Medicago announces 2008 second quarter results



    QUEBEC CITY, Aug. 28 /CNW/ - Medicago Inc. (TSX-V: MDG), today announced
its operational and financial results for the second quarter ended June 30,
2008. The Company's financial statements and management report are available
at www.sedar.com and at www.medicago.com.

    
    Q2 2008 Highlights

    -   Demonstrated efficacy of H5N1 VLP pandemic vaccine at very low doses
        and cross-reactivity against multiple strains of avian flu in key
        ferret animal model
    -   Successfully completed cGMP qualification of the Company's
        manufacturing facility
    -   Received a $500,000 payment from an undisclosed Fortune 100 company
        for the attainment of an important development milestone
    -   Appointed Mr. Pierre Labbé as Chief Financial Officer and
        Ms. Brigitte Barbeau as VP Manufacturing

    Subsequent Events

    -   Received non-refundable grant of up to $279,700 from Canada's
        National Research Council Industrial Research Assistance program
        ("NRC-IRAP") to support the development of seasonal influenza VLP
        vaccine program
    -   Agreement with Evry Genopole biopark to study the feasibility of a
        pandemic vaccine production facility in France
    

    "In Q2, we discovered that our H5N1 VLP pandemic vaccine provides
significant immune protection levels in ferrets after a single dose of
5 micrograms, in addition to providing broad levels of protection against
three of the deadliest strains of H5N1, after two doses," said Andy Sheldon,
President and CEO of Medicago. "We believe this is significant because if
these ferret results are replicated in humans our H5N1 VLP vaccine has the
potential to generate protection levels after just a single dose of
vaccination. Current FDA-approved H5N1 vaccines in the US require two doses.
Ferrets are the most predictive animal model for the effectiveness of
influenza vaccines in humans. The ferret data and animal toxicity study are
the final steps required for the submission of the clinical trial application
(CTA) to initiate our Phase I clinical trial in 2009," stated Andy Sheldon,
CEO of Medicago Inc.
    "Our recent achievements have also begun to attract interest from new
potential partners in Europe, Asia and Africa, who believe the capabilities of
our technology could address vaccine production and supply challenges in their
domestic market. To this end, we entered into an agreement with Evry Genopole
biopark to evaluate the establishment of a pandemic vaccine production
facility in France using our proprietary plant-based technology," added Mr.
Sheldon.

    Outlook

    Medicago is currently conducting all the necessary preclinical work for
its H5N1 VLP pandemic vaccine to enable it to file a CTA with Health Canada in
2009 which would then, pending feedback from Health Canada, allow it to
proceed into human clinical trials. Upcoming milestones include:

    
    -   Submission of a CTA to Health Canada in 2009 for Medicago's H5N1
        pandemic vaccine
    -   Completion of the production of clinical grade vaccine supply for use
        in Phase I human clinical trials
    -   Initiation of a Phase I clinical trial for its pandemic vaccine
    -   Continuation of business development activities with potential
        partners including Fortune 100 company
    -   Completion of immunogenicity study in mice for seasonal vaccine
        candidate in the first half of 2009
    

    Financial Results

    Revenues from research agreements increased by $583,000 for the
three-month period ended June 30, 2008 compared to the three-month period
ended June 30, 2007. This increase is due to revenues generated by a milestone
payment from a non-exclusive licensing agreement signed with an undisclosed
Fortune 100 company. For the six-month period ended June 30, 2008, revenues
were $2,248,000 compared to $18,500 for the six-month period ended June 30,
2007. This increase is due to revenues generated by two non-exclusive
licensing agreements signed with an undisclosed Fortune 100 company.
    Research and development ("R&D") expenses totaled $1,116,000 in the
second quarter of 2008 ($2,232,000 since the beginning of the year), compared
to $875,000 in the second quarter of 2007 ($1,615,000 for the first six months
of 2007). R&D expenses were higher mainly as a result of the Company's
preclinical studies on its H5N1 VLP vaccine performed in the first half of
2008.
    Investment tax credits totaled $352,000 for the three-month period ended
June 30, 2008, $42,000 higher than the three-month period ended June 30, 2007.
The increase is due to the increase in R&D expenses. For the six-month ended
June 30, 2008 investment tax credits increased by $305,000 to $691,000. This
increase is explained by the corporate reorganization completed on April 1,
2007, which resulted in the creation of new entities to perform its research
and development activities and therefore maximizing its R&D tax credits.
    General and administrative, business development and intellectual
property expenses increased by $133,000, to $747,000 for the three-month
period ended June 30, 2008 compared to the same period in 2007. The increase
in expenses is explained by consultant fees and stock-based compensation. For
the six-month ended June 30, 2008, general and administrative, business
development and intellectual property expenses increased by $243,000, to
$1,434,000 compared to 2007. The increase in expenses resulted mainly from
consultant fees, stock-based compensation, salaries and in outsourced contract
work.
    Other net financial expenses amounted to $507,000 for the three-month
period ended June 30, 2008, $305,000 higher compared to the same period in
2007. This increase is the result of higher interest on bank loans, higher
amortization of deferred financing expenses and no grants in 2008 compared to
$159,000 in the same period in 2007. Consequently, since the beginning of the
year other net financial expenses increased by $437,000 to $896,000.
    Consolidated loss for the three-month period ended June 30, 2008 was
$1,577,000, or $0.05 per basic and diluted share compared to a loss of
$1,550,000, or $0.09 per basic and diluted share in the same period in 2007.
For the six-month period ended June 30, 2008 consolidated loss amounted to
$1,902,000 or $0.07 per basic and diluted share compared to a loss of
$3,197,000, or $0.18 per basic and diluted share in the first six months of
2007.
    As at June 30, 2008, the Company had consolidated assets of $7.9 million,
including cash and cash equivalents of $0.9 million, compared to consolidated
assets of $6.7 million, including cash and cash equivalents of $0.2 million as
at December 31, 2007.

    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.

    
    The TSX Venture Exchange assumes no responsibility for the content or
    accuracy of this press release.
    

    %SEDAR: 00023641EF C7814




For further information:

For further information: Medicago, Inc., Andy Sheldon, President and
CEO, (418) 658-9393; Medicago Inc., Pierre Labbé, Vice-president and CFO,
(418) 658-9393

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Medicago Inc.

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