Medivir announces a rights offering of SEK 300 million

Medivir announces a rights offering of SEK 300 million

Medivir announces a rights offering of SEK 300 million, fully covered by
subscription undertakings, declarations of intent and underwriting undertakings

The Board of Directors of Medivir has resolved to conduct a rights offering of
approximately SEK 300 million, after transaction costs, subject to approval by
the Annual General Meeting. The rights offering will enable Medivir to create
value for shareholders by developing its projects further under its own
management, strengthen the company's commercial organization and capabilities,
invest in additional research projects targeting infectious diseases and create
operational and financial flexibility.

NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES,
AUSTRALIA, CANADA, SINGAPORE, SOUTH AFRICA, SWITZERLAND, JAPAN OR HONG KONG OR
IN ANY JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL.

Summary 

·  The Board of Directors of Medivir has resolved to conduct a rights offering
of approximately SEK 300 million, after transaction costs, through an issue of
class B shares with preferential rights for existing shareholders in Medivir
(the “Rights Offering”)

·  The Rights Offering is fully covered by subscription undertakings,
declarations of intent and underwriting undertakings by a combination of major
shareholders in Medivir and a guarantee consortium

·  The proceeds will be used to create value for shareholders by developing
Medivir's projects further under its own management, strengthen its commercial
organization and capabilities, invest in additional research projects targeting
infectious diseases and create operational and financial flexibility

·  The Rights Offering is subject to approval by the Annual General Meeting,
which is scheduled to be held on 29 April 2010

·  The subscription price and offer ratio are expected to be announced on 27
April 2010

·  Trading in subscription rights is expected to occur from 6 May to 25 May 2010

·  Subscription period from 6 May to 28 May 2010

·  A telephone conference will be held today at 10.00 am (CET)

Background and reasons 
Medivir AB (publ) (“Medivir” or the “Company”) has in recent years taken several
important steps towards becoming a profitable research-based pharmaceutical
company with own marketing capability. The Company has independently and
successfully guided Xerclear™ through phase III clinical studies, regulatory
approvals, market registration in the United States and EU and product launch in
Sweden and Finland. The North American marketing rights for Xerclear™ (marketed
as Xerese™ in North America) have been licensed to Meda AB. Xerclear™ is a
topical cream and the only FDA-approved cold sore treatment with a label, that
describes a clinically documented reduction in the likelihood of ulcerative cold
sores and healing time. Medivir believes that an expansion of the commercial
organization will make the Company a more attractive partner for in-licensing of
products for the Nordic markets.

TMC435, Medivir's most promising clinical program, is presently in clinical
phase IIb studies. This project is being developed in collaboration with
Tibotec/Johnson & Johnson for the treatment of hepatitis C, and is expected to
have significant advantages over current approved treatments as well as products
under clinical development. TMC435 is an example of Medivir's best-in-class
protease and polymerase inhibitor development platform.

The Company recently conducted a comprehensive review of its R&D portfolio,
which led to a decision to focus future projects on the Company's core
competency of infectious diseases. The intention is to continue to concentrate
on drugs that target the enzymes protease and polymerase, but to bring a clearer
prioritization on infectious diseases to the currently mixed preclinical
portfolio. 

The portfolio will consist of ten projects, of which Xerclear™ is in the market
launch phase, six projects are in clinical or preclinical development stage and
the remaining three are in earlier phases. 

Infectious diseases are the target of seven of the projects, while the other
three primarily target diseases in the central nervous system or diseases of the
bone. 

In terms of partnerships, three of the projects are partnered with
Tibotec/Johnson & Johnson and three have been licensed to other partners. These
partners are responsible for all development and funding of the projects towards
market registration. 

As part of the review of its R&D portfolio, Medivir intends to take cathepsin S
and cathepsin K (MIV-710/711), two projects with significant commercial
potential, further towards and into clinical development. The Company believes
this will enable it to increase the value of future out-licensing agreements
considerably.

Against this background the Board of Directors has resolved to conduct a Rights
Offering of approximately SEK 300 million, after transaction costs, subject to
approval by the Annual General Meeting. The proceeds of the Rights Offering is
expected to enable Medivir to:

·  Create value for shareholders by developing its projects further under its
own management 
The Rights Offering will provide the Company with flexibility to out-license
projects at a stage when large shareholder value is created. Taking preclinical
projects further into clinical development under own management is expected to
create higher values at the time of out-licensing and greater commercial
opportunities for the Company. This also includes the possibility to retain
marketing rights outside the Nordic region.

·  Strengthen the Company's commercial organization and capabilities 
Medivir intends to strengthen the commercial organization in order to be able
to, under its own management, capitalize on the progress of the most advanced
projects. This is expected to enable Medivir to launch Xerclear™ in the Nordic
markets during 2010. A strengthened commercial organization will help support
the launch of products like TMC435, and is expected to make Medivir a more
attractive partner for in-licensing products for the Nordic markets. Medivir
also has the objective to acquire additional product rights in selected
territories. 

·  Invest in additional research projects targeting infectious diseases 
The market for drugs targeting infectious diseases is expected to grow
considerably over the coming five to ten years, and Medivir believes that the
proposed new share issue will enable the Company to further leverage its
research and development competence and experience within the area of infectious
diseases.

·  Create operational and financial flexibility 
The Rights Offering will provide Medivir with greater operational and financial
flexibility. This will reduce the need to early out-licensing of the most
promising product candidates and reduce the dependence on early milestone
payments from partners.

The Rights Offering 
The Board of Directors resolved on 28 March 2010, subject to approval by the
Annual General Meeting, to raise approximately SEK 300 million, after
transaction costs, through an issue of new class B shares, with preferential
right for the Company's existing shareholders. The Annual General Meeting is
scheduled to be held on 29 April 2010.

The Board of Directors expects to announce the final terms of the Rights
Offering, including the maximum increase of the share capital and the number of
shares to be issued and the subscription price for the new shares, on or about
27 April 2010. The final terms will be agreed between the Board of Directors and
its financial advisors.

A number of Swedish and international shareholders, including among others the
founders of Medivir, Staffan Rasjö, Länsförsäkringar, DNB NOR Asset Management,
Carlsson Fonder, the Third National Swedish Pension Fund, Carnegie Funds and
Alecta, representing approximately in aggregate 62.7 percent of the votes in
Medivir (approximately 52.1 percent of the capital), have stated that they are
supportive of the Rights Offering, and have undertaken or, expressed their
intention to, vote in favor of the Rights Offering at the Annual General
Meeting.

Alecta, Carnegie Global Healthcare Fund, Carnegie Fund - Medical Sub-Fund,
Carnegie Fund II - Biotechnology Sub-Fund and the Third National Swedish Pension
Fund, among others, have undertaken to subscribe for their respective pro rata
share in the Rights Offering, corresponding to approximately 16.3 percent of the
Rights Offering.

In addition to the undertakings mentioned above, Länsförsäkringar, DNB NOR Asset
Management and Carlsson Fonder, among others, representing approximately in
aggregate 18.8 percent of the total number of shares in the Company have stated
that they are supportive of the Rights Offering and intend to subscribe for
their respective pro rata share.

The Third Swedish National Pension Fund has undertaken to underwrite an amount
corresponding to approximately 7.0 percent of the Rights Offering, bringing the
total amount of the Rights Offering covered by subscription undertakings,
declarations of intent and underwriting undertakings by existing shareholders to
approximately 42.0 percent. In addition, Volati Ltd has committed to underwrite
an amount corresponding to approximately 14.9 percent of the Rights Offering.

The remaining portion of the Rights Offering is, subject to customary terms and
conditions, underwritten by Carnegie and Jefferies, the Joint Bookrunners in the
Rights Offering. 

Indicative timetable for the Rights Offering

27 April 2010
 Subscription price and offer ratio announced in a press release
 
29 April 2010
 Annual General Meeting of shareholders to decide on the Rights Offering
resolved by the Board of Directors
 
30 April 2010
 The Medivir share is traded excluding subscription right
 
30 April 2010
 Estimated date of publication of the prospectus
 
4 May 2010
 Record date for participation in the Rights Offering, i.e. shareholders
registered in the share register of Medivir as of this date will receive
subscription rights for participation in the Rights Offering
 
6 May-25 May 2010
 Trading in subscription rights
 
6 May-28 May 2010
 Subscription period
 
3 June 2010
 Announcement of preliminary outcome
 
Financial and legal advisors 
Carnegie and Jefferies are acting as financial advisors to Medivir and as Joint
Bookrunners. Vinge is acting as legal advisor to Medivir. Gernandt & Danielsson
and Cleary Gottlieb Steen & Hamilton LLP are acting as legal advisors to the
Joint Bookrunners.

Conference call 
Date: 29 March 2010
Time: 10.00 am (CET)
Call-in number: SE + 46 (0)8-619 75 30, UK +44 (0)20-707 532 17
Confirmation code: 841185#



For additional information, please contact 
Ron Long, CEO, +46 (0) 8-5468 3100

Rein Piir, CFO & VP Investor Relations, +46 (0)8-5468 3123 or +46 708 537 292.

For more information about the Company, please visit; www.medivir.se 

Huddinge, 29 March 2010
Medivir AB (publ)

The above information has been made public in accordance with the Securities
Market Act and/or the Financial Instruments Trading Act. The information was
published at 08.30 am (CET) on 29 March 2010.


IMPORTANT INFORMATION

This press release is not an offer for subscription for shares in Medivir. A
prospectus relating to the Rights Offering referred to in this press release and
the subsequent listing of the new class B shares at NASDAQ OMX Stockholm will be
filed with the Swedish Financial Supervisory Authority. After approval and
registration of the prospectus by the Swedish Financial Supervisory Authority,
the prospectus will be published and made available on inter alia Medivir's
website. 

The distribution of this press release in certain jurisdictions may be
restricted. This press release does not constitute an offer of, or an invitation
to purchase, any securities of Medivir in any jurisdiction. 

This press release does not constitute or form part of an offer or solicitation
to purchase or subscribe for securities in the United States. The securities
referred to herein may not be sold in the United States absent registration or
an exemption from registration under the US Securities Act of 1933, as amended.
Medivir does not intend to register any portion of the offering of the
securities in the United States or to conduct a public offering of the
securities in the United States. Copies of this announcement should not be made
in and may not be distributed or sent into the United States, Canada, Australia,
Singapore, South Africa, Switzerland, Japan or Hong Kong.

Carnegie Investment Bank AB and Jefferies International Limited (the ”Joint
Bookrunners”) are acting exclusively for Medivir and no one else in connection
with the Rights Offering. They will not regard any other person (whether or not
a recipient of this release) as their respective clients in relation to the
Rights Offering and will not be responsible to anyone other than Medivir for
providing the protections afforded to their respective clients nor for giving
advice in relation to the Rights Offering or any transaction or arrangement
referred to herein. No representation or warranty, express or implied, is made
by each of the Joint Bookrunners as to the accuracy, completeness or
verification of the information set forth in this release, and nothing contained
in this release is, or shall be relied upon as, a promise or representation in
this respect, whether as to the past or the future. Each of the Joint
Bookrunners assume no responsibility for its accuracy, completeness or
verification and, accordingly, disclaim, to the fullest extent permitted by
applicable law, any and all liability which they might otherwise be found to
have in respect of this release or any such statement.

This press release contains "forward-looking statements”, which are statements
related to future events. In this context, forward-looking statements often
address Medivir's expected future business and financial performance, and often
contain words such as "expect, "anticipate, "intend, "plan, "believe”, "seek, or
"will”. Forward-looking statements by their nature address matters that are, to
different degrees, uncertain and can be influenced by many factors, including
the behaviour of financial markets, fluctuations in interest and exchange rates,
commodity and equity prices and the value of financial assets; the impact of
regulation and regulatory, investigative and legal actions; strategic actions;
and numerous other matters of national, regional and global scale, including
those of a political, economic, business and competitive nature. These factors
may cause Medivir's actual future results to be materially different than those
expressed in its forward-looking statements. Medivir does not undertake to
update its forward-looking statements.

Medivir has not authorized any offer to the public of shares or rights in any
Member State of the European Economic Area other than Sweden. With respect to
each Member State of the European Economic Area other than Sweden and which has
implemented the Prospectus Directive (each, a “Relevant Member State”), no
action has been undertaken to date to make an offer to the public of shares or
rights requiring a publication of a prospectus in any Relevant Member State. As
a result, the shares or rights may only be offered in Relevant Member States:

(a) to legal entities which are authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose corporate purpose
is solely to invest in securities;

(b) to any legal entity meeting two or more of the following criteria: (1) an
average of at least 250 employees during the last financial year; (2) a total
balance sheet of more than EUR 43 million and (3) an annual net turnover of more
than EUR 50 million, as shown in its last annual or consolidated accounts; or

(c) in any other circumstances, not requiring Medivir to publish a prospectus as
provide under Article 3(2) of the Prospectus Directive.

For the purposes hereof, the expression an “offer to the public of shares or
rights” in any Relevant Member State means the communication in any form and by
any means of sufficient information on the terms of the offer and the shares and
rights to be offered so as to enable an investor to decide to purchase any
securities, as the same may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State and the expression
“Prospectus Directive” means Directive 2003/71/EC and includes any relevant
implementing measure in each Relevant Member State.