Medicago and Philip Morris Products Sign Commercial Agreement for Influenza Vaccines in China

Medicago to receive up to US$12 million in upfront and milestone payments as well as royalties

QUEBEC CITY, Sept. 25, 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 the signing of a licensing agreement with Philip Morris Products SA ("PMP"), a subsidiary of Philip Morris International Inc. (NYSE/Euronext Paris: PM), the leading international tobacco company with products sold in approximately 180 countries. Under the agreement, Medicago grants PMP an exclusive license to develop, commercialize and manufacture Medicago's pandemic and seasonal influenza vaccines for China.  In addition, Medicago has signed an exclusive, worldwide license for a portfolio of plant-based protein development technologies from PMP.

Medicago will receive 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 any future sales of pandemic and seasonal influenza vaccines by PMP in China which utilize the Medicago technologies.

In a separate agreement, in exchange for signing an exclusive, worldwide licensing agreement, Medicago has licensed a portfolio of plant-based protein development technologies from PMP.  These technologies include tools and methods for producing proteins in plants which are expected to complement Medicago's existing patent portfolio. Medicago will pay US$0.7 million to PMP, and there are no additional milestone payments associated with this agreement.  PMP is entitled to receive royalty payments on any future sales of Medicago products which utilize the technologies licensed from PMP.

"We look forward to working closely with PMP to develop our pandemic and seasonal influenza vaccine candidates in the coming years," said Andy Sheldon, Chief Executive Officer of Medicago. "Strengthening our VLP platform and international expansion to emerging markets like China is a key component of our growth strategy, and this partnership represents an important milestone in achieving this strategy."

Philip Morris Investments B.V., a subsidiary of Philip Morris International, holds 98,608,800 common shares of Medicago, representing approximately 40% of the issued and outstanding common shares of Medicago. Therefore, PMP, which is also a subsidiary of Philip Morris International, is considered a "related party" of Medicago under Multilateral Instrument 61-101 respecting Protection of Minority Security Holders in Special Transactions (Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions in Québec) ("MI 61-101"). The transactions described in this press release are "related party transaction" under MI 61-101 but are exempt from formal valuation and minority approval requirements under MI 61-101. The Board of Directors of Medicago has reviewed and approved all agreements referenced in this press release.

Medicago's pipeline includes the initiation of a U.S. Phase IIa clinical trial for a quadrivalent seasonal flu vaccine, with interim data expected in the first quarter of 2013. A Phase I clinical trial for a H5N1 VLP vaccine with a new adjuvant is planned in partnership with the Infectious Disease Research Institute (IDRI), with interim data expected in the first quarter of 2013. GMP process development and a GLP toxicology study for a rabies vaccine are ongoing. Medicago is also working with Mitsubishi Tanabe Pharma under a strategic alliance to develop a vaccine for rotavirus, and at least two additional vaccine candidates.  In addition to vaccines, Medicago is conducting research and development in the area of biosimilar products.

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. The forward-looking statements are not historical facts, but reflect Medicago's current expectations regarding future results or events. Such statements include but are not limited to statements related to the agreements with Philip Morris Products SA referenced in this press release. 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.