Medicago Announces the Execution of the Subscription Agreement with Philip Morris International Inc.



    QUEBEC CITY, Oct. 22 /CNW/ - Medicago Inc. ("Medicago") (TSX-V: MDG)
today announced that, further to the letter of intent with Philip Morris
International Inc. ("PMI") previously announced on September 22, 2008, it has
executed a binding conditional subscription agreement with PMI for the private
placement (the "Private Placement") of 45,000,000 units (the "Units"). Net
proceeds of CAD$15,975,000 which will be used to further fund the development
of Medicago's pandemic and seasonal influenza vaccines.
    Each Unit is priced at CAD$0.355 per Unit and consists of one common
share in the share capital of Medicago (a "Common Share") and one common share
purchase warrant (a "Warrant"). Each Warrant entitles its holder to purchase
one Common Share until 5:00 p.m. (Montreal time) on October 20, 2010, at a
price equal to CAD$0.375 for the first year following the date of the issuance
of the Warrants and CAD$0.405 for the second year following the date of the
issuance of the Warrants (the "Warrant Exercise Price"). The Common Shares,
the Warrants and the Common Shares underlying the Warrants are subject to a
statutory four-month hold period. After completion of the Private Placement,
PMI will hold indirectly, assuming fulfilment of the remaining condition, a
total of 45,000,000 Common Shares representing an interest of 49.8% of the
outstanding common shares of Medicago as at the date hereof, 45,000,000
Warrants, and 2,000,000 warrants issued in February 2008 allowing it to
acquire up to 2,000,000 Common Shares until February 2011.
    The total subscription price and the certificates representing the Common
Shares and the Warrants are currently held in escrow until fulfilment of the
only remaining condition which is the receipt of a confirmation that the
shareholders of Medicago have voted in favour of the Private Placement at the
special meeting of shareholders scheduled to take place on November 10, 2008
for which a management proxy circular dated October 15, 2008 was mailed to
Medicago's shareholders. The Private Placement is also subject to obtaining
final approval of the TSX Venture Exchange upon fulfilment of customary
listing conditions.

    
    As part of the Private Placement, Medicago and PMI have entered into:

    -   a Research and License Agreement granting Medicago ownership of
        intellectual property rights developed under the joint pandemic and
        seasonal influenza program and granting Philip Morris Products, S.A.
        ("PMP"), a subsidiary of PMI, among other rights, a license on such
        intellectual property rights;
    -   a Master Research Services Agreement providing the framework under
        which Medicago could conduct additional future research on PMP's
        behalf and on a fee-for-service basis. PMP will be granted ownership
        of intellectual property rights developed under each of these
        projects and Medicago will be granted a license on such intellectual
        property rights allowing Medicago to conduct influenza research;
    -   a representation right and preemptive right agreement whereby
        Medicago has undertaken, as long as PMI and its affiliates holds,
        jointly, directly or indirectly, a 10% equity interest in Medicago,
        calculated on a fully diluted basis, to propose for election at each
        annual shareholders' meeting of Medicago at least one representative
        selected by PMI (or its affiliates) and has granted a preemptive
        right to PMI to maintain or increase its equity participation in
        Medicago;
    

    This news release does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities of Medicago in the United States. The
securities have not been, and will not be, registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act") or any state
securities laws and may not be offered or sold within the United States or to
U.S. Persons unless registered under the U.S. Securities Act and applicable
state securities laws or unless an exemption from such registration is
available.

    About Medicago Inc.

    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.

    About Philip Morris International

    Philip Morris International Inc. (PMI) is the leading international
tobacco company, with seven of the world's top 15 brands, including Marlboro,
the number one cigarette brand worldwide. PMI has more than 75,000 employees
and its products are sold in approximately 160 countries. In 2007, the company
held an estimated 15.6% share of the total international cigarette market
outside of the U.S. For more information, see www.pmintl.com.

    Forward-Looking Statements

    This press release contains forward-looking statements which reflect the
Company's current expectations regarding future events. The forward-looking
statements involve risks and uncertainties. Actual results could differ
materially from those projected herein. The Company 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




For further information:

For further information: Medicago Inc.: Andy Sheldon, President and CEO,
(418) 658-9393; Media and Investors: Arianna Vanin, The Equicom Group, P.
(514) 844-4680, E. avanin@equicomgroup.com

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