Medicago announces $10,080,000 bought deal equity financing


QUEBEC CITY, Nov. 6 /CNW/ - Medicago Inc. ("Medicago") (TSX-V: MDG), a biotechnology company focused on developing highly effective and affordable vaccines based on proprietary manufacturing technologies and Virus-Like Particles (VLPs), today announced that it has entered into an agreement to sell, on a bought deal basis (the "Offering"), 14,000,000 subscription receipts (the "Subscription Receipts") at a price of C$0.72 per Subscription Receipt to a syndicate of underwriters led by Paradigm Capital Inc., for gross proceeds to the Company of C$10,080,000 million. The net proceeds of the offering will be used primarily for the continued clinical development of the Company's plant manufactured Influenza VLP vaccines. The offering is scheduled to close on or about November 30, 2009 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the TSX Venture Exchange.

Each Subscription Receipt represents the right to receive one unit of Medicago (each, a "Unit") upon the earlier of (the "Conversion Date"): (a) the date on which Philip Morris Participations B.V. ("PMP") refuses to exercise the Preemptive Right, (b) the date on which PMP subscribes to units of Medicago pursuant to its Preemptive Right, or (c) December 15, 2009. Each Unit will consist of one common share in the share capital of Medicago (the "Common Shares") and one-half of one common share purchase warrant. Each whole warrant will be exercisable at a price of C$1,00 for a period of 12 months from the closing date of the Offering. In addition, the Underwriters have been granted an option (the "Over-allotment Option") to purchase up to an additional number of Units equal to the lesser of the over-allocation position and 15% of the size of the Units at the same offering price to cover over-allotments and for market stabilization purposes. The Over-allotment Option may be exercised at any time, in whole or in part, until that date which is 30 days following the closing date.

In addition, Medicago has granted the Underwriters a compensation option (the "Compensation Option") to purchase a number of units (the "Compensation Option Units") representing up to 7% of the total number of Units sold under this Offering, including any Units issued pursuant to the Over-Allotment Option.

As previously announced, Medicago is party to a Representation Right and Preemptive Right Agreement (the "Preemptive Right Agreement"), made as of October 21, 2008 with PMP and available on SEDAR, under which Medicago cannot issue securities or right to acquire securities without offering to PMP or to its affiliates to subscribe to a number of such securities (the "Preemptive Right") which would preserve a participation by PMP of (i) 40.6% of all the issued and outstanding Common Shares assuming the exercise of all outstanding warrants and options of Medicago except for the warrants held by PMP; and (ii) a number of Common Share purchase warrants such that, if exercised, PMP will have a controlling interest of 58.3% in Medicago calculated on a fully diluted basis (the "Proportionate Entitlement").

In accordance with the Preemptive Right Agreement, PMP will be notified of the Offering and will be asked to confirm whether or not PMP desires to exercise its Preemptive Right to preserve its Proportionate Entitlement. If PMP elects to maintain its Proportionate Entitlement, the maximum total offering would amount to $23,677,800 (or $27,303,700 if the Over-allotment Option is exercised in full).

If PMP advises Medicago of its intent not to maintain its Proportionate Entitlement before the closing of the Offering, the Offering would then become an offering of Units as per the provisions of the engagement letter with the Underwriters.

The Subscription Receipts, or Units, as the case may be, will be offered for sale to the public in each of the provinces of Canada pursuant to a short form prospectus to be filed with Canadian securities regulation authorities in all Canadian provinces.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

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

Forward-Looking Statements

This news release includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with Medicago's business and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend", and similar expressions to the extent they relate to Medicago or its management. The forward-looking statements are not historical facts, but reflect Medicago's current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the matters discussed under "Risks Factors and Uncertainties" in Medicago's Annual Information Form filed on March 25, 2009 with the regulatory authorities. Medicago assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements.

    Neither TSX Venture Exchange nor its Regulation Services Provider (as
    that term is defined in the policies of the TSX Venture Exchange) accepts
    responsibility for the adequacy or accuracy of this release.

SOURCE Medicago Inc.

For further information: For further information: Medicago, Inc., Andy Sheldon, President and CEO, (418) 658-9393; Medicago Inc., Arianna Vanin, Director, Investor Relations, (514) 796-3993

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