Redwood City, California
July 30, 2002

Maxygen, Inc. (Nasdaq: MAXY) today reported financial results for the second quarter ended June 30, 2002.

For the second quarter of 2002, Maxygen reported a pro forma net loss of $6.5 million, or $0.19 per share, compared to a pro forma net loss of $5.9 million, or $0.18 per share, in the same period in 2001, in each case exclusive of stock compensation expense and amortization of intangible assets. Including such charges, Maxygen reported a net loss of $8.7 million, or $0.26 per share, for the second quarter of 2002 compared to a net loss of $11.5 million, or $0.35 per share, in the second quarter of 2001.

Revenue in the second quarter of 2002 was $10.5 million compared to $7.7 million for the same period in 2001, an increase of 37 percent. The increase in revenue was due to the addition of new alliances. Expenses relating to research and development increased in the second quarter of 2002 to $15.4 million, compared to $13.0 million for the same period in 2001.

At June 30, 2002, cash, cash equivalents and marketable securities totaled $221 million.

"We are pleased to report that Maxygen is on track to achieve the goals that we established for this year while maintaining a controlled cash burn and strong financial position," said Russell Howard, Ph.D., Chief Executive Officer of Maxygen. "A key goal that we established for Maxygen this year is the advancement of our four preclinical leads towards the filing of our first INDs in 2003/2004. Our preclinical programs are progressing well and Maxygen recently expanded its strength and expertise in its human therapeutics business by appointing Paul Spence to Senior Vice President of Research and Development to lead its product discovery and development programs."

"Additionally, during the second quarter we were pleased to announce that Maxygen has achieved its industrial goals for the year with the establishment of two industrial alliances, including one joint venture. We also shortly anticipate the receipt of our first product royalties. This achievement further underscores the speed and efficiency of our technologies for the creation of improved commercial products. Finally, Maxygen continues to extend its leadership position in recombination-based directed evolution with the issuance of 17 U.S. patents and the grant of two European patents."

RECENT NEWS

Expansion of Human Therapeutics Team

Paul Spence, D.Phil, appointed Senior Vice President Research and Development.
Dr. Spence will lead Maxygen's human therapeutics product discovery and development programs currently focused in the areas of novel and improved second-generation protein pharmaceuticals, and cross-protective prophylactic and treatment vaccines. Dr. Spence joins Maxygen from Pharmacia Corporation where he was Vice President of Biotechnology and a member of the Pharmacia Research Leadership Team that was responsible for managing all of Pharmacia's research projects. In this role, he helped build the Biotechnology group into a diversified organization operating out of St. Louis, Kalamazoo and South San Francisco with responsibility for protein therapeutics, small molecule high throughput screening, enzymology and computational biology. Dr. Spence received his D.Phil. from Oxford University.

Therapeutic Partnerships and Product Pipeline Moving Forward

Maxygen continues to deliver success to its partners by generating desired improvements in genes and proteins through application of its proprietary technologies. In February, Maxygen announced that Lundbeck has selected an improved interferon beta for advancement into clinical trials. Including this product, Maxygen is advancing four preclinical programs toward the filing of INDs in the 2003/2004 timeframe. In addition to the improved interferon beta in preclinical development with Lundbeck for
multiple sclerosis, Maxygen currently has an improved interferon gamma in preclinical development with InterMune for inflammatory diseases and cancer, and two wholly-owned product candidates; a treatment vaccine for colorectal cancer and a cross-protective vaccine for Dengue.

Industrial businesses continue to advance: Goals for 2002 completed

DeltaMax Cotton LLC joint venture created

In May, Maxygen's agriculture subsidiary MaxyAg announced the establishment of a joint venture with Delta and Pine Land Company called DeltaMax Cotton LLC. DeltaMax Cotton LLC was formed to develop and commercialize innovative gene leads developed using MolecularBreeding(TM) directed molecular evolution technologies for the cotton seed market. The global market for technology-enhanced cotton seed was estimated to be approximately $480 million in 2001 and is expected to grow to over $1.9 billion in the next ten years. DeltaMax Cotton LLC will focus on the creation of gene-based improvements for herbicide tolerance and pest and disease control in cotton.

New collaboration established with Cargill Dow

In April, Maxygen's chemicals subsidiary Codexis announced a collaboration with Cargill Dow to further optimize Cargill Dow's novel natural process for the production of lactic acid, a major component of their NatureWorks(TM) PLA (polylactide).

DSM milestone received, collaboration extended

In June, Maxygen's chemicals subsidiary Codexis announced the achievement of a second milestone in its 1999 agreement and extension of their collaboration with DSM for antibiotic manufacturing of specific beta-lactam antibiotics. Both targets were initially identified by DSM and subsequently improved using Codexis' proprietary MolecularBreeding(TM) directed molecular evolution technologies and are currently in the commercial development stage. The first target, delivered to DSM in June of 2000, is currently undergoing testing at commercial scale.

Patent portfolio expanded

In May, Maxygen announced a series of recent advances in its proprietary product discovery and development platform, including the issuance of 17 U.S. patents and the grant of two European patents. The new methods provide for dramatic increases in breadth and efficiency of Maxygen's proprietary MolecularBreeding(TM) discovery technologies.

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, and the International AIDS Vaccine Initiative
(IAVI). 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.