UPDATE 1-Maxygen, Astellas seal research pact, CEO will exit

* Maxygen teams up with Japan's Astellas on R&D

* CEO, CFO and COO will leave after joint venture set

SAN FRANCISCO, June 30 (Reuters) - Maxygen Inc (MAXY.O), has agreed to set up a joint venture with Japan's Astellas Pharma Inc (4503.T) to focus on researching protein pharmaceuticals, as the U.S. drug maker brings in a partner to defray the cost of its research programs.

Maxygen said on Tuesday its chief executive, chief financial officer and chief operating officer will depart the company after the venture is set up and established. Maxygen will own 83 percent of the venture initially, in a structure to be finalized in the third or fourth quarter of this year.

The partners will contribute $10 million in cash each to the newly formed venture, which will likely be led by Maxygen's chief business officer, Grant Yonehiro, Maxygen said in a statement.

Maxygen, which has reported persistent losses over past years, said in October it would lay off 30 percent of its workforce and delay certain programs as it searches for partners to share costs.

Under the terms of the venture agreement, Astellas will have the option to buy out Maxygen's stake within three years after the venture is set up.

If Astellas does not buy Maxygen's stake during the three-year window, it may choose to license one product from the venture. The remaining products will be jointly owned by both companies.

"Today's announcement largely completes a multiyear strategic process to position Maxygen's programs and assets in collaborations and other arrangements that are primarily supported by external parties," the executive chairman of the board, Isaac Stein, said in a statement on Tuesday.

"As a part of this process and following an appropriate transition period after the closing of the joint venture transaction, we also expect Maxygen's current senior management team -- Russell Howard, Larry Briscoe and Elliot Goldstein -- will be leaving the company."

The company plans to shift one of its major research programs, focusing on the treatment of autoimmune diseases such as rheumatoid arthritis and transplant rejection, to the joint venture, Maxygen said.

Shares in the Redwood City, California-based company closed down 4.4 percent at $6.72 on the Nasdaq. (Reporting by Clare Baldwin in San Francisco; Editing by Gary Hill)