Medivir Takes Its First Pharmaceutical Project Into Phase III and Sharpens Its Strategic Focus; Labial Herpes Project ME-609 Proceeds to Phase III with Medivir in Control.

STOCKHOLM, Sweden -- The US Food and Drug Administration (FDA) in an End-of-Phase-II Meeting has recently approved Medivir's proposal for configuring the pivotal clinical trials to allow drug registration of labial (oral) herpes project ME-609. A characteristic feature of the project is its low development risk, and it has the potential to offer patients, for the very first time, the opportunity to completely avoid the outbreak of a cold sore.

The preparatory work for the phase III clinical trials has started and the trials are estimated to begin during the autumn of 2006. Discussions with the FDA have resulted in a cost-effective registration program, which means that the phase III costs during 2006 are limited to around SEK 40 m.

A reduced resource commitment to the Company's HIV projects has facilitated the decision to run the ME-609 phase III program under Medivir control, as has the continued successes in Medivir's protease projects.

Medivir regroups to allow divestment of all HIV/HBV and shingles polymerase inhibitors

All of the Company's HIV/hepatitis B (HBV) and shingles projects based on the older research platform of polymerase inhibition are to be placed in a new subsidiary; Medivir HIV Franchise AB. Medivir's ambition is to divest this subsidiary or its assets as soon as possible and thus future internal investments will be very limited.

Advances in protease inhibitor platform increase possibility of short term revenues

Medivir's protease inhibitor projects which address diseases such as osteoporosis, hepatitis C, rheumatism and autoimmune disorders continue to make progress.

--The HCV protease project operated jointly with Tibotec continues to make progress.

--MIV-701, a potential new pharmaceutical for osteoporosis, which inhibits the protease enzyme cathepsin K has recently had additional successes. The program is expected to reach clinical phase I early in 2007.

--Efforts to tailor other cathepsin K inhibitors to the widely prevalent disease osteoarthritis are developing positively. These compounds and efficacy data are being assessed for a possible Candidate Drug (CD) designation as early as 2006. This rapid progress provides an additional validation of Medivir's protease inhibitor platform.

--The cathepsin S project, directed to autoimmune disorders, has recently developed compounds which are superior to the previously designated Candidate Drug, CD-1. This enhances the potential of the project, but means that further development of CD-1 is de-prioritized for the present.

From the CEO 

"The advances in the protease inhibitor projects increase the possibility of generating revenues in the short term and our decision to divest polymerase projects relating to HIV/HBV and shingles releases resources and creates a clearer operative focus. All this enables us to take an aggressive and long-anticipated step forward - to drive our most mature project towards the market under our own banner", says Medivir CEO Lars Adlersson. "In furtherance of the goal of being a profitable pharmaceutical company, Medivir strives after a clear shift in values by becoming a company with acknowledged attractive protease inhibitors in clinical development and one of the few European biotechs with an in-house phase III program", continues Adlersson. "In the future, Medivir will progress selected key-projects further into clinical development than has thus far been the case"

The Medivir Group

Medivir is an innovative, specialist research company that develops drugs with the objective of becoming a sustaining, profitable pharmaceuticals company. Medivir is located in Huddinge, Sweden and at Chesterford Research Park, Essex, UK.

Medivir's research is oriented on developing new drug compounds based on proteases as target enzyme. The group consists of Medivir AB, its subsidiary Medivir UK Ltd, Medivir HIV Franchise AB and Medivir Personal AB. As of 30 September, the group had 129 employees. Medivir was listed on the Stockholm Exchange O-list in 1996.

Medivir's research portfolio includes projects against hepatitis C, cold sores, osteoporosis, osteoarthritis, rheumatoid arthritis (RA), asthma, multiple sclerosis (MS) and autoimmune disorders. Medivir has five projects in various development phases, whereof one is on its way to phase III.

Medivir HIV Franchise AB focuses on development and divestment of the HIV projects and to ascertain the clinical strategy for MIV-606 against shingles.

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