SYS-CON UK Authors: Salvatore Genovese, Jeremy Geelan, Jamie Matusow

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Medicago Announces 2012 Third Quarter Financial Results

- Provides Update on Seasonal and Pandemic Influenza Programs -

QUEBEC CITY, Nov. 9, 2012 /PRNewswire/ - Medicago Inc. (TSX: MDG)(OTCQX: MDCGF), a biopharmaceutical company focused on developing highly effective and competitive vaccines based on proprietary manufacturing technologies and Virus-Like Particles ("VLPs"), today announced its operational and financial results for the third quarter ended September 30, 2012. The Company's financial statements and management report are available at www.sedar.com and at www.medicago.com.

"In the third quarter of 2012, we announced that we had successfully produced significantly more than 10 million doses of H1N1 influenza VLP vaccine at our commercial-scale facility in North Carolina and completed the DARPA project. In addition, we announced FDA authorization to initiate a Phase I clinical trial with IDRI for an H5N1 VLP vaccine to explore the possibility of enhanced protection with one dose of vaccine, continued development of the quadrivalent seasonal flu vaccine, and signed a commercial agreement with Philip Morris Products for influenza vaccines in China," said Andy Sheldon, President and Chief Executive Officer of Medicago. "In 2013, we expect to see results from at least three clinical trials, which would reinforce our position with governments and companies to secure revenues and grant opportunities."

Corporate and Financial Highlights
During the third quarter of 2012:

  • Announced the successful production of significantly more than 10 million does of H1N1 VLP influenza vaccine candidate in one month.  Under our agreement with the Defense Advanced Research Projects Agency ("DARPA"), this earned Medicago a US$1 million milestone payment. Testing by a third party laboratory confirmed that a single dose of the H1N1 VLP induced protective levels of neutralizing antibodies in an animal model. Medicago met all milsteones and has earned the full US$21 million in DARPA milestone awards.
  • Medicago signed a licensing agreement with Philip Morris Products SA ("PMP"). Under the agreement, Medicago granted PMP an exclusive license to develop, commercialize and manufacture Medicago's pandemic and seasonal influenza vaccines for China.  In addition, Medicago signed an exclusive, worldwide license for a portfolio of plant-based protein development technologies from PMP for $0.7 million. Medicago received an upfront payment of US$4.5 million from PMP.  In addition, Medicago is eligible to receive development milestone payments totalling US$7.5 million, as well as royalty payments on future sales.
  • The Infectious Disease Research Institute ("IDRI"), a Seattle-based non-profit research organization and Medicago announced clearance from the U.S. Food and Drug Administration to initiate a Phase I clinical trial for an H5N1 pandemic Influenza VLP vaccine candidate ("H5N1 VLP vaccine"). The trial is focused on evaluating the safety and immunogenicity of the H5N1 VLP vaccine, combined with IDRI's Glucopyranosyl Lipid A ("GLA") adjuvant, administered intramuscularly ("IM") or intradermally ("ID"). The trial is believed to be the first human test of an intradermal adjuvant - a technology platform that could potentially benefit a number of worldwide vaccination programs. The trial is funded by a multi-million dollar grant IDRI received from DARPA to develop an influenza vaccine for pandemic flu.

Subsequent to the third quarter:

  • Medicago and Cellectis plant sciences, a US-based subsidiary of Cellectis Group (Alternext: ALCLS), ("Cellectis"), a specialist in genome engineering, successfully completed the first step in their research collaboration to improve therapeutic proteins produced in tobacco plants. Cellectis develops enzymes called nucleases which can enable the production of biosimilar products.

Update on H5N1 Pandemic Influenza Program
The pandemic threat from H5N1 Avian Influenza remains a serious global threat.  Recent studies by Fouchier and Kawaoka in Science and Nature1 have demonstrated that by recombining already circulating strains, human to human transmission is possible. These authors have also demonstrated that five mutations are needed for human to human transmission, and that current H5N1 strains circulating in birds are three mutations away from becoming transmissible to humans, strongly supporting the need for pandemic preparedness2.

Medicago is therefore expanding its H5N1 clinical program to ensure the continued development of this best-in-class vaccine.  The Company believes that this will provide Medicago with enhanced access to future government contracts and grants for pandemic preparedness. Government contracts may include participation as a domestic supplier in Canada, the U.S., as well as in Europe and Asia. Grant opportunities include the Biomedical Advanced Research and Development Authority (BARDA) Broad Agency Announcement for the Advanced Development of Medical Countermeasures for Pandemic Influenza and other U.S. funding opportunities.

This clinical trial is expected to start in the spring of 2013. This trial will be designed to determine the lowest dosage possible by both IM and ID routes and by combining the vaccine with a GLA adjuvant from IDRI.  Initial safety and immunogenicity data are expected in the summer of 2013, with ongoing results due later in the year. Manufacturing of the H5N1 vaccine candidate for the trial will occur at Medicago's pilot facility in Quebec City. The trial will be designed to demonstrate that: (1) the dosage of H5N1 vaccine can be reduced, thereby effectively increasing capacity and reducing the cost of goods of our pandemic vaccine; (2) Medicago's H5N1 vaccine has the capacity to cross-protect against different strains of H5N1, an important advantage as strains can mutate during a pandemic; and, (3) as ID administration will be tested, this could simplify vaccine distribution and administration during a pandemic. The Company has already shown protection in animal models after one dose of vaccine.  Medicago will now continue to explore the possibility of enhanced protection with one dose of vaccine in humans.  Additional details will be provided at a later date.

Update on Seasonal Influenza Vaccine Program
Medicago is currently preparing for a Phase IIa clinical trial of its quadrivalent seasonal influenza vaccine candidate.  As part of the development of the vaccine, the Company completed different pre-clinical studies. In two animal models, the quadrivalent VLP vaccine was found to be safe and immunogenic, inducing antibody levels comparable to licensed vaccines and allowing for the progression to the production of the clinical lots. The production of the vaccine was initially planned to occur at our pilot facility in Quebec, however the Company has decided to transfer the production to the commercial-scale facility in North Carolina.  This transfer will provide additional capacity at the pilot facility in Quebec, allowing for accelerated production of H5N1 vaccine for the new clinical study, rotavirus, rabies, and other vaccine candidates including at least two additional targets related to Medicago's strategic alliance with Mitsubishi Tanabe Pharma Corporation.

As the North Carolina facility was intended to produce the seasonal influenza vaccine candidate for the Phase IIb clinical trial, it is expected that there will be no impact on the projected time to market as the transfer would have occurred later for the Phase IIb trial. Following successful completion of Phase II and Phase III clinical trials, Medicago anticipates that its quadrivalent seasonal influenza vaccine would receive FDA approval in 2016. At that time, it is estimated that the U.S. market for seasonal influenza vaccines will be valued at US$2 billion. Technology transfer from Quebec to North Carolina is ongoing and production has begun.  Interim data from the clinical trial is now expected to be available in summer 2013.

Corporate Outlook
Expected milestones include:

  • Additional contract opportunities (government, pharmaceutical companies);
  • Addition of new pipeline candidates;
  • Interim data from IDRI Phase I clinical trial in the first quarter of 2013;
  • Preparation for pandemic readiness clinical trial for H5N1 pandemic influenza vaccine with interim data expected in summer 2013; and
  • Preparation for US Phase IIa clinical trial for quadrivalent seasonal influenza vaccine with interim data expected in summer 2013.

Financial Results
The consolidated loss for the three-month period ended September 30, 2012, was $4,748,832 or $0.02 per basic and diluted share.  This compares to a loss of $4,407,058 or $0.03 per basic and diluted share for the three-month period ended September 30, 2011.  Operating expenses were $9,440,652 in the three-month period ended September 30, 2012, compared to $4,594,871 in the same period of 2011.  The increase in operating expense of $4,805,781 is mainly explained by: (1) the preparation for the Phase IIa clinical trial of the quadrivalent influenza seasonal vaccine; (2) preparation and beginning of the production of H5N1 pandemic vaccine quantities for our upcoming clinical trial; (3) work on our new rabies vaccine and other potential targets; and (4) work on the rotavirus candidate as part of our collaboration with Mitsubishi Tanabe Pharma Corporation.

Cash and short-term investments were $23.0 million as at September 30, 2012, a decrease of $17.3 million from December 31, 2011.

As at November 9, 2012, there were 247,874,006 common shares issued and outstanding as well as 10,651,773 stock options outstanding.  Warrants outstanding and unit options outstanding as at November 9, 2012, are in the aggregate of 24,455,713.

Medicago Inc.
Interim Consolidated Statements of Income
        Three-month period
ended September 30,
  Nine-month period ended
September 30,  
Revenues from license       4,370,400   -   4,370,400 -
Revenues from research agreements       321,420   20,964   848,374 58,820
        4,691,820   20,964   5,218,774 58,820
Operating expenses                  
Research and development       5,533,309   3,558,052   16,637,832 9,312,007
General and administrative       1,662,227   1,411,316   5,523,245 4,293,050
Depreciation of property, plant and equipment       673,395   279,761   2,044,112 735,662
Amortization of intangible assets       53,770   41,096   150,636 108,082
Financial income       (49,833)   (24,931)   (387,831) (81,466)
Financial costs       724,989   366,667   2,284,760 1,075,124
Exchange loss       842,795   (1,037,090)   801,377 (838,718)
        9,440,652   4,594,871   27,054,131 14,603,741
Loss for the period before deferred  income taxes       (4,748,832)   (4,573,907)   (21,835,357) (14,544,921)
Deferred income taxes       -   166,849   - 203,522
Net loss for the period       (4,748,832)   (4,407,058)   (21,835,357) (14,341,399)
Basic and diluted loss per share       (0.02)   (0.03)   (0.09) (0.09)

Selected Balance Sheet Data
        September 30,   December 31,
Cash and short-term investments       23,033,000   40,362,000
Total assets       59,761,000   80,394,000
Long-term debt       17,132,000   17,927,000
Finance lease liability       16,581,000   17,359,000

1Horfst et al. (2012) Science 336: 1534; Imai et al. (2012) Nature 486: 420.
2Russell et al. (2012) Science 336: 1541.

About Medicago
Medicago is a clinical-stage biopharmaceutical company developing novel vaccines and therapeutic proteins to address a broad range of infectious diseases worldwide. The Company is committed to providing highly effective and competitive vaccines and therapeutic proteins based on its proprietary VLP and manufacturing technologies. Medicago is a worldwide leader in the development of VLP vaccines using a transient expression system which produces recombinant vaccine antigens in plants. This technology has potential to offer more potent vaccines with speed and cost advantages over competitive technologies, enabling the development of a vaccine for testing in approximately one 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, and supply large volumes of vaccine antigens to the world market. Medicago also intends to expand development into other areas such as biosimilars and biodefense products where the benefits of our technologies can make a significant difference. Additional information about Medicago is available at www.medicago.com.

Forward Looking Statements
This news release includes certain forward-looking statements or forward-looking information for the purposes of applicable securities laws and such statements and information 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. Such statements include but are not limited to statements related to expected clinical development timelines and potential government contracts and grants.  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 "Risk Factors and Uncertainties" in Medicago's Annual Information Form filed on March 29, 2012, 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.


SOURCE Medicago Inc.

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