Medicago announces second quarter results

    QUEBEC CITY, Aug. 29 /CNW/ - Medicago Inc. (TSX-V: MDG), ("Medicago" or
"the Company"), today reported its financial results for the fiscal quarter
ended June 30, 2007. The Company's financial statements and Management's
Discussion and Analysis are available at and at
    In the second quarter of 2007 results obtained in our key influenza
vaccine development program have ensured that Medicago remains on track with
its key deliverables towards its Phase 1 clinical filing in 2008.
    Four weeks from receiving the genetic sequences, Medicago's scientists
were able to produce the two principal antigens of the Influenza H5N1
Indonesia clade 2 strain currently circulating in Asia and parts of Europe,
otherwise known as Avian Flu. The two antigens Hemagglutinin and Neuraminidase
were successfully produced at commercially viable levels and Medicago intends
to start pre-clinical testing shortly.
    "This is an excellent result and a major milestone for Medicago which
takes us one step further toward full realization of the value of our
technology." said Medicago's President and Chief Executive Officer Andy
Sheldon. "It is also a real-life demonstration of the power of our technology
to deliver fast response and critical surge capacity to assist in protecting
the worldwide population against new emerging Influenza strains. In order to
achieve these milestones, Medicago needs to raise additional financing."
    To face pandemic and seasonal vaccine supply challenges, Medicago has
developed a proprietary transient expression system which produces recombinant
vaccine antigens in the cells of non-transgenic plants. Our technology offers
significant advantages of speed and cost over competitive egg-based and cell
culture technologies. It can deliver a vaccine for testing in about a month
after the identification and reception of Hemagglutinin and Neuraminidase
genetic sequences from the pandemic strain. This production time frame has the
potential to allow vaccination of the population before the first wave of the
pandemic strikes and to supply large volumes of vaccine antigens to the world
market including developing countries.

    Financial Results

    The Company's revenues were nil in the second quarter of 2007, compared
to $77,000 for the same period a year ago. This decrease is due to milestones
payments in 2006 that did not reoccur in the second quarter of 2007.
    Consolidated loss for the quarter ended June 30 was $1,550,000 or $0.09
per share, compared to $1,716,000 or $0.20 per share in the second quarter of
2006. The main cost reduction occurred in research and development activities.
    Research and development expenses decreased by $243,000 to $875,000 in
the second quarter of 2007 compared to the same period in 2006. This decrease
is attributable to lower wages and salaries, lower travelling charges and
lower level of outsourced contract work.
    Investment tax credits were at $310,000 for the three-month period ended
June 30, 2007, $28,000 lower than the three-month period ended June 30, 2006.
These credits are calculated on admissible research and development charges;
the refundable credit rate was the same in the second quarter of 2007 as in
the same quarter in 2006.
    General and administrative, business development and intellectual
property expenses increased by $24,000 to $614,000 for the quarter ended June
30, 2007 compared to the same period in 2006.
    Other net financial expenses amounted to $ 361,000 for the three-month
period ended June 30, 2007, $88,000 higher compared to the three-month period
ended June 30, 2006. This increase is mainly the result of higher interest
rate on the long-term Bio-Levier loan.
    Total consolidated assets were $7.4 million as of June 30, 2007, a
decrease of $1.2 million from $8.6 million as of December 31, 2006. The
variation is due to a decrease in the total of cash and term deposit for
$0.8 million and investment tax credits receivable for $0.3 million.
    On August 29, 2007 the Company has granted its interim Chief Financial
Officer, Mr. Vincent Bélanger, 25,000 stock options exercisable at a price of
$0.65 starting from the date of the grand as part of his compensation.


    The Company expects the following milestones to be completed in 2007 and

    -   Completion of preclinical studies for our Avian Flu pandemic vaccine
    -   Submission of our first Regulatory Filing (CTA) for our Avian Flu
        pandemic vaccine;
    -   Initialization of Phase I clinical studies.

    In order to attain these milestones, Medicago needs to raise additional

    About Medicago Inc.

    Medicago is a biotechnology company focused on the development, production
and commercialization of protein-based biopharmaceuticals using a proprietary
manufacturing system developed from its expertise in the genetic engineering
of plants. Medicago's Proficia technology offers speed, flexibility and cost
advantages that can greatly improve the accessibility of today's emerging
biopharmaceuticals for both partners and patients.

    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 Inc. has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release.

    Interim Consolidated Statement of Earnings (unaudited)

                                  Three Months Ended       Six Months Ended
                                       June 30,                June 30,

                                    2007        2006        2007        2006
                                       $           $           $           $

    Revenues from research
     agreements                        -      77,474      18,500     121,959

    Research and development     875,430   1,119,061   1,614,911   2,306,687
    Research grants and
     contributions              (159,358)    (27,660)   (222,426)    (55,243)
    Research and development
     tax credits                (310,000)   (338,437)   (386,000)   (603,199)
    General and
     administrative              614,161     590,173   1,156,613   1,284,336
    Exchange loss (gain)          (3,116)     (1,747)       (357)     (2,173)
    Depreciation of property,
     plant and equipment         153,810     151,249     292,134     299,669
    Amortization of
     intangible assets            18,212      27,843      49,233      55,472
    Other financial expenses,
     net                         361,097     273,362     711,214     535,815

                               1,550,236   1,793,844   3,215,322   3,821,364

    Loss and comprehensive
     loss for the period      (1,550,236) (1,716,370) (3,196,822) (3,699,405)

    Basic and diluted loss
     per share                     (0.09)      (0.20)      (0.18)      (0.43)

    Consolidated Statement of Deficit (unaudited)

                                  Three Months Ended       Six Months Ended
                                       June 30,                June 30,

                                    2007        2006        2007        2006
                                       $           $           $           $

    Balance at the beginning
     of the period            31,645,165  24,495,351  30,269,947  22,512,316

    Adjustment related to the
     implementation of new
     accounting standards                               (271,368)          -

    Loss and comprehensive
     loss for the period       1,550,236   1,716,370   3,196,822   3,699,405

    Balance at the end of
     the period               33,195,401  26,211,721  33,195,401  26,211,721

    Consolidated Balance Sheets

                                                         As at         As at
                                                       June 30,  December 31,
                                                          2007          2006
                                                             $             $
                                                    (unaudited)     (audited)


    Current assets
    Cash and cash equivalents                          873,574       442,929
    Term deposit                                           100     1,230,188
    Current portion of security deposit on a
     lease agreement                                    20,000        20,000
    Accounts receivable                                108,526        79,130
    Financing receivable                               228,852       171,926
    Investment tax credits receivable                  316,850       581,167
    Grants receivable                                   10,000        23,125
    Prepaid expenses                                   105,680        74,312

                                                     1,663,582     2,622,777

    Security deposit on a lease agreement               20,000        20,000

    Property, plant and equipment                    4,305,062     4,536,560

    Intangible assets                                1,400,369     1,433,552

                                                     7,389,013     8,612,889


    Current liabilities
    Bank loan                                                -       300,000
    Accounts payable and accrued liabilities           654,317       990,338
    Current portion of long-term debt                   13,072        13,072

                                                       667,389     1,303,410

    Long-term debt                                  13,589,826    13,067,121

                                                    14,257,215    14,370,531

    Shareholders' Deficiency

    Share capital                                   23,463,903    22,152,413

    Contributed surplus                                801,868       798,034

    Other equity components                          2,061,428     1,561,858

    Deficit                                        (33,195,401)  (30,269,947)

                                                    (6,868,202)   (5,757,642)

                                                     7,389,013     8,612,889


    %SEDAR: 00023641E

For further information:

For further information: Andrew J. Sheldon, President and Chief
Executive Officer, Tel.: (418) 658-9393, Email:; Eric
Bouchard, Investor Relations, The Equicom Group, Tel: (514) 844-7997, Email:

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