there is no assurance that the joint venture will be successful or

that Astellas will exercise its buy-out option even if the joint venture is successful.  In any forward-looking

statement

in

which

Maxygen

expresses

an

expectation

or

belief

as

to

future

results,

such

expectation

or

belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance

that the statement or expectation or belief will result or be achieved or accomplished.  The following factors,

among others, could cause actual results to differ materially from those described in the forward-looking

statements: failure of the Maxygen stockholders to approve the formation of the joint venture and the other

transactions, the failure of any other closing condition to be satisfied, unexpected delays in the formation of

the joint venture, risks inherent in drug development, such as potential difficulties or delays in the

development, testing, regulatory approvals, progression or production of drug compounds, the failure to

develop products suitable for commercialization, the delay or suspension of predicted development and

commercial timelines for any potential products, the failure to protect intellectual property portfolio and rights;

the failure to identify and develop new potential products, and the risk that any compounds developed may

have adverse side effects or inadequate therapeutic efficacy, and other economic, business, competitive,

and/or regulatory factors affecting Maxygen’s business and the market it serves generally, including those

set forth in Maxygen’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q,

especially in the “Risk Factors”

and “Management’s Discussion and Analysis of Financial Condition and

Results of Operations”

sections, and its Current Reports on Form 8-K and other SEC filings.  Maxygen is

under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking

statements whether as a result of new information, future events, or otherwise.

HIGHLY CONFIDENTIAL

Thanks!

Nasdaq: MAXY

Additional Information and Where You Can Find It

In connection with the transaction discussed herein, Maxygen will file a proxy statement with the SEC. The proxy statement will be furnished to the stockholders of Maxygen. Investors and security holders of Maxygen are urged to read the proxy statement when it becomes available because it will contain important information about Maxygen and the proposed transaction. The proxy statement (when it becomes available), and any other documents filed by Maxygen with the SEC, may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by Maxygen by contacting Maxygen at info@maxygen.com or via telephone at (650) 298-5300. Investors and security holders are urged to read the proxy statement and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed transaction.

Maxygen and its respective directors and executive officers may be deemed to be participants in the solicitation of proxies from its stockholders in favor of the proposed transaction. Information about the directors and executive officers of Maxygen and their respective interests in the proposed transaction will be available in the proxy statement.

Cautionary Statement Regarding Forward-Looking Statements

This document contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations and beliefs of Maxygen’s management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The forward-looking statements contained in this document include statements about the proposed transaction, the timing of the transaction and the potential benefits of the transaction and the strategic restructuring. These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. For example, if Maxygen does not receive required stockholder approval or fails to satisfy other conditions to closing, the joint venture will not be formed. Further, there is no assurance that the joint venture will be successful or that Astellas will exercise its buy-out option even if the joint venture is successful. In any forward-looking statement in which Maxygen expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: failure of the Maxygen stockholders to approve the formation of the joint venture and the other transactions, the failure of any other closing condition to be satisfied, unexpected delays in the formation of the joint venture, risks inherent in drug development, such as potential difficulties or delays in the development, testing, regulatory approvals, progression or production of drug compounds, the failure to develop products suitable for commercialization, the delay or suspension of predicted development and commercial timelines for any potential products, the failure to protect intellectual property portfolio and rights; the failure to identify and develop new potential products, and the risk that any compounds developed may have adverse side effects or inadequate therapeutic efficacy, and other economic, business, competitive, and/or regulatory factors affecting Maxygen’s business and the market it serves generally, including

those set forth in Maxygen’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, especially in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections, and its Current Reports on Form 8-K and other SEC filings. Maxygen is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events, or otherwise.