Maxygen will receive $90 million upfront for its unit, and is eligible to receive payments of up to $30 million thereafter in potential future fees. Bayer will get the lead drug candidate MAXY-VII along with a license to use the underlying gene targeting technology, which appears to be expected to move to early-stage clinical studies in the third quarter. This is a perfect fit as Bayer already sells Factor VIII product kogenate for the treatment of hemophilia.

What is interesting is that as of March 31, Maxygen has $133.5+ million in cash and equivalents on the balance sheet and only $10.2 million in liabilities.

Maxygen is greatly benefiting from this. Its shares are up 29% at $4.54, and its 52-week trading range is $3.28 to $9.56. With a $168 million market cap after the unit sale, this one is trading at below net-cash. Of course that is misleading since the company has said it may become target of an Amgen (NASDAQ: AMGN) lawsuit earlier this month.

Jon C. Ogg
July 2, 2008