Medicago Reports Second Quarter Financial and Operating Results


Quebec City, Canada, August 30, 2006 ― Medicago Inc. (TSX-V : MDG) today reported financial results for the second quarter ended June 30, 2006. For the second quarter, Medicago’s consolidated net loss decreased by 11% to $1,700,000 or $0.20 per basic and diluted share compared to $1,900,000 or $0.22 per basic and diluted share for the corresponding period in 2005. This decrease is mainly explained by a decrease in R&D expenses for $200,000 in the three-month period ended June 30, 2006. Since the beginning of the year, the consolidated net loss amounted to $3,700,000 or $0.43 per basic and diluted share compared to a net loss of $3,100,000 or $0.36 per basic and diluted share for the corresponding period in 2005. This variation of $600,000 is mainly attributable to an increase in financial expenses and depreciation of property, plant and equipment. Cash and short-term deposit were $1,800,000 on June 30, 2006.

Second quarter 2006 Highlights

  • 11% decrease for the net loss for the Quarter;
  • Grant of a refundable contribution of a maximum of $300,000 from Canada Economic Development;

Collaboration and product development pipeline advancements

  • Successful completion of the first part of the contract with Acambis LLC and on time beginning of the second part of the contract ;
  • Successful expression of the two major antigens of the vaccines against the avian influenza, namely Hemagglutinin and Neuraminidase;
  • Positive results of animal studies for MED-205, in-house product, for the reduction of cholesterol levels.

Recent Events

  • Closing of the IPO on August 30, 2006 ;
  • Appointment to Medicago’s board of directors of Mr. Jonathan R. Goodman, president and CEO of Paladin Laboratories Inc. and of Mr. Pierre Seccareccia FCA, corporate director and former managing partner for the Montreal office of PricewaterhouseCoopers.

«Several events which have occurred during the last several months give us confidence for the future development of the Company», stated Mr. Andy Sheldon, President and CEO of Medicago Inc. «During the 2nd Bird Flu Summit, which was held in Washington last June, we announced that we succeeded in expressing the two major antigens of vaccines against the avian influenza, which are Hemagglutinin (ha) and Neuraminidase (NA), using our new technology for the production of vaccines. A few weeks later, we announced the positive results of two studies carried out on animals for MED-205, which is a proprietary product of Medicago designed to reduce cholesterol levels. In these studies, over a 21 days period, MED-205, by oral administration, decreased the total blood cholesterol rate by 16,5%, the cholesterol-LDL rate by 17,5% and the triglycerides rate by 33%. The preliminary efficacy profile of MED-205 compares favourably to existing statin and fibrate therapy.

We are pleased with the progress made by Medicago’s team in these two projects and their impacts on the future development of the company. In the last two quarters of 2006, we will actively continue our efforts to sign new contracts for our contract manufacturing activities. In addition, we will be continuing the search for partners for our proprietary products, in particular MED-205 for the reduction of the cholesterol levels following the positive results of the animal studies», concluded Mr. Sheldon.

About Medicago:

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 ProficiaTM technology offers speed, flexibility and cost advantages that can greatly improve the accessibility of today’s emerging biopharmaceuticals for both partners and patients.

The company has established collaboration agreements with Acambis PLC (NASDAQ: ACAM – www.acambis.com) and InterveXion Therapeutics LLC (www.intervexion.com) for the development of several products and is also developing its own proprietary pipeline.

For additional information, please visit Medicago web site at www.medicago.com.

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.

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For any additional information, please contact :

M. Andrew J. Sheldon
President and Chief Executive Officer Medicago Inc.
(418) 658-9393

M. Pierre Labbé
Vice-president and Chief Financial Officer Medicago Inc.
(418) 658-9393

Email: info@medicago.com, www.medicago.com;