QUEBEC CITY, Aug. 26 /CNW/ - Medicago Inc. (TSX-V: MDG), a biotechnology company focused on developing highly effective and affordable vaccines based on proprietary manufacturing technologies and Virus-Like Particles, today announced its operational and financial results for the second quarter ended June 30, 2009. The Company's financial statements and management report are available at www.sedar.com and at www.medicago.com.

"We achieved several important milestones over the past quarter. We completed all preclinical work with our lead H5N1 pandemic flu vaccine candidate and subsequent to the end of the quarter, we received clearance from Health Canada to commence our first clinical trial. We anticipate data from this trial towards the end of 2009," said Andy Sheldon, President and CEO of Medicago. "We also obtained animal results demonstrating that our novel H1N1 vaccine candidate induced an immune response after a single dose. This vaccine candidate was produced within 14 days of receiving the genetic sequence of the new virus. We believe that this validates our technology and our ability to rapidly produce highly effective vaccines."

"We made important progress with our international strategy after signing an agreement with Genopole in France to build an influenza vaccine production facility. With this agreement we have taken a step towards developing the commercial potential of our unique plant-based vaccine technology to address current deficiencies in traditional vaccine manufacturing technologies."

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    Outlook

    Medicago has received clearance from Health Canada to proceed into human
    clinical trials with its lead H5N1 pandemic vaccine. Upcoming milestones
    include:

    -   Completion of a Phase I clinical trial for an H5N1 pandemic vaccine
    -   Continue development of H1N1 vaccine candidate
    -   Completion of an agreement with a second country for a pandemic
        vaccine production facility
    -   Completion of an immunogenicity study in mice for a seasonal vaccine
        candidate
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Financial Results

Consolidated loss for the three-month period ended June 30, 2009 was ($2,794,000) or ($0.03) per basic and diluted share, compared to a loss of ($1,577,000) or ($0.05) per basic and diluted share in the same period in 2008. Consolidated loss for the six-month period ended June 30, 2009 was ($5,419,000) or ($0.06) per basic and diluted share, compared to a loss of ($1,902,000) or ($0.07) per basic and diluted share in the first six months of 2008.

There were no revenues in the second quarter and first six months of 2009 compared to $583,000 and $2,248,000 respectively in 2008. This decrease is due to revenues generated by two agreements signed with Philip Morris International ("PMI") in 2008.

Research and development ("R&D") expenses totaled $1,827,000 in the second quarter of 2009 compared to $1,116,000 in the second quarter of 2008. For the first six months of 2009, R&D expenses increased to $3,225,000 compared to $2,232,000 in the same period of 2008. R&D expenses were higher mainly as a result of the Company's preclinical studies on its H5N1 VLP vaccine, the hiring of new employees required for the completion of preclinical work and development of a cGMP process for the production of clinical materials for the upcoming Phase I trial.

Investment tax credits decreased by $184,000 for the three-month period ended June 30, 2009, compared to the three-month period ended June 30, 2008. For the six months ended June 30, 2009 investment tax credits decreased to $273,000 compared to $691,000 in 2008. The decrease in tax credits for the quarter and the six months resulted from a decrease in the provincial tax credits rate from 37.5% to 17.5% applicable to the R&D activities of the Company as a result of the private placement with PMI.

General and administrative ("G&A"), business development and intellectual property ("IP") expenses totalled $856,000 for the three-month period ended June 30, 2009, compared to $685,000 in the same period of 2008. For the first six months of 2009, G&A, business development and IP expenses increased to $1,748,000 compared to $1,330,000 in 2008.The increase was mainly due to an increase in salaries, license and patent costs, and travelling expenses. The increase in salaries is explained by the hiring of a CFO in May 2008 and the hiring of a Director, Investor Relations and Communications in January 2009.

Other net financial expenses amounted to $176,000 and $421,000 for the three-month and six month period ended June 30, 2009 respectively, compared to $507,000 and $896,000 in the same periods in 2008. This decrease is mainly the result of a lower interest rate on the Bio-levier loan and higher interest income explained by the increase in cash, cash equivalents and short-term investments and no expenses related to warrants issued as financing fees.

As at June 30, 2009, the Company had consolidated assets of $16.1 million, including cash, cash equivalents and short-term investments of $9.2 million, compared to consolidated assets of $20.6 million, including cash and cash equivalents of $14.0 million as at December 31, 2008.

As at August 25, 2009, there were 95,124,640 common shares issued and outstanding, 5,766,412 stock options outstanding and 56,133,496 warrants outstanding. Between June 30 and August 25, 2009, 1,035,250 warrants at a price of $0.25 and 3,625,450 warrants at a price of $0.30 were exercized, for a total of $1,346,448.

About Medicago

Medicago is committed to provide highly effective and affordable vaccines based on proprietary Virus-Like Particle (VLP) and manufacturing technologies. Medicago is developing VLP vaccines to protect against H5N1 pandemic influenza, using a transient expression system which produces recombinant vaccine antigens in non-transgenic plants. This technology has potential to offer advantages of speed and cost over competitive technologies. It could deliver a vaccine for testing in about a month after the identification and reception of genetic sequences from a pandemic strain. This production time frame has the potential to allow vaccination of the population before the first wave of a pandemic strikes and to supply large volumes of vaccine antigens to the world market. Additional information about Medicago is available at www.medicago.com.

Forward Looking Statements

This press release contains forward-looking statements which reflect Medicago's current expectations regarding future events. The forward-looking statements involve risks and uncertainties. Actual results could differ materially from those projected herein. Medicago disclaims any obligation to update these forward-looking statements.

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