MIGENIX Reports Second Quarter Fiscal Year 2008 Financial Results

MGIFF), a clinical-stage developer of drugs for infectious diseases, reports
financial results for the three months ended October 31, 2007 and an update on
its programs.


    Omiganan 1% gel (Omigard(TM)/CPI-226/MX-226; topical cationic peptide;
prevention of catheter-related infections): A pivotal Phase III study being
conducted by our development and commercialization partner Cadence
Pharmaceuticals is in progress in the United States under a Special Protocol
Assessment (SPA) agreement with the US FDA and in Europe. This confirmatory
Phase III trial is a randomized, Evaluation Committee-blinded study to assess
the effectiveness of Omigard(TM) vs. 10% povidone-iodine for the prevention of
central venous catheter-related infections. This ongoing trial is known as the
Central Line Infection Reduction Study, or CLIRS trial. Cadence expects they
will complete enrollment of the 1,850 patients planned for the trial in the
second quarter of 2008, with results available in the second half of 2008. If
the results of the CLIRS trial are positive, Cadence expects to submit a New
Drug Application ("NDA") for omiganan 1% gel in the first half of 2009.

    Celgosivir (MX-3253; oral alpha-glucosidase I inhibitor; treatment of
chronic hepatitis C virus infections): Final top-line results of a Phase II
12-week combination therapy study in non-responder and partial responder
patients were announced April 11, 2007, demonstrating proof-of-concept and
evidence of clinical benefit when adding celgosivir to the current
standard-of-care HCV therapy (pegylated interferon plus ribavirin) as compared
to the active control treatment (standard-of-care alone) in patients with
chronic hepatitis C virus genotype 1 infections who were characterized as
non-responders to prior therapy with optimized pegylated alpha interferon plus
    In conjunction with the Phase II non-responder study described above, a
protocol was designed and approved by Health Canada to provide participants in
the 12-week study with access to continued treatment for up to an additional
36 weeks (for up to a total of 48 weeks of therapy). In consultation with
their physicians, patients could elect to continue on with their original
treatment or, if on the double combination or the control treatments, could
switch to the triple combination treatment. Of the 50 patients completing 12
weeks of treatment, 31 elected to continue treatment beyond 16 weeks, with 30
of these either continuing with, or switching to, the triple combination and
one patient remaining on double combination. Of the 30 patients receiving
triple combination treatment: 11 patients completed 48 weeks of treatment with
5 of these patients achieving undetectable virus levels. Three of these
patients (all partial responders to prior therapy) relapsed subsequently, and
two of the patients (both non-responders to prior therapy) achieved a
sustained virologic response (SVR). The safety profile for patients exposed to
celgosivir for up to 48 weeks did not differ from those in the initial
12-weeks of treatment. There was no increase in reported diarrhea with long
term treatment, nor an increase in incidence and severity of Creatine Kinase
(CK) elevations (two side effects seen in previous studies). No new,
previously unknown adverse events were reported.
    Interim 4-week results on the first 10 patients in an ongoing Phase II
viral kinetics combination study of celgosivir in patients with chronic HCV
(genotype 1) infection who have not received prior treatment for their
infection were announced December 3, 2007. The results indicate that
celgosivir has no negative effects on the tolerability, pharmacokinetics and
viral kinetics when combined with the standard of care drugs, pegylated
interferon plus ribavirin, as compared to the standard of care drugs alone.
The viral kinetics in both treatment groups are similar and, due to the small
number of patients and the high response rate with standard of care alone in
this study, efficacy results from the interim data are inconclusive.
    Based on a detailed analysis of the data from the Phase II viral kinetics
study, the non-responder study and the related extension protocol, there is
rationale for increasing the dosage of celgosivir from 400mg per day to 600mg
per day to enhance efficacy. We are, therefore, exploring the potential to
amend the current viral kinetics study protocol to allow for the increased
    All MIGENIX-related clinical trials of celgosivir to date have been
conducted in Canada. A US IND application is in the preparation process, with
the timing for submission to be determined in conjunction with our plans for
the amendment to the viral kinetics study described above, funding
considerations, and partnering of the program. MIGENIX has been and continues
to be in discussions with potential partners for the further clinical
development of celgosivir.
    MIGENIX recently received notification that the European Patent Office
intends to grant a key patent protecting the use of celgosivir as a treatment
for HCV. This follows the issuance of patents in South Korea, New Zealand and
South Africa that are also directed to the use of celgosivir for the treatment
of HCV and other hepaciviruses. Prosecution of related patent applications,
also claiming uses for celgosivir against HCV, continues in other key

    Omiganan (CLS001; topical cationic peptide; treatment of dermatological
diseases): Cutanea Life Sciences, Inc., our development and commercialization
partner for CLS001, have completed their first Phase II trial designed to
evaluate the safety and efficacy of CLS001 in 240 patients with papulopustular
rosacea. The results of this randomized, vehicle-controlled, double-blind,
multi-center Phase II study, were announced October 17th, 2007. Based on the
promising results from this study, Cutanea has selected a once-daily dose of
omiganan 2.5% gel for further development for the treatment of papulopustular
rosacea and is planning to advance this product candidate into Phase III

    MX-2401 (IV lipopeptide; treatment of gram-positive bacterial
infections): MX-2401 is an injectable lipopeptide being developed for the
treatment of serious gram positive bacterial infections. To date, preclinical
studies conducted on MX-2401 have demonstrated very favorable activity, low
toxicity, a long half-life, and other positive scientific and competitive
features (with efficacy in multiple animal models, including pneumonia).
    Based on these positive results, the Company initiated interactions with
Health Canada to obtain feedback on the pre-Phase I development program. Good
Laboratory Practices ("GLP") compliant non-clinical studies were then
initiated in April 2007. The timing for completion of the GLP studies is
dependent upon: (1) additional manufacturing process development work; (2)
initiation of the remaining required GLP studies; and (3) financial resources.

    MX-4565 (small molecule; treatment of neurodegenerative diseases): In
June 2007 we were awarded a grant from the Michael J. Fox Foundation to fund
research in our MX-4565 program. The grant award agreement provides Elan
Pharmaceuticals with a limited right to license the technology arising from
the project for certain uses in the field of human disease. Studies funded by
the grant are ongoing.

    Other Matters: In November 2007 we relocated our Vancouver office and
research operations to new premises in close proximity to our former facility.
Our new premises consist of approximately 9,500 sq. ft. of office and lab
space, with leases that expire in December 2009. We have a renewal option for
an additional three- year term and rights of first offer for approximately
1,200 sq. ft of additional lab space to expand our operations.


    For the three months ended October 31, 2007 ("Q2/08"), MIGENIX incurred a
loss of $3.0 million (Q2/07: $3.7 million) or $0.03 (Q2/07: $0.05) per common
share, and for the six months ended October 31, 2007 ("YTD Fiscal 2008") the
loss is $6.1 million ($0.06 per common share) compared to a loss of
$6.2 million ($0.08 per common share) for the six months ended October 31,
2006 ("YTD Fiscal 2007"). The $0.7 million decrease in the Q2/08 loss compared
to Q2/07 consists of: (i) a $0.4 million decrease in research and development
expenses (see "Research and Development Expenses" below); (ii) a $0.2 million
decrease in general and corporate expenses (see "General and Corporate
Expenses" below; and (iii) a $0.1 million decrease in amortization expense
(see "Amortization" below).


    During Q2/08 the Company had no revenues (Q2/07: $nil) and during YTD
Fiscal 2008 research and development collaboration revenue was nominal (i.e.
(less than) $0.1 million) (YTD Fiscal 2007: $nil). This research and
development collaboration revenue is pursuant to the sale of omiganan drug
substance to Cutanea Life Sciences.

    Research and Development Expenses

    The following table summarizes our research and development expenses for
the periods indicated:

                                  Three months ended        Six months ended
                                          October 31              October 31
                                    2007        2006        2007        2006
    Program Expenses                      Canadian dollars, millions
      Omiganan 1% gel (partnered)    0.0         0.0         0.0         0.0
      Omiganan for dermatological
       diseases (partnered)          0.0         0.0         0.0         0.0
      Celgosivir                     0.3         0.2         0.7         0.6
      MX-2401 (net of government
       assistance)                   0.1         0.6         0.1         0.6
      Other projects                 0.0         0.1         0.0         0.1
    Total Program Expenses           0.4         0.9         0.8         1.3

    Unattributed Expenses
      Personnel                      0.8         0.7         1.5         1.3
      Patent costs                   0.3         0.2         0.6         0.3
      Other                          0.3         0.4         0.6         0.6
    Total Unattributed Expenses      1.4         1.3         2.7         2.2

    Total Research & Development
     Expenses                       $1.8        $2.2        $3.5        $3.5
    (1) Before amortization expense, technology and license acquisition
        costs, and write-offs of intangibles assets.
    (2) Value of $0.0 million represents $nil to ~$50,000 in expenses during
        the period.

    Our Omiganan programs are being advanced by development and
commercialization partners (Cadence Pharmaceuticals and Cutanea Life
    Celgosivir program costs were $0.3 million in Q2/08 (Q2/07: $0.2 million)
and were $0.7 million for YTD Fiscal 2008 (YTD Fiscal 2007: $0.6 million).
    Costs in the MX-2401 program in Q2/08 were $0.1 million (Q2/07:
$0.6 million) and were $0.1 million for YTD Fiscal 2008 (YTD Fiscal 2007:
$0.6 million). The decrease in Q2/08 and YTD Fiscal 2008 MX-2401 costs is
principally due to higher cost manufacturing activity in Q2/07 and YTD Fiscal
2007 in preparation for the GLP studies started in April 2007. The MX-2401
program costs are net of government assistance (see "Liquidity and Capital
    Research and development costs not allocated to programs were
$1.4 million in Q2/08 (Q2/07: $1.3 million) and were $2.7 million for YTD
Fiscal 2008 (YTD Fiscal 2007: $2.2 million). The approximate $0.5 million
increase in these unallocated research and development costs in YTD Fiscal
2008 is spread out across personnel costs (increased headcount initiated last
year, particularly with respect to non-clinical work in the celgosivir
program) and patent costs (advancement of celgosivir patent applications).
    We anticipate that we will make determinations as to which programs to
pursue and how much funding to direct to each program on an ongoing basis. We
are currently focusing our resources on advancing the development of our
non-partnered programs: celgosivir and MX-2401.

    General and Corporate Expenses

    General and corporate expenses in Q2/08 were $0.8 million (Q2/07:
$1.0 million) and were $1.8 million for YTD Fiscal 2008 (YTD Fiscal 2007:
$1.8 million). Personnel costs were $0.4 million in Q2/08 (Q2/07:
$0.7 million) and were $1.0 million for YTD Fiscal 2008 (YTD Fiscal 2007:
$1.2 million).


    Amortization expense for equipment was $0.1 million in YTD Fiscal 2008
(YTD Fiscal 2007: $0.1 million).
    Amortization expense for intangible assets was $0.1 million in YTD Fiscal
2008 (YTD Fiscal 2007: $0.3 million).

    Other Income and Expenses

    Interest income was $0.3 million for YTD Fiscal 2008 (YTD Fiscal 2007:
$0.3 million).
    Accretion expense related to the convertible royalty participation units
for Q2/08 was $0.4 million (Q2/07: $0.4 million) and is $0.8 million for YTD
Fiscal 2008 (YTD Fiscal 2007: $0.7 million). This accretion expense is a
non-cash expense resulting from (i) accreting the liability component of the
convertible royalty participation units to the maximum royalties payable of
$29.5 million (will be reduced for actual royalties paid, any units converted
into common shares, and should our estimate of the probable royalties payable
decline below $29.5 million) over the estimated royalty payment term using the
effective interest method; and (ii) amortizing the deferred financing costs
over the estimated royalty payment term using the effective interest method.
    The foreign exchange gains/losses were nominal ((less than) $0.1 million)
for each of Q2/08, Q2/07, YTD Fiscal 2008 and YTD Fiscal 2007.

    Equipment and Intangible Asset Expenditures

    Equipment expenditures for Q2/08 were approximately $0.1 million (Q2/07:
$0.1 million) and for YTD Fiscal 2008 were $0.2 million (YTD Fiscal 2007:
$0.2 million).
    Intangible asset costs capitalized in Q2/08, Q2/07, YTD Fiscal 2008 and
YTD Fiscal 2007 were $nil.

    Liquidity and Capital Resources

    As of October 31, 2007, the Company had cash, cash equivalents and
short-term investments of $10.5 million (April 30, 2007: $15.3 million) and
the Company's net working capital was $9.7 million (April 30, 2007:
$14.6 million). The $4.9 million decrease in net working capital from
April 30, 2007 is primarily attributable to the cash loss of $4.5 million
(loss excluding non-cash expenses: amortization, stock-based compensation and
accretion of the convertible royalty participation units) for the six months
ended October 31, 2007.
    In March 2005 the Company obtained a $9.3 million funding commitment for
the MX-2401 program from the Industrial Technologies Office - Industry Canada
("ITO"; formerly Technology Partnerships Canada). The ITO funding covers 26%
of eligible costs and a royalty is payable to ITO if the MX-2401 program is
successful (determination of success includes the obtaining of marketing
approval). As at October 31, 2007, the Company had expenditures qualifying for
$1.3 million of funding under this commitment of which $0.6 million had been
received and $0.7 million was recorded as government assistance receivable.
Based on a meeting with ITO it was determined that a substantive amendment to
our agreement with ITO would be required as milestones in the program had
shifted principally as a result of more manufacturing process development work
being undertaken in the program compared to the original work plan for ITO.
Currently our claims for ITO funding including the $0.7 million recorded as
government assistance receivable are on hold and we are working with ITO to
address these claims. It is possible that the ITO repayment terms could change
in conjunction with other changes, if any, in the ITO agreement. Royalties, if
any, that may be payable to ITO would be accounted for in the period in which
it is determined that payment is likely.
    MIGENIX believes that its funds on hand at October 31, 2007 are
sufficient to provide for operations into the third quarter of calendar 2008
before funds received, if any, from existing or new license agreements, the
exercise of warrants and options and future financing activities. The Company
will continue advancing its highest priority programs while operating within
an annual burn rate of $11 million to $13 million. The magnitude of spending
in the Company's development programs will be dependent on the licensing
status of the celgosivir program and results in the programs, and we may need
to increase or decrease our annual burn rate in response to such results.
MIGENIX is likely to need to raise additional funds in support of its
operations and there is no assurance that such funds can be obtained.

    Outstanding Shares

    There are currently 94,463,806 (October 31, 2007: 94,463,806; April 30,
2007: 94,237,205) common shares outstanding; 29,465 convertible royalty
participation units (October 31, 2007 and April 30, 2007: 29,465); and
9,250,000 (October 31, 2007: 9,250,000; April 30, 2007: 9,350,000) preferred
shares outstanding. As of December 13, 2007 MIGENIX approved the redemption of
the outstanding 4,000,000 Series E preferred shares for the aggregate sum of
US$1 based on the expiry of the milestone obligations associated with these
preferred shares.

    Conference Call

    Investors, analysts and the media are invited to participate in a
    conference call and webcast on Thursday, December 13, 2007 at
    11:00 a.m. ET (8:00 a.m. PT) to discuss this announcement. An update on
    company activities will also be provided. To participate in the
    conference call, please dial 416-644-3418 or 1-800-732-1073. The call
    will be available for replay until December 27, 2007 by calling
    416-640-1917 or 1-877-289-8525 and entering the pass code 21255722
    followed by the number sign. The live and archived webcast can be
    accessed through the company's website at www.migenix.com for the next
    90 days.

    Selected Financial Highlights

    BALANCE SHEETS                                    October 31,   April 30,
    Unaudited - In Thousands of Canadian dollars            2007        2007
    Cash and cash equivalents                             $5,886      $2,945
    Short-term investments                                 4,635      12,365
    Other current assets                                   1,310       1,245
    Total current assets                                 $11,831     $16,555
    Long-term investments                                      1           1
    Equipment                                                906         881
    Intangible assets                                      1,543       1,671
    Deferred transaction costs(1)                              -         473
    Total assets                                         $14,281     $19,581
    Liabilities and Shareholders' Equity
    Accounts payable and accrued liabilities              $2,161      $1,958
    Total current liabilities                             $2,161      $1,958
    Convertible royalty participation units(1)             5,219       4,847
    Preferred shares                                           -         115
    Total liabilities                                     $7,380      $6,920
    Shareholders' equity
    Common shares                                       $125,156    $124,994
    Equity portion of convertible royalty
     participation units                                   4,554       4,554
    Contributed surplus                                    8,005       7,830
    Deficit                                             (130,814)   (124,717)
    Total shareholders' equity                            $6,901     $12,661
    Total liabilities and shareholders' equity           $14,281     $19,581
    (1) As of May 1, 2007 pursuant to the adoption of new accounting
        standards Deferred transaction costs are netted against the
        convertible royalty participation units in liabilities.

    Unaudited - In Thousands      Three months ended        Six months ended
     Canadian dollars (except          October 31,             October 31,
     per share amounts)             2007        2006        2007        2006
      Research and development
       collaboration                   -           -           6           -
                                     $ -         $ -          $6         $ -
      Research and development     1,754       2,165       3,457       3,506
      General and corporate          843       1,016       1,830       1,805
      Amortization                   117         233         254         459
                                  $2,714      $3,414      $5,541      $5,770

    Loss before other income
     (expense)                   $(2,714)    $(3,414)    $(5,535)    $(5,770)
      Accretion of convertible
       royalty participation
       units                        (425)       (419)       (846)       (719)
      Interest income                127         130         270         274
      Foreign exchange gain
       (loss)                         15          (9)         14          17
    Loss and comprehensive
     loss for the period         $(2,997)    $(3,712)    $(6,097)    $(6,198)
    Deficit, beginning of
     period                     (127,817)   (111,151)   (124,717)   (108,665)
    Deficit, end of period     $(130,814)  $(114,863)  $(130,814)  $(114,863)
    Basic and diluted loss
     per common share             $(0.03)     $(0.05)     $(0.06)     $(0.08)
    Weighted avg. number of
     common shares outstanding
     (000's)                      94,464      74,505      94,464      74,202

    Unaudited - In Thousands
     of Canadian dollars            2007        2006        2007        2006
    Loss for the period          $(2,997)    $(3,712)    $(6,097)    $(6,198)
    Items not affecting cash:
      Amortization                   117         233         254         459
      Stock-based compensation        52          88         185         235
      Issuance of deferred
       share units                     -          96           -          96
      Accretion of convertible
       royalty participation
       units                         425         419         846         719
      Changes in non-cash
       working capital items
       relating to operating
       activities                    274         619         261        (676)
    Cash used in operating
     activities                  $(2,129)    $(2,257)    $(4,551)    $(5,365)

    Issuance of convertible
     royalty participation units       -          (5)          -       7,732
    Proceeds on exercise of
     stock options                     -           9           -          10
    Proceeds on exercise of
     warrants                          -         138          36         155
    Repayment of capital lease
     obligation                        -           -           -          (5)
    Cash provided by financing
     activities                        -        $142         $36      $7,892

    Funds from (purchases of)
     short-term investments          748      (1,447)      7,628      (2,811)
    Proceeds on disposal of
     equipment                         -           -          12           -
    Purchases of equipment          (109)        (99)       (184)       (171)
    Cash provided by (used in)
     investing activities           $639     $(1,546)     $7,456     $(2,982)

    (Decrease) increase in
     cash and cash equivalents   $(1,490)    $(3,661)     $2,941       $(455)
    Cash and cash equivalents,
     beginning of period           7,376       8,949       2,945       5,743
    Cash and cash equivalents,
     end of period                $5,886      $5,288      $5,886      $5,288

    About MIGENIX

    MIGENIX is committed to advancing therapy, improving health, and
enriching life by developing and commercializing drugs primarily in the area
of infectious diseases. The Company's clinical programs include drug
candidates for the treatment of chronic hepatitis C infections (Phase II and
preclinical), the prevention of catheter-related infections (Phase III) and
the treatment of dermatological diseases (Phase II). MIGENIX is headquartered
in Vancouver, British Columbia, Canada with US operations in San Diego,
California. Additional information can be found at www.migenix.com.

    "Jim DeMesa"
    James M. DeMesa, M.D.
    President & CEO


    This news release contains forward-looking statements within the meaning
of the United States Private Securities Litigation Reform Act of 1995, and
forward-looking information within the meaning of applicable securities laws
in Canada, (collectively referred to as "forward-looking statements").
Statements, other than statements of historical fact, are forward-looking
statements and include, without limitation, statements regarding our strategy,
future operations, timing and completion of clinical trials, prospects, plans
and objectives of management. The words "anticipates", "believes", "budgets",
"could", "estimates", "expects", "forecasts", "intends", "may", "might",
"plans", "projects", "schedule", "should", "will", "would" and similar
expressions are often intended to identify forward-looking statements, which
include underlying assumptions, although not all forward-looking statements
contain these identifying words. By their nature, forward-looking statements
involve numerous assumptions, known and unknown risks and uncertainties, both
general and specific, that contribute to the possibility that the predictions,
forecasts, projections and other things contemplated by the forward-looking
statements will not occur.
    Although our management believes that the expectations represented by
such forward-looking statements are reasonable, there is significant risk that
the forward-looking statements may not be achieved, and the underlying
assumptions thereto will not prove to be accurate. Forward-looking statements
in this news release include, but are not limited to, statements concerning
our expectations for: Cadence Pharmaceuticals completing enrollment of 1,850
patients in the CLIRS trial in the second quarter of 2008, with results
available in the second half of 2008 and if the results of this trial are
positive, Cadence submitting a new drug application (NDA) for Omigard in the
first half of 2009; the timing for submission of a US IND for celgosivir to be
determined in conjunction with our plans for the amendment of the viral
kinetics study and funding considerations and partnering of the program;
Cutanea Life Sciences' plans to advance omiganan for the treatment of rosacea
into Phase III clinical development, our estimate of the probable royalties
payable to the holders of the convertible royalty participation units; the
Company continuing to advance its highest priority programs while operating
within an annual burn rate of $11 million to $13 million; and the Company's
financial resources being sufficient to fund operations into the third quarter
of calendar 2008.
    With respect to the forward-looking statements contained in this news
release, we have made numerous assumptions regarding, among other things:
Cadence's ability to enroll sufficient patients to complete the Omigard CLIRS
trial; the adequacy of the CLIRS trial design to generate data that are deemed
sufficient by regulatory authorities to support potential regulatory filings,
including an NDA, for Omigard; Cutanea's ability to manage, fund and advance
omiganan for dermatological applications into Phase III, the adequacy of
Cutanea's Phase II results for regulatory authorities to support advancing to
Phase III; our ability to manage licensing opportunities; our ability to
initiate, fund and complete non-clinical studies, clinical studies,
manufacturing and all ancillary activities within our expected timelines; and
future expense levels being within our current expectations.
    Actual results or events could differ materially from the plans,
intentions and expectations expressed or implied in any forward-looking
statements, including the underlying assumptions thereto, as a result of
numerous risks, uncertainties and other factors including: dependence on
corporate collaborations; potential delays; uncertainties related to early
stage of technology and product development; uncertainties as to the
requirement that a drug be found to be safe and effective after extensive
clinical trials and the possibility that the results of such trials, if
completed, will not establish the safety or efficacy of our products;
uncertainties as to future expense levels and the possibility of unanticipated
costs or expenses or cost overruns; the possibility that opportunities will
arise that require more cash than presently anticipated and other
uncertainties related to predictions of future cash requirements; and other
risks and uncertainties which may not be described herein. Certain of these
factors and other factors are described in detail in the Company's Annual
Information Form and Annual Report on Form 20-F for and other filings with the
Canadian securities regulatory authorities and the U.S. Securities & Exchange
    Forward-looking statements are based on our current expectations and
MIGENIX assumes no obligations to update such information to reflect later
events or developments.

    The Toronto Stock Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release.

For further information:

For further information: Art Ayres, MIGENIX Inc., Tel: (604) 221-9666
Ext. 233, aayres@migenix.com; Dian Griesel, Ph.D., Investor Relations Group,
Tel: (212) 825-3210, Theproteam@aol.com

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