Medivir — Annual Report 2007

Feb 13, 2008

Press Release, 13 February 2008

MEDIVIR, FINANCIAL STATEMENT 1 January – 31 December 2007

• Consolidated net sales were SEK 249.6 (126.0) m in the period.
• The loss after tax amounted to SEK -29.3 (-195.6) m.
• Liquid assets amounted to SEK 329.3 (195.1) m as of 31 December.
• Earnings per share were SEK -1.74 (-15.16).

CEO's statement—comments on the fourth quarter

The fourth quarter of the year was the most eventful and successful in Medivir's history. All our prioritized clinical projects passed major milestones. We strengthened our financial position by securing significant revenue from our outlicensed projects, and started work on establishing resources to sell pharmaceuticals in the Nordic region.

• During the quarter we reported major milestones and positive results on our clinical hepatitis C project TMC 435350, conducted together with Tibotec. The project has advanced very rapidly from the start of phase I studies (February) to phase IIa studies, which started late-November. These advances entitled Medivir to receive two milestone payments totaling SEK 160 m, the company's largest ever.
• All clinical trials in the phase III program for Lipsovir® are complete, with efforts now focused on compiling, evaluating and reporting data. These results are estimated to be presented late-March/early-April.
• Clinical results from the phase I study on MIV-701 (against bone degradation diseases) show that we have achieved proof of principle. These results demonstrate that inhibiting the enzyme Cathepsin K reduces the rate of bone resorption in a clinically relevant manner. We will now start the process of identifying an industrial partner for the Cathepsin K program.
• The milestone payment from Tibotec significantly strengthened our financial position, facilitating the start-up of Nordic sales and marketing resources, while also offering us a stronger negotiating position in forthcoming partnership negotiations. Our objective is to enter into co-marketing agreements for the Nordic market as early as in 2008.

Lars Adlersson

Huddinge, Sweden, 13 February 2008

FOR MORE INFORMATION, PLEASE CONTACT: Rein Piir, CFO and VP, Investor Relations: +46 (0)8 546 83123 or +46 (0)70 853 7292.

SIGNIFICANT EVENTS IN THE FOURTH QUARTER 2007

TMC435350—hepatitis C protease inhibitor has entered clinical phase IIa studies

Tibotec Pharmaceuticals Ltd. is collaborating with Medivir on the development of the CD (candidate drug) TMC435350, which progressed into phase II of its clinical development program.

Tibotec initiated the first phase IIa study in late-November, entitling Medivir to a EUR 5 m (approx. SEK 47) milestone payment. At this time, Medivir also secured a one-off payment of EUR 12 m (approx. SEK 113m). The second relates to Medivir declining its option to receive the marketing and sales rights for one of Johnson & Johnson's approved pharmaceuticals for sale in the Nordic region at some point in the future.

Events in the quarter included data from the phase Ia study (healthy volunteers) being presented at the AASLD meeting in Boston, US on 6 November 2007. In the follow-up Ib study, 200 mg of TMC 435350 was administered once daily over five days to patients chronically infected with genotype 1 hepatitis C virus (HCV). The reduction in virus levels seen in these patients after just five days' therapy satisfied the high standard set for the study. The complete results will be presented in April 2008.

The phase IIa study (TMC 435350-C201), a randomized, double-blind and placebo-controlled study, is being conducted to examine the efficacy, tolerability, pharmacokinetics and safety of four differing doses of TMC 435350. 25, 75, 200 or 400 mg of the compound will be administered orally once daily to a total of 130 patients with chronic HCV genotype 1 infection. 96 previously untreated patients and 34 patients, who previously did not respond to standard therapy, will be covered by the study, which will be conducted at over 20 clinics in Europe.

Patients will either received TMC435350 or placebo, one tablet daily for 28 days together with a SoC (standard of care) therapy, with peginterferon alpha-2a (Pegasys®) and ribavirin (Copegasus®). After the first 28 days, patients will continue therapy with peginterferon and ribavirin for a total of 24 (if the virus is rapidly eliminated from the bloodstream) or 48 weeks. After standard therapy concludes, patients will be monitored for another 24 weeks to determine the residual therapeutic effect, measured as the absence of detectable virus in the bloodstream.

All patients treated in the phase III program on Lipsovir®

The five studies in Lipsovir's® phase III program are now complete, the data compilation for evaluation and analysis is now underway. If the results are positive, work on negotiating a partnership structure for future sales of Lipsovir® will be conducted in 2008. The plan is to be able to submit a NDA (New Drug Application) in late-spring/summer 2008, and Medivir expects to be able to secure its first marketing approval in the first half-year 2009.

In the pivotal study, 2,450 patients were recruited, of which 1,450 were treated either with Lipsovir®, acyclovir or placebo. The purpose of the study was to demonstrate that early treatment onset with Lipsovir® can prevent the incidence of cold sores. Two further phase III studies started and concluded in the year, encompassing 430 recruited patients of which 240 received therapy. A photosensibility and phototoxicity study covering 80 patients was also conducted.

Proof of principle attained in the Cathepsin K program

MIV-701 inhibits an enzyme, Cathepsin K, which breaks down bone, and probably also contributes to cartilage breakdown in joint disease. The compound has also proved demonstrably effective in laboratory trials and extensive preclinical studies, sharply reducing skeletal breakdown.

In the clinical phase I program concluded in the quarter, Medivir examined how a per oral preparation of MIV-701 was absorbed and tolerated by the body. By studying biomarkers (substances in the blood altered by the disease) we also gained our first impression of the compound's effect on osteoporosis.

The part of the study involved a group of post-menopausal women (a group often affected by osteoporosis) which studied the effect of MIV-701 measured on biomarkers for osteoporosis. At a single daily per oral dose of MIV-701 over 14 days, the effect on biomarkers shows that skeletal resorption reduced by approximately 50%. These results mean that proof of principle has been attained in the Cathepsin K program.

The next step on this project will be to seek an industrial partner for the onward development of our Cathepsin K project towards market registration. This will be conducted based on the clinical results for MIV-701 and our broad preclinical research program, where it will be possible to designate another CD in spring 2008.

Epiphany Biosciences starts two clinical phase II studies on MIV-606

US company Epiphany Biosciences is responsible for and conducting the clinical development of valomaciclovir (MIV-606). Two phase II studies started in the late-autumn, the first against shingles where MIV-606 is being compared to current market-leading pharmaceutical Valtrex® . The second study is targeted at glandular fever.

About one million shingles cases occur yearly in the US, and current therapy requires frequent dosage, usually three to five times daily. Such dosages can be problematic for patients who already take several pharmaceuticals for other disorders. The study, which started in the autumn, is intended to examine the safety and efficacy of valomaciclovir taken once daily in comparison with the current therapy, Valtrex® , taken three times daily. The study is dimensioned to enable evaluation of a number of efficacy parameters.

In the second study MIV-606 is targeted at glandular fever. Glandular fever is a common and lengthy disease among teenagers. At present, there is no approved pharmaceutical for treating glandular fever.

A new partner for MIV-310

Presidio Pharmaceuticals Inc. opted to return licensing rights to antiviral HIV compound MIV-310, that enables Medivir to transfer the licensing rights to Beijing Mefuvir Medicinal Technology Co. Ltd., which will develop MIV-310 for future HIV therapy.

The total contract value for the licensing agreement Medivir and Presidio entered in December 2006 was USD 75.25 m. This contract value has now been adjusted as a result of the licensing rights for MIV-310 being transferred from Presidio. Remaining milestone payments amount to USD 52.25 m, relating to the preclinical compound MIV-410 (PPI-801/802), which is not affected by this contract adjustment.

The new licensing agreement for MIV-310 stipulates Mefuvir funding clinical development and work on achieving market registration in Asia. Mefuvir has the market rights to Asia excluding Japan while Medivir is retaining market rights for the rest of the world. The terms of this agreement, including royalty levels, were not disclosed.

SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD

Extended collaboration with Tibotec regarding HIV protease inhibitors

In January, Medivir extended its research collaboration with Tibotec on HIV protease inhibitors. This extension is for one year and means that Medivir will receive continued research support in 2008. This project is currently in preclinical optimization.

Results from Lipsovir® program scheduled for completion in late-March/ early-April

Results from the preclinical program are being compiled and processed in the first quarter 2008. The schedule for the final reporting will be determined by an extensive collection of data before the code is unlocked and the evaluation of the results in the pivotal study could be done. At present, this is scheduled to occur so that all results from the five clinical studies conducted can be presented in late-March/early-April.

At present, analysis of the specific study including immuno-deficient patients with cold sores is completed. The primary purpose of the study was to demonstrate that treatment with Lipsovir® was at least as good as of acyclovir in terms of healing times, which the results confirmed.

MEDIVIR'S PRIORITIZED PROJECT PORTFOLIO

Medivir's prioritized clinical projects currently comprise Lipsovir® against labial herpes and the protease projects against hepatitis C and against osteoporosis, osteoarthritis and metastasing skeletal cancer (MIV-701). The prioritized projects and those currently with full resources assigned in the preclinical portfolio are Cathepsin K and HIV-PI.

In addition to Medivir's prioritized projects, there are a number of protease-based projects, which Medivir has not currently assigned full resources to and are awaiting resources to be freed up as other projects enter late pre-clinical development on the way to clinical studies. These projects include projects against COPD (chronic obstructive pulmonary disease) Alzheimer's disease, a project against hypertension (renin inhibitors) and Cathepsin S (autoimmune disorders such as RA, MS and chronic pain control).

		Partners/-
		date of			Explorative	Optimiz	Preclinic		Phase	Phase
Project	Indication(s)	agreement	Terms	Medivir's markets	phase	ation		al dev.* Phase I	II	III
Lipsovir®	Labial herpes	In-house
(ME-609)
TMC435350	Hepatitis C	Tibotec / 2004	EUR 68.5 m + royalties	Nordic region
(HCV PI)			FTE funding
MIV-701	Osteoporosis,	In-house
	osteoarthritis, bone metastases
Cathepsin K Osteoporosis,		In-house
	osteoarthritis, bone metastases
HCV POL	Hepatitis C	Roche / 2003	Undisclosed	Nordic region
HIV PI	HIV	Tibotec / 2006	EUR 64 m + royalties	Nordic region
			FTE funding
COPD PI	COPD	In-house(Hengrui)		World exc. China
Renin	Hypertension	In-house
BACE	Alzheimer's	In-house
Cathepsin S	Rheumatoid artritis, In-house
	multiple sclerosis
	* The regulated preclinical development phase

Protease inhibitor Polymerase inhibitor Plymerase inhibitor/hydrocortisone

Polymerase-based projects

Medivir HIV Franchise AB administers the polymerase-based projects against HIV, HBV, shingles and glandular fever.

		Partners/- date of			Explorative	Optimiz	Preclinic		Phase	Phase
Project	Indication(s)	agreement	Terms	Medivir's markets	phase	ation		al dev.* Phase I	II	III
(ME-606)	Valomaciklovir Shingles,herpes- virus	Epiphany Bio-	USD 24.5m + royalties sciences /2006 Epiphany shares	Nordic region
Alovudine (MIV-310)	HIV	Mefuvir/2007	Royalties	World exc. Asia
MIV-210	Hepatitis B, HIV	Hainan Noken	USD 7 m + royalties	World exc. Asia
MIV-150	HIV	Population Council / 2003		Option of 50% of Western world
MIV-160	HIV	Mefuvir	Mefuvir shares and royalties	World exc. China, Taiwan and Macao
MIV-410	HIV, CMV	Presidio/2006	USD 52.25m + royalties Nordic region and UK Presidio shares	Option on Europe
MIV-170	HIV

Polymerase inhibitor

For a detailed description of all projects, go to Medivir's website www.medivir.se under Research & Development.

FINANCIAL INFORMATION

Consolidated earnings, January-December 2007

Net sales were SEK 249.6 (126.0) m in the year. Turnover is attributable to items including three milestone payments totaling SEK 182.3 m (EUR 19.5 m) relating to HCV protease inhibitors from Tibotec Pharmaceuticals Ltd. and a milestone payment of SEK 3.5 m (USD 0.50 m) on the MIV-606 project from Epiphany Bioscience. Turnover includes SEK 34.1 m of remuneration for a research collaboration on HCV and HIV protease inhibitors from Tibotec Pharmaceuticals Ltd. SEK 18.4 m (EUR 2 m) was received in July 2006 from Tibotec Pharmaceuticals Ltd., linked to a collaboration agreement on the HIV protease inhibitors. This amount has been allocated over the term of the collaboration agreement, with SEK 9.2 m of revenue recognized in the period.

Turnover also includes shares as remuneration totaling SEK 18.8 m, of which SEK 14.2 m relates to the MIV-606 project from Epiphany Biosciences and SEK 4.6 m on the antiviral compounds alovudine (MIV-310) and PPI-801/802 (MIV-410) from Presidio Pharmaceuticals, Inc. Presidio Pharmaceuticals Inc. returned the licensing rights to the compound MIV-310 in December, to enable Medivir to transfer the licensing rights to Beijing Mefuvir Medicinal Technology Co. Ltd. Medivir's shareholding in Presidio is unchanged, and the return of these rights did not generate any costs. Beijing Mefuvir Medicinal Technology Co. Ltd.'s licensing rights on the HIV compound MIV-160 include an obligation to issue shares in lieu of payment at Medivir's request. Medivir receiving shares in the company will be dependent on the approval of the Chinese authorities. Due to this reservation, no revenue has been recognized as yet.

The sizeable increase in net sales on the previous year is mainly explained by the year's three milestone payments relating to HCV protease inhibitors from Tibotec Pharmaceuticals Ltd.

Operating costs were SEK -290.8 (-330.9) m, comprising external costs of SEK -168.1 (-173.5) m, personnel costs of SEK -99.0 (-110.3) m, depreciation and amortization of SEK -10.8 (-17.5) m and impairment losses of SEK -12.9 (-29.5) m. The reduced operating costs for the year are mainly attributable to lower costs achieved by concentrating research on the unit at Huddinge, Sweden. Impairment losses comprise the balance sheet item "fixed assets held for sale" in Medivir UK, which have not been saleable. The impairment losses in the previous year were for the impairment of fixed assets through the concentration of research on the unit at Huddinge. The operating loss was SEK -37.3 (-201.6) m. The profit increase is mainly explained by higher net sales, but also by lower operating costs. Profit from financial investments was SEK 8.5 (1.1) m. The increase in profits from financial investments is due mainly to rising interest rates. The consolidated net loss for the year was SEK -29.3 (-195.6) m.

Consolidated earnings, October – December 2007

Net sales were SEK 168.8 (38.0) m in the period, and are primarily attributable to two milestone payments totaling SEK 159.7 (EUR 17.0) m regarding HIV protease inhibitors from Tibotec Pharmaceuticals Ltd., and SEK 8.5 m of remuneration on a research collaboration regarding HIV protease inhibitors from Tibotec Pharmaceuticals Ltd.

Operating costs were SEK -65.5 (-124.2) m, divided between external costs of SEK -35.1 (-57.8) m, personnel costs of SEK -27.6 (-32.6) m and depreciation and amortization of SEK -2.8 (-4.3) m. The lower operating costs in the year are mainly due to lower costs from the current phase III studies on the Lipsovir® project, and reduced costs due to the concentration of research to the unit at Huddinge. The operating profit was SEK 106.1 (-83.6) m, the net financial position was SEK 8.5 (1.1) m and the profit after financial items was SEK 108.5 (-85.1) m. Net profit for the period was SEK 108.5 (-80.6) m.

Liquidity and financial position

Cash flow from operating activities for the year was SEK -70.4 (-90.0) m. Cash flow from operating activities benefited from improved operating profit and higher net sales.

Cash flow from financing activity in the year was SEK 217.3 (-11.4) m. The main explanation for the increase was the new share issue in the year, which raised SEK 215.1 m. At year-end there were SEK 0.0 (6.9) m of interest-bearing liabilities, because a bank loan was amortized in the year. The consolidated equity ratio at year-end was 83.7 (65.0)%.

Liquid assets including short-term investments with a maximum maturity of three months were SEK 329.3 (195.1) m at the end of the period.

Investments

Gross investments in tangible and intangible fixed assets were SEK 12.9 (5.6) m in the year, primarily research equipment and rebuilding existing research premises. Medivir's future investments largely comprise the acquisition of additional research equipment.

Focusing of operations

In December 2006, the company resolved to focus the company's resources and concentrate its research operations on the unit at Huddinge. The research operations at the former unit at Chesterford, UK were transferred in the first quarter of 2007. In July 2007, Medivir's research facility at Chesterford Research Park was sublet to BioFocus Ltd. until 2015 with an extension option until 2025 when Medivir's rental agreement expires. No provision for future rental expenditure is considered necessary. Accordingly, the focus of operations on the Huddinge unit is complete and the cost-saving effects will exert their full impact on a rolling 12-month basis from the third quarter of 2007 and beyond.

Non-recurring restructuring costs amounted to some SEK 9.0 am in the year, and non-cash impairment losses on tangible fixed assets were SEK 12.9 m. Provisions in the financial statement 2006 for non-recurring restructuring expenses were SEK 9.2m and non-cash impairment of intangible and tangible fixed assets was SEK 29.7 m, which were utilized in the year. No further restructuring-related expenditure or impairment losses are expected.

Medivir AB, corporate identity no. 556238-4361, parent company

Medivir AB's operations comprise research operations and administrative functions. Parent company net sales for the year were SEK 254.3 (135.1) m. Operating costs were SEK -273.8 (-266.1) m, divided between external costs of SEK -168.4 (-184.9) m, personnel costs of SEK -94.7 (-72.4) m and depreciation and amortization of SEK -10.8 (-8.8) m. The operating loss was SEK -17.1 (-127.8) m and the loss after financial items was SEK -27.2 (-219.0) m. The loss after financial items includes a cost to cover the losses of Medivir UK Ltd. of SEK -18.9 (-65.7) m, which Medivir AB issued to consolidate the subsidiary's shareholders' equity. An impairment loss on participations in subsidiaries of SEK -28.4 m due to the transfer of significant portions of operations from Medivir UK to Medivir AB was included in the previous year.

Gross investments in tangible fixed assets were SEK 16.9 (4.1) m in the year. Liquid assets including short-term investments with a maximum maturity of three months were SEK 326.0 (194.4) m.

For comments on the results of operations, please refer to the section on Medivir's consolidated turnover and costs.

Shareholders' equity, share data and stock options

Consolidated shareholders' equity at year-end was SEK 384.0 (186.3) m and the total number of shares was 20,843,547 (12,902,611), of which 660,000 (660,000) were class A and 20,183,547 (12,242,611) class B shares. New share issues in the year increased shareholders' equity by SEK 224.2 m. At the beginning of the year there were 676,995 outstanding options, with 142,408 options converted to class B shares, 44,587 options expiring and an additional 480,000 options forthcoming in the year. Accordingly, the total number of outstanding options at year-end was 970,000, corresponding to 1,102,300 class B shares. The number of outstanding options could increase shareholders' equity by SEK 82.9 m and upon full conversion, the total number of shares could amount to 21,945,847.

The Annual General Meeting (AGM) on 24 April 2007 approved a new staff stock option plan of 480,000 options for the subscription of new class B shares, of which approximately 360,000 staff stock options were granted to employees of the Group, with the remainder retained as a cash flow hedge to cover social security costs. The term is from 18 June 2007 to 30 April 2012, and each staff stock option plan will be exercisable against the payment of an exercise price of SEK 67. After one year, employees can convert 30% of granted options, a further 30% after two years and the remaining 40% after three years.

The consolidated equity ratio at year-end was 83.7 (65.0)%. Earnings per share in the year, based on a weighted average of the number of outstanding shares, was SEK -1.74 (-15.16) and shareholders' equity per share at year-end was SEK 18.42 (14.44).

New share issue

On 22 December 2006, an Extraordinary General Meeting (EGM) of Medivir AB approved the new share issue of a maximum of 7,741,566 class B shares, implying a share capital increase of a

maximum of SEK 38,707,830. The company's shareholders were eligible to subscribe for new shares in the period 15 January - 2 February 2007, where, irrespective of share class, each five existing shares conferred the holder with the right to subscribe for three new class B shares. The subscription price per share was SEK 29. The new share issue was fully subscribed, raising SEK 215.1 m in February 2007 after deductions for issue expenses of SEK 9.6 m.

Employees

As of 31 December 2007, the number of employees in the Group stood at 97 (133) and the average number of employees during the year was 97 (126). The reduction in the number of employees is explained by focusing the company's resources and concentration of research on the unit at Huddinge.

Dividends

The Board proposes that no dividends be paid for the financial year 2007.

Annual General Meeting

The Annual General Meeting will be held in the Polstjärnan Auditorium, Sveavägen 77, Stockholm, Sweden at 3:00 p.m. on Tuesday 23 April 2008.

Annual Report

Medivir's Annual Report will be available from the company's website, www.medivir.se, from 20 March 2008 onwards. A printed annual report will be distributed to shareholders.

Nomination Committee 2007-2008

Pursuant to a resolution by the AGM 2007, the Nomination Committee for 2007-2008 will consist of representatives of at least three of the largest shareholders as of the end of the third quarter 2007 and the Chairman of the Board. The Nomination Committee for the Annual General Meeting 2008 will consist of Eva Gottfridsdotter-Nilsson (representative of Länsförsäkringar Fonder), Joachim Spetz (representative of Handelsbanken Fonder), Bo Öberg (representative of class A shareholders) and Medivir's Chairman Anders Vedin.

Outlook including significant risks and uncertainty factors

Medivir's ability to produce new CDs, to enter partnerships on its projects, and to bring its development projects to market launch and sale, is decisive to its future. The progress of existing partnerships and securing new partnerships will exert a major influence on Medivir's revenues and cash position.

There are many risk factors to consider for Medivir as a company in the research and development process. Medivir has several projects in, or close to clinical phases, and many collaboration partners to develop compounds and conduct clinical studies. This diversifies risks, both financial and operational.

Because no significant change to significant risks and uncertainty factors occurred in the year, the reader is referred to the Report of the Directors in the Annual Report 2006.

Attestation

The Board of Directors and Chief Executive Officer hereby offer their assurances that this Financial Statement offers a true and fair view of the company's and group's operations, position and earnings, and states the significant risks and uncertainty factors facing the company and group companies.

Chairman Board member Board member

Anders Vedin Lars-Göran Andrén Anna Malm Bernsten

Magnus Falk Donna Janson Ron Long Board member Board member Board member

Bo Öberg Lars Adlersson

Board member Chief Executive Officer

Huddinge, Sweden, 13 February 2008

CONSOLIDATED INCOME STATEMENT
(SEK m)	2007	2006	2007	2006
	Jan-Dec	Jan-Dec	Oct-Dec	Oct-Dec
Turnover, etc.
Net sales	249.6	126.0	168.8	38.0
Other revenue	3.8	3.3	2.8	2.6
Total	253.5	129.3	171.6	40.6
Operating costs
Other external costs	-168.1	-173.5	-35.1	-57.8
Personnel costs	-99.0	-110.3	-27.6	-32.6
Depreciation and amortization	-10.8	-17.5	-2.8	-4.3
Impairment loss	-12.9	-29.5	0.0	-29.5
Total operating costs	-290.8	-330.9	-65.5	-124.2
Operating profit	-37.3	-201.6	106.1	-83.6
Profit from financial investments	8.5	1.1	2.4	-1.5
Profit after financial items	-28.8	-200.5	108.5	-85.1
Tax	-0.5	4.9	0.0	4.5
Net profit	-29.3	-195.6	108.5	-80.6
Basic and diluted earnings per share, SEK	-1.74	-15.16	5.24	-6.24
Average number of shares, 000	16,873	12,903	20,751	12,903
Number of shares at end of period, 000	20,844	12,903	20,844	12,903

CONSOLIDATED BALANCE SHEET (SEK m)	2007	2006
	31 December	31 December
Assets
Fixed assets
Intangible fixed assets	0.9	1.4
Tangible fixed assets	35.9	33.4
Financial fixed assets	18.8	0.0
Total fixed assets	55.6	34.8
Current assets
Fixed assets held for sale	0.0	13.5
Current receivables	73.9	43.4
Short-term investments	311.5	172.1
Cash and bank balances	17.8	23.0
Total current assets	403.3	252.0
Total assets	458.9	286.8
Liabilities and shareholders' equity
Shareholders' equity	384.0	186.3
Current liabilities, interest-bearing	0.0	6.9
Current liabilities, non interest-bearing	74.9	93.6
Total liabilities and shareholders' equity	458.9	286.8

STATEMENT OF CHANGES TO SHAREHOLDERS' EQUITY (SEK m)	2007	2006
	31 December	31 December
Opening balance of shareholders' equity	186.3	378.0
Exchange rate differences	0.7	2.4
Total revenue and costs accounted directly in shareholders' equity	0.7	2.4
Net profit	-29.3	-195.6
Total accounted revenue and costs	-28.6	-193.2
New share issue	224.2	0.0
Staff stock option plans, value of employee service	2.1	1.5
Closing balance of shareholders' equity	384.0	186.3

CONSOLIDATED CASH FLOW STATEMENT (SEK m)	2007 Jan-Dec	2006 Jan-Dec
Operating activities
Operating profit/loss	-37.3	-201.6
Adjustment for items not included in cash flow, etc:
Depreciation, amortization and impairment loss	23.7	47.1
Other adjustments	-15.8	5.7
	-29.4	-148.8
Interest, yields and dividends, etc.	13.1	0.7
Cash flow from operating activities before change in working capital	-16.3	-148.1
Change in working capital	-54.1	58.1
Cash flow from operating activities	-70.4	-90.0
Investment activity
Acquisition/divestment of fixed assets	-12.4	-5.4
Cash flow from investment activity	-12.4	-5.4
Financing activity
New issue	224.2	0.0
Amortization/change in loans	-6.9	-11.4
Cash flow from financing activity	217.3	-11.4
Cash flow for the period
Liquid assets, opening balance	195.1	301.9
Change in liquid assets	134.2	-106.8
Liquid assets, closing balance	329.3	195.1

KEY FIGURES	2007	2006
	Jan-Dec	Jan-Dec
Return on:
-equity, %	-10.3	-69.3
-capital employed, %	-9.9	-66.6
-total capital, %	-7.6	-52.8
Average number of shares, 000	16 873	12,903
Number of shares at end of period, 000	20 844	12,903
Outstanding warrants, 000	970	677
Basic and diluted earnings per share, SEK	-1,74	-15.16
Shareholders' equity per share before and after dilution, SEK	18.42	14.44
Cash flow per share after investments, SEK	-4.91	-7.39
Equity ratio, %	83.7	65.0

PARENT COMPANY INCOME STATEMENT (SEK m)	2007 Jan-Dec	2006 Jan-Dec
Turnover, etc.
Net sales	254.3	135.1
Other revenue	2.4	3.2
Total	256.7	138.3
Operating costs
Other external costs	-168.4	-184.9
Personnel costs	-94.7	-72.4
Depreciation and amortization	-10.8	-8.8
Total operating costs	-273.8	-266.1
Operating profit	-17.1	-127.8
Profit from financial investments	-10.1	-91.2
Profit after financial items	-27.2	-219.0
Net profit	-27.2	-219.0

PARENT COMPANY BALANCE SHEET (SEK m)	2007	2006
	31 December	31 December
Assets
Fixed assets
Intangible fixed assets	0.9	1.4
Tangible fixed assets	35.9	29.5
Financial fixed assets	19.0	0.2
Total fixed assets	55.8	31.1
Current assets
Current receivables	69.5	33.5
Short-term investments	311.5	172.1
Cash and bank balances	14.5	22.3
Total current assets	395.5	227.9
Total assets	451.3	259.0
Liabilities and shareholders' equity
Shareholders' equity	384.2	185.1
Long-term liabilities, interest-bearing	0.6	0.8
Current liabilities, interest-bearing	0.0	6.9
Current liabilities, non interest-bearing	66.5	66.2
Total liabilities and shareholders' equity	451.3	259.0

ACCOUNTING PRINCIPLES

Group

Medivir prepares its consolidated accounts pursuant to IFRS, as endorsed by the EU. These are the same principles as applied in the Annual Report for 2006. Apart from the stated IFRS, the group also observes RR's (Redovisningsrådet, the Swedish Financial Accounting Standards Council) recommendations RR 30:06 (Supplementary Accounting Regulations for Groups) and RR 31 (Interim Reporting for Groups) and applicable RR Emerging Issues Task Force statements. The Interim Report has been prepared pursuant to IAS 34 Interim Financial Reporting.

Parent company

In its accounting, as previously, Medivir AB applies the principles applicable to legal entities that prepare consolidated accounts and are listed on a stock exchange. Briefly, this implies the continued application of RR's recommendations to the extent they are applicable to a group parent company. Thus Medivir AB observes RR 32:06 'Accounting for Legal Entities'.

Discontinued operations

In late-December 2005, Medivir decided that its HIV, hepatitis B (HBV) and shingles projects based on the older research platform of polymerase inhibition, would be outlicensed/divested. Medivir HIV Franchise, which administered these efforts, outlicensed the seventh and final polymerase project in February 2007. In the period of outlicensing efforts, "discontinued operations" were stated separately in the Income Statement. The outcome of the work conducted on polymerase projects meant that in all cases, Medivir retains the ownership of intangible assets. This implies a future relationship with the projects remains (for example, Medivir has retained the Nordic market rights, which may be utilized at a future date) and that Medivir may receive revenue. Accordingly, the structure of the Income Statement, from and including the first quarter 2007 (and comparables), has been revised to encompass all consolidated turnover and costs without any separate disclosure of the polymerase projects that have been outlicensed according to plan.

The research operations conducted in the UK have been relocated to Sweden and have not been discontinued. A restructuring has occurred, where the research operations have been relocated/focused to Sweden, implying restructuring costs. For a review of provisions, expenditure and impairment losses, please refer to the relevant section and the Annual Report for 2006.

Financial assets held for sale

Medivir received shares from a new issue consummated by Epiphany Biosciences, Medivir's license partner on the MIV-606 project, and received shares through a new issue by Presidio Pharmaceuticals, Inc., Medivir's license partner on the antiviral compounds alovudine (MIV-310) and PPI-801/802 (MIV-410).

Medivir classifies these shares as financial assets held for sale pursuant to IAS 39 and the shares are recognized in the balance sheet item "financial fixed assets". Because there is no active market in the shares, there will be no ongoing value change to the balance sheet item, although Medivir will monitor any potential need for impairment.

REVIEW REPORT

We have conducted a limited review of the Financial Statement for Medivir AB (publ) for the period 1 January – 31 December 2007. The preparation and presentation of these interim financial statements pursuant to the Swedish Annual Accounts Act and IAS 34 are the responsibility of the company's management. Our responsibility is to report our conclusions concerning these interim financial statements on the basis of our limited review

We have conducted our limited review pursuant to the Standard for Limited Review (SÖG) 2410 Limited review of interim financial information conducted by the company's appointed auditor, issued by FAR. A limited review consists of making inquiries, primarily to individuals responsible for financial and accounting matters, as well as performing analytical procedures and taking other limited review measures. A limited review has a different focus and significantly less scope than an audit according to RS Auditing Standards in Sweden and generally accepted auditing practice. The review procedures undertaken in a limited review do not enable us to obtain a level of assurance where we would be aware of all important circumstances that would have been identified had an audit been conducted. Therefore, a conclusion reported on the basis of a limited review does not have the level of certainty of a conclusion reported on the basis of an audit.

Based on our limited review, no circumstances have come to our attention that would give us reason to believe that the interim financial statements have not been prepared pursuant to the Swedish Annual Accounts Act and IAS 34 in all material respects.

Liselott Stenudd Peter Clemedtson Authorized Public Accountant Authorized Public Accountant

PricewaterhouseCoopers AB PricewaterhouseCoopers AB

Stockholm, Sweden, 13 February 2008

FORTHCOMING FINANCIAL INFORMATION

The Three-month Interim Report will be published on 23 April 2008. The Annual General Meeting will be held on 23 April 2008.

These reports will be available at Medivir's Website, www.medivir.se from these dates under the 'Investor/Media' heading.