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

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

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

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

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

Advances in protease inhibitor platform increase possibility ofshort term revenues

Medivir's protease inhibitor projects which address diseases suchas osteoporosis, hepatitis C, rheumatism and autoimmune disorderscontinue 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 thepossibility of generating revenues in the short term and our decisionto divest polymerase projects relating to HIV/HBV and shinglesreleases resources and creates a clearer operative focus. All thisenables us to take an aggressive and long-anticipated step forward -to drive our most mature project towards the market under our ownbanner", says Medivir CEO Lars Adlersson. "In furtherance of the goalof being a profitable pharmaceutical company, Medivir strives after aclear shift in values by becoming a company with acknowledgedattractive protease inhibitors in clinical development and one of thefew European biotechs with an in-house phase III program", continuesAdlersson. "In the future, Medivir will progress selected key-projectsfurther into clinical development than has thus far been the case"

The Medivir Group

Medivir is an innovative, specialist research company thatdevelops drugs with the objective of becoming a sustaining, profitablepharmaceuticals company. Medivir is located in Huddinge, Sweden and atChesterford Research Park, Essex, UK.

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

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

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

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