Redwood City, California
February 12, 2002

Maxygen, Inc. (Nasdaq: MAXY) today reported financial results for the fourth quarter and year ended December 31, 2001.

For the year ended December 31, 2001, Maxygen reported a pro forma net loss of $24.2 million, or $0.74 per share, compared to a pro forma net loss in 2000 of $11.2 million, or $0.37 per share, in both cases exclusive of stock compensation expense and amortization of intangible assets and, for 2000, a one-time charge for acquired in-process research and development. Including such charges, Maxygen reported a net loss of $45.0 million, or $1.38 per share for the year ended December 31, 2001, compared to a net loss of $59.6 million, or $1.96 per share, in 2000.

Revenue for the year ended December 31, 2001 was $30.5 million compared to $24.5 million in 2000, an increase of 25 percent. The increase in revenue was due to the addition of new alliances formed in 2001 and the ongoing success of existing alliances.

At December 31, 2001, cash, cash equivalents and marketable securities totaled $234.9 million.

For the fourth quarter of 2001, Maxygen reported a pro forma net loss of $7.0 million, or $0.21 per share, compared to a pro forma net loss of $6.2 million, or $0.19 per share, in the same period in 2000 exclusive of stock compensation expense and amortization of intangible assets. Including such charges, Maxygen reported a net loss of $11.5 million, or $0.35 per share, for the fourth quarter of 2001 compared to a net loss of $12.9 million, or $0.40 per share, in the fourth quarter of 2000.

For the fourth quarter ended December 31, 2001, revenue was $8.5 million compared to $6.9 million for the same period in 2000, an increase of 23 percent. Expenses relating to research and development increased in the fourth quarter of 2001 to $14.8 million, compared to $12.9 million for the same period in 2000.

"The year 2001 was very productive at Maxygen. We continued to advance our broad pipeline of over 40 potential products and now have a total of 14 products in development. In particular, we achieved significant success and momentum in our therapeutics business and today Maxygen has four products in pre-clinical development," said Russell Howard, Ph.D., Chief Executive Officer of Maxygen. "Across our therapeutic and industrial businesses, Maxygen has strategic alliances with over 20 leading corporations, academic centers and government agencies. Maxygen's financial position remains very strong and allows us to advance our therapeutic business via the development of a sustainable product pipeline with the goal of bringing important new medicines and vaccines to market."

Select Year 2001 Company Highlights:

In 2001 Maxygen successfully made the transition from a platform technology company to a product-focused human therapeutics company with the advancement of 2 additional therapeutic products into pre-clinical development and the signing of six significant strategic collaborations.

Products moving forward

In 2001, Maxygen announced that two potential products from its broad pipeline of over 20 potential therapeutic products would be taken into development.

• InterMune took into pre-clinical development next-generation interferon gamma product candidates developed by Maxygen under its collaboration to develop a next-generation ACTIMMUNE(R) with enhanced pharmacokinetics and a less-frequent dosing regimen.
• Maxygen announced that it took its cross-protective DNA vaccine for Dengue hemorrhagic fever into pre-clinical development in 2001. Maxygen has shown in relevant assay systems that its Dengue vaccine candidates generated through DNA shuffling elicit antibodies that react
  with and can neutralize all four serotypes of Dengue virus.

New strategic alliances

Maxygen entered into six new therapeutic strategic alliances in 2001 with the following companies and organizations:

• ALK-Abello
  In February 2001, Maxygen and ALK-Abello A/S signed a three-year agreement to research and develop novel recombinant therapeutics for the treatment of specific allergies.
  International AIDS Vaccine Initiative (IAVI)
  In February 2001, Maxygen announced the formation of a three-year collaboration to develop novel HIV vaccines using Maxygen's proprietary MolecularBreeding(TM) directed molecular evolution technologies.
  InterMune, Inc.
  In September 2001, Maxygen signed a three-year collaboration with InterMune, Inc., the world's leader in interferon gamma therapies, to develop a next-generation ACTIMMUNE(R) with enhanced pharmacokinetics and a less-frequent dosing regimen.
  U.S. Agency for International Development (USAID)
  In October 2001, Maxygen received a $3.7 million, three-year grant from the U.S. Agency for International Development (USAID) to support the research and development of a novel, broadly protective malaria vaccine.
  Aventis Pasteur
  In November 2001, Maxygen signed a three-year collaboration with Aventis Pasteur, a leading vaccine company, to create improved vaccines for an undisclosed target.
  Celltech
  In December 2001, Maxygen signed an agreement to undertake a technology collaboration with Celltech in the area of monoclonal antibodies.

Industrial Businesses continue progress toward independence

In addition to its accomplishments in human therapeutics, Maxygen's industrial businesses continued to progress and position themselves for independence. During 2001 the Company announced four industrial products had been taken into development, an existing collaboration has been expanded and Maxygen received its second milestone payment for a process that is currently in commercial scale-up.

• Based upon the success of their existing collaboration, in November 2001 Maxygen and Novozymes A/S announced that the companies would expand the market areas addressed by their alliance created in 1997 for the improvement of industrial enzymes. Novozymes also took
  into development two additional enzyme products developed in the collaboration with Maxygen. Novozymes now has four product candidates in development that were optimized using Maxygen's MolecularBreeding(TM) technologies.
• Syngenta took into development two agriculture candidates developed under the August 1999 collaboration with Maxygen.
• Pfizer paid Maxygen a milestone payment for developing an improved biosynthetic pathway that is critical to the manufacturing of a Pfizer pharmaceutical product. This was Maxygen's second major process improvement for Pfizer developed through Maxygen's MolecularBreeding(TM) directed molecular evolution technologies. The optimized commercial process is now in commercial scale-up.

Intellectual property

In 2001, Maxygen received issuance of 14 additional U.S. patents and the grant of 29 additional foreign patents. Maxygen now has 60 U.S. and foreign patents owned by the company with over 450 patent applications filed worldwide. Maxygen's expanding patent estate provides it with an increasingly broad and unique platform from which to create and improve products in human therapeutic and industrial applications.

Maxygen's 2002 Financial Outlook

This section contains forward-looking guidance about Maxygen's financial outlook for 2002.

Revenue: In 2002, Maxygen expects to receive revenue in the range of $35 to $40 million consisting of strategic alliance revenue, grant revenue and royalties on product sales.

Operating Expenses: Maxygen expects operating expenses to be in the range of $85 to $90 million. This increased operating expenditure is focused on advancing Maxygen's therapeutic products currently in pre-clinical development towards clinical development.

Net Cash Utilization (cash burn): Maxygen expects its cash burn for year 2002 to be approximately $45 million and expects to end 2002 with a cash balance of approximately $185 to $195 million.

Maxygen, Inc. headquartered in Redwood City, California, is focused on creating novel products using its integrated proprietary technologies for human therapeutics and industrial applications. Maxygen's technologies bring together advances in molecular biology and protein modification to create novel biotechnology products. Maxygen has strategic collaborations with leading companies including Aventis, InterMune, Celltech, Lundbeck, ALK-Abello, the International AIDS Vaccine Initiative (IAVI), Pfizer and DSM. Additionally, Maxygen has a range of other strategic alliances in industrial  applications, as well as funding from U.S.A. government organizations including USAID, DARPA and NIST-ATP.