Medicago was awarded $21M grant from the US Dept. of Defense to build a 10 million dose per month manufacturing facility of its plant-expressed VLP vaccines in North Carolina. The US Homeland Security was keen on addressing the need for a faster response to influenza outbreaks and Medicago's "faster, cheaper, better" process was hailed as the potential answer. The collaboration is a $42M project in which DARPA contributes $21M, Medicago $7.5M and Alexandria Real Estate Equities Inc. $13.5M.

The DARPA award is not a surprise, but the details disclosed in this press release are very exciting. First off, $21M by the government and $13.5M by the leasing company is a huge source of non-dilutive funding.  This is a big step for Medicago as this is the first definitive agreement signed to date, despite 4 outstanding MOUs. The 10M dose per month capacity can be scaled up, but if I just think about a meager $1 profit per dose, that is a potential $10M profit per month for Medicago. The U.S. is the biggest, the most sought after market, and having an agreement with a government agency will help ease regulatory hurdles and access to market. Building the facility in Congressman David Price's district brings an important political connection (he is the Chairman of the House Homeland Security Appropriations Subcommittee), it also makes Medicago eligible for new sources of funding through US grants. Finally this agreement will be seen as a major validation of Medicago's technology and will open doors for other agreements as well as new investors.

Today's media event in NC will bring a lot of exposure to Medicago in the US.  The story has already been partially reported in the WSJ and other media outlets will likely follow suit. An investors conference is also scheduled for today at 11AM ET.  In case you're unable to dial in I will comment on it in the next update.

So, what does this mean for investors? This is a major announcement that will have a positive effect on the share price. Tekmira's (TKM.V) SP jumped 40% when they announced a deal with US DoD back in July. Medicago still has to finance the $7.5M from it's side and that may put an anchor on the price movement. We should see price appreciate as the financing agreement is fulfilled and as new developments unfold. As the volume increases and as the SP increases I will likely be starting to take some profits (very slowly) off the table.  This stock should see $1 in the next few months so I will keep a good portion of my position well beyond this event.

Regards,

TB

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