Medivir — Interim / Quarterly Report 2008

Jul 9, 2008

Press Release, 9 July 2008

Medivir, Interim Report, 1 January – 30 June 2008

• Consolidated net sales were SEK 14.7 (66.8) m in the period. In May, Medivir signed an agreement with Tibotec Pharmaceuticals Ltd. on hepatitis C, triggering a SEK 46.2 m (EUR 5.0 m) payment. This amount has been allocated over the assessed agreement term, with SEK 3.9 m recognized as revenue.
• The loss after tax amounted to SEK -77.3 (-98.0) m.
• Earnings per share were SEK -3.71 (-5.84).
• Cash flow from operating activities was SEK 1.2 (-86.2) m.
• Liquid assets as of 30 June were SEK 329.2 (313.1) m.

CEO's statement—comments on the second quarter

In May, Medivir signed the biggest commercial agreement in its history. Together with Tibotec Pharmaceuticals Ltd. the companies have agreed to jointly evaluate virus inhibitors developed by Medivir. The objective is to designate one or more CDs (candidate drugs) against hepatitis C (a serious form of jaundice). Medivir and Tibotec are already jointly developing a potential hepatitis C pharmaceutical (TMC435350), but the compounds now covered by the new agreement adopt a different approach and may become another important component in future hepatitis C therapy. As part of the agreement Tibotec also gains access to Medivirs' extensive library of polymerase inhibitors—one of the largest in the world—to determine whether any of these compounds have the potential to be developed into pharmaceuticals against other viral diseases. Medivir received an up-front payment of EUR 5 m at signing and may receive up to EUR 142 m if one compound reaches registration filing and up to EUR 272 m if two compounds reaches registration filing for two indications. Medivir retains the Nordic rights, and is entitled to royalties on future product sales in the rest of the world.

After having discussed Lipsovir's® phase III data with US and European regulatory authorities, our judgment is that an application for marketing authorization will be filed in October for both markets.

The results of the first clinical trial on TMC435350, in which this compound was administered to HCV-infected patients that had previously not responded to today's therapy, was presented at a scientific congress, EASL, in April. TMC435350 demonstrated highly potent antiviral efficacy in this hard-to-treat patient group. TMC435350 is currently in phase IIa trials which are proceeding as planned.

In the second quarter, Medivir took another step towards becoming an integrated pharmaceuticals company on the Nordic market. A co-promotion agreement was signed with GlaxoSmithKline (GSK) which grants us the rights to market selected GSK pharmaceuticals in Sweden.

Lars Adlersson CEO

Huddinge, Sweden, 9 July 2008

Significant events in the second quarter 2008

Lipsovir®—EU and US registration filings scheduled for October

Preparatory meetings ahead of filings for registration have now been held with the US and European regulatory authorities. Medivir is planning to file for registration with the EU and US authorities in October.

In parallel with this process work Medivir is continuing to evaluate suitable potential partners.

The final trial reports from the Lipsovir® phase III program have now been completed. In the final report, the comparative data between Lipsovir®, acyclovir in Medivir's cream base and placebo for preventive effect against cold sores are identical with that previously communicated, with one important difference in Lipsovir's® favor. In the final analysis the differences in healing times between Lipsovir® and placebo now achieves a statistical significance level of p<0.05, improved from p=0.057, which unlike the previous preliminary results, is meeting the requirements of the US regulatory authority.

TMC435350 demonstrates potent antiviral efficacy in hepatitis C patients, not previously responding to current therapy

Medivir's and Tibotec Pharmaceutical's jointly developed compound TMC435350 is a potent inhibitor of the hepatitis C (HCV) NS3/4A protease. The compound is in a major clinical phase IIa trial (OPERA-1) in Europe since end of last year and is progressing as planned.

The results from a phase Ib trial were presented at a scientific congress in Milan (EASL) in April. The trial demonstrated that five days dosing with 200 mg TMC435350 once-daily resulted in a median reduction of viral load of 3.9 log10 units/mL (99.98%) on day 6 (one day after treatment conclusion). Rapid decline in viral load was observed in all patients with genotype 1, the most common genotype in the Western world and hardest to treat. All patients maintained reduced viral load in the following three days. Adverse events observed in patients and healthy volunteers were assessed as mild and no serious events were observed. There were no study-medication related discontinuations.

Medivir broadens the commitment in hepatitis C by entering a new R&D partnership with Tibotec Pharmaceuticals

Medivir signed the biggest commercial agreement in its history in the quarter. Virus inhibitors developed by Medivir will be evaluated together with Tibotec Pharmaceuticals with the objective of designating one or more CDs against hepatitis C.

Tibotec will also gain access to Medivir's extensive library of polymerase inhibitors—one of the world's largest—to evaluate whether any of these compounds have the potential to be developed into pharmaceuticals against other viral diseases.

Medivir received an up-front payment of EUR 5 m at signing. In addition Medivir may receive up to EUR 142 m if one compound reaches filing for registration and up to EUR 272 m if two compounds reach filing for registration for two indications. Medivir is retaining the Nordic marketing rights and is entitled to royalties for future product sales in the rest of the world. This agreement also covers research support for the project during the preclinical phase.

Co-promotion agreement with GlaxoSmithKline's Swedish subsidiary

In April Medivir signed an agreement granting it the rights to market selected GSK pharmaceuticals in Sweden. This is an important first step in the process of establishing Medivir as an integrated pharmaceuticals company on the Nordic market.

The products included in the agreement are GSK's complete dermatology portfolio, certain antiinfective products and the smoking cessation aid Zyban. The agreement embraces products which are well known and well established on the Swedish market. Total turnover in 2007 from the product portfolio was SEK 53 m.

The agreement obligates Medivir to assign resources to market the products successfully. The revenues from the collaboration will be determined by the extent to which sales exceed an agreed baseline. Medivir will retain a substantial share of revenues above baseline. The objective is that the agreement with GSK will make a positive financial contribution to operations in 2009.

Prioritized project portfolio

Medivir's prioritized clinical projects currently comprise Lipsovir® against labial herpes, TMC435350 against hepatitis C and MIV-701 against bone degradation diseases. The prioritized preclinical projects are Cathepsin K, Alzheimer's disease, HIV-PI and HCV polymerase.

In addition to Medivir's prioritized projects, there are a number of protease-based projects, to which full resources currently have not been assigned. These include projects against COPD (chronic obstructive pulmonary disease), a project against hypertension (renin inhibitors) and Cathepsin S (focusing on 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® (ME-609)	Labial herpes	In-house
TMC435350 (HCV PI)	Hepatitis C	Tibotec / 2004	EUR 68.5 m + royalties FTE funding	Nordic region
MIV-701	Osteoporosis, osteoarthritis, bone metastases	In-house
	Cathepsin K Osteoporosis, osteoarthritis, bone metastases	In-house
HCV POL	Hepatitis C	Roche / 2003	Undisclosed	Nordic region
HCV POL	Hepatitis C	Tibotec / 2008	EUR 142-272 m + royalties, FTE funding	Nordic region
HIV PI	HIV	Tibotec / 2006	EUR 64 m + royalties, FTE funding	Nordic region
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
Protease inhibitor	Polymerase inhibitor		Plymerase inhibitor/hydrocortisone

Polymerase-based projects

Polymerase inhibitor

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

Project	Indication(s)	Partners/- date of agreement	Terms	Medivir's markets	Explorative phase	Optimiz ation	Preclinic	al dev.* Phase I	Phase II	Phase III
Valomaciklovir Shingles, mono- (ME-606)	nucleosis	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

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

Consolidated earnings and financial position

Turnover and earnings, 1 January - 30 June 2008

Net sales for the period were SEK 14.7 (66.8) m. In May, Medivir signed an agreement with Tibotec Pharmaceuticals Ltd. on hepatitis C, triggering a one-off payment of SEK 46.2 m (EUR 5 m). This payment has been allocated over the assessed agreement term, and SEK 3.9 m of revenue has been recognized. Turnover in the period also included remuneration of SEK 10.7 m for research collaboration on HIV protease inhibitors and hepatitis C from Tibotec Pharmaceuticals Ltd.

Previous year turnover, SEK 66.8 m, consisted of SEK 17.0 m from research collaboration, an allocated one-off payment of SEK 9.2 m on HIV protease inhibitors and milestone payments of SEK 22.6 m on HCV protease inhibitors from Tibotec Pharmaceuticals Ltd. Turnover also included a SEK 17.7 m milestone payment on the MIV-606 shingles project from Epiphany Biosciences.

Operating costs were SEK -100.1 (-170.3) m, comprising external costs of SEK -46.1 (-100.7) m, personnel costs of SEK -48.9 (-51.4) m, depreciation and amortization of SEK -5.1 (-5.2) m and impairment losses of SEK -0.0 (-13.0) m. The reduced operating costs compared to previous year are mainly attributable to the completed Lipsovir® clinical phase III program, and MIV-701 phase I program, as well as the focusing of research activities at the unit in Huddinge. Impairment losses in the previous year were shown on the balance sheet under the item 'non-current assets held for sale' and relates to divestment of Medivir UK.

The operating loss was SEK -84.4 (-102.8) m. The reduced losses are mainly a consequence of lower operating costs. Profit from financial investments was SEK 7.1 (4.8) m. The increase in profits from financial investments is mainly due to increased interest rates. The net loss for the period was SEK -77.3 (-98.0) m.

Medivir AB Telephone Facsimile Contact PO Box 1086 +46 8 5468 3100 +46 8 5468 3199 info@medivir.se SE-14122 Huddinge www.medivir.se SWEDEN

4

Turnover and earnings, 1 April - 30 June 2008

Net sales were SEK 10.5 (13.4) m in the period. Turnover consisted of an allocated up-front payment of SEK 3.9 m at signing of the hepatitis C agreement with Tibotec Pharmaceuticals Ltd. and a SEK 6.6 m research collaboration contribution on HIV protease inhibitors and hepatitis C also with Tibotec Pharmaceuticals Ltd. Turnover in the corresponding period of the previous year consisted of SEK 8.6 m of research collaboration contribution from Tibotec Pharmaceuticals Ltd. on HIV protease inhibitors and an allocated one-off payment of SEK 4.6 m on HIV protease inhibitors from Tibotec Pharmaceuticals Ltd.

Operating costs were SEK -50.5 (-88.3) m, comprising external costs of SEK -22.7 (-48.4) m, personnel costs of SEK -25.3 (-24.2) m, depreciation and amortization of SEK -2.5 (-2.8) m and impairment losses of SEK 0.0 (13.0) m. The reduced operating costs in the previous year are mainly attributable to reduced costs for the Lipsovir® project and MIV-701, and from the focusing of research activities at the unit in Huddinge. The operating loss was SEK -39.5 (-74.9) m, the net financial position was SEK 3.4 (2.4) m and profit after financial items was SEK 36.1 (-72.5) m. The net loss was SEK -36.1 (-72.5) m. The reduced losses are mainly a result of lower operating costs.

Cash flow and financial position

Cash flow from operating activities was SEK 1.2 (-86.2) m, an increase of SEK 87.4 m. In yearon-year terms, cash flow from operating activities was positively affected by changes in working capital. Cash flow from financing activity was SEK 0.0 (211.0) m. In the first quarter of the previous period, a new share issue raised SEK 215.6 m net of issue costs.

Liquid assets including short-term investments with a maximum maturity of three months were SEK 329.2 (313.1) m.

Investments, depreciation, amortization and impairment losses

Gross investments in tangible and intangible fixed assets were SEK 1.2 (7.3) m in the period, primarily research equipment. Medivir's future investments comprise the acquisition of additional research equipment and rebuilding of existing research premises. Depreciation and amortization in the period reduced profit by SEK -5.1 (5.2) m and impairment losses reduced it by SEK 0.0 (13.0) m. In the previous year, impairment losses related to the 'non-current assets held for sale' balance sheet item of Medivir UK.

Shareholders' equity, share data and stock options

The share capital at the end of the period was SEK 104.2 (103.3) m and shareholders' equity was SEK 308.3 (304.1) m. The number of shares was 20,843,547 (20,657,993), of which 660,000 (660,000) were class A and 20,183,547 (19,997,993) class B shares with a quotient value of SEK 5. There were 970,000 outstanding options at the end of the period, corresponding to 1,102,300 class B shares. No options were converted or expired in the period. 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 equity ratio at the end of the period was 77.9 (77.9)%. Earnings per share, based on a weighted average number of outstanding shares, was SEK -3.71 (-5.84) and shareholders' equity per share was SEK 14.79 (14.72).

Employees

Medivir had 100 (102) employees at the end of the period, 46 (44)% of which were women.

Parent company

Medivir AB (publ), corporate identity no. 556238-4361, is the parent company of the group. The group's operations are mainly conducted in the parent company, and consist of research operations and administrative functions. Parent company net sales for the period were SEK 14.7 (66.8) m. Operating costs were SEK -98.6 (-145.6) m, divided between external costs of SEK -44.6 (-93.4) m, personnel costs of SEK -48.9 (-47.1) m and depreciation and amortization of SEK -5.1 (-5.2) m. The operating loss was SEK -83.9 (-78.6) m and the loss after financial items was SEK -77.3 (-95.8) m. Gross investments in tangible fixed assets were SEK 1.2 (11.3) m in the period. Liquid assets including short-term investments with a maximum maturity of three months amounted to SEK 326.1 (312.7) m.

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 trials. This diversifies risks, both financial and operational.

Because no significant change to significant risks and uncertainty factors occurred during the period, the reader is referred to the Report of the Directors in the Annual Report 2007.

Attestation

The Board of Directors and Chief Executive Officer hereby offer their assurances that this Halfyear Interim Report 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.

Anders Vedin Björn C Andersson Lars-Göran Andrén Chairman Board member Board member

Anna Malm Bernsten Magnus Falk Donna Janson Board member Board member Board member

Ingemar Kihlström Ron Long Göran Pettersson Board member Board member Board member

Bo Öberg Lars Adlersson Board member Chief Executive Officer

Huddinge, Sweden, 9 July 2008

Medivir AB Telephone Facsimile Contact PO Box 1086 +46 8 5468 3100 +46 8 5468 3199 info@medivir.se SE-14122 Huddinge www.medivir.se SWEDEN

CONSOLIDATED INCOME STATEMENT	2008	2007	2007
(SEK m)	Jan-Jun	Jan-Jun	Jan-Dec
Turnover, etc.
Net sales	14.7	66.8	249.6
Other revenue	1.0	0.7	3.8
Total	15.7	67.5	253.5
Operating costs
Other external costs	-46.1	-100.7	-168.1
Personnel costs	-48.9	-51.4	-99.0
Depreciation and amortization	-5.1	-5.2	-10.8
Impairment loss	0.0	-13.0	-12.9
Total	-100.1	-170.3	-290.8
Operating profit	-84.4	-102.8	-37.3
Profit from financial investments	7.1	4.8	8.5
Profit after financial items	-77.3	-98.0	-28.8
Tax	0.0	0.0	-0.5
Net profit	-77.3	-98.0	-29.3
Basic and diluted earnings per share, SEK	-3.71	-5.84	-1.74
Average number of shares, 000	20,844	16,780	16,873
Number of shares at end of period, 000	20,844	20,658	20,844

CONSOLIDATED INCOME STATEMENT, Q2 (SEK m)	2008	2007
	Apr-Jun	Apr-Jun
Turnover, etc.
Net sales	10.5	13.4
Other revenue	0.5	0.0
Total	11.0	13.4
Operating costs
Other external costs	-22.7	-48.4
Personnel costs	-25.3	-24.2
Depreciation and amortization	-2.5	-2.8
Impairment loss	0.0	-13.0
Total	-50.5	-88.3
Operating profit	-39.5	-74.9
Profit from financial investments	3.4	2.4
Profit after financial items	-36.1	-72.5
Tax	0.0	0.0
Net profit	-36.1	-72.5
Basic and diluted earnings per share, SEK	-1.73	-3.51
Average number of shares, 000	20,844	20,651
Number of shares at end of period, 000	20,844	20,658

CONSOLIDATED BALANCE SHEET
SUMMARY	2008	2007	2007
(SEK m)	30 Jun	30 Jun	31 Dec
Assets
Intangible fixed assets	0.7	1.2	0.9
Tangible fixed assets	32.4	35.9	35.9
Financial fixed assets	18.8	14.2	18.8
Fixed assets held for sale	0.0	0.3	0.0
Current receivables	14.8	25.5	73.9
Short-term investments	263.7	307.0	311.5
Cash and bank balances	65.5	6.1	17.8
Total assets	395.8	390.3	458.9
Liabilities and shareholders' equity
Shareholders' equity	308.3	304.1	384.0
Current liabilities, interest-bearing	0.0	2.3	0.0
Current liabilities, non interest-bearing	87.5	83.9	74.9
Total liabilities and shareholders' equity	395.8	390.3	458.9
STATEMENT OF CHANGES TO
SHAREHOLDERS' EQUITY	2008	2007	2007
(SEK m)	30 Jun	30 Jun	31 Dec
Opening balance	384.0	186.3	186.3
Exchange rate difference	0.2	-0.2	0.7
Net profit	-77.3	-98.0	-29.3
New share issue	0.0	215.6	224.2
Staff stock option plans: value of employee service	1.4	0.4	2.1
Closing balance	308.3	304.1	384.0

CONSOLIDATED CASH FLOW STATEMENT (SEK m)	2008 Jan-Jun	2007 Jan-Jun	2007 Jan-Dec
Cash flow from operating activities before
changes in working capital	-70.7	-99.0	-16.4
Changes in working capital	71.9	12.8	-54.1
Cash flow from operating activities	1.2	-86.2	-70.5
Investment activity
Acquisition/divestment of fixed assets	-1.0	-6.8	-12.4
Cash flow from investment activity	-1.0	-6.8	-12.4
Financing activity
New share issue	0.0	215.6	224.2
Amortization/change in loans	0.0	-4.6	-6.9
Cash flow from financing activity	0.0	211.0	217.3
Cash flow for the period
Liquid assets, opening balance	329.3	195.1	195.1
Change in liquid assets	0.2	118.0	134.4
Exchange rate difference in liquid assets	-0.3	0.0	-0.2
Liquid assets, closing balance	329.2	313.1	329.3

KEY FIGURES	2008	2007	2007
	Jan-Jun	Jan-Jun	Jan-Dec
Return on:
- equity, %	-22.3	-40.0	-10.3
- capital employed, %	-22.3	-39.2	-9.9
- total capital, %	-18.1	-28.9	-7.6
Average number of shares, 000	20,844	16,780	16,873
Number of shares at end of period, 000	20,844	20,658	20,844
Outstanding warrants, 000	970	1,147	970
Basic and diluted earnings per share, SEK	-3.71	-5.84	-1.74
Shareholders' equity per share before and after
dilution, SEK	14.79	14.72	18.42
Cash flow per share after investments, SEK	0.01	-5.54	-4.91
Equity ratio, %	77.9	77.9	83.7

PARENT COMPANY INCOME STATEMENT	2008	2007	2007
(SEK m)	Jan-Jun	Jan-Jun	Jan-Dec
Turnover, etc.
Net sales	14.7	66.8	254.3
Other revenue	0.0	0.2	2.4
Total	14.7	67.0	256.7
Operating costs
Other external costs	-44.6	-93.4	-168.4
Personnel costs	-48.9	-47.1	-94.7
Depreciation and amortization	-5.1	-5.2	-10.8
Total	-98.6	-145.6	-273.8
Operating profit	-83.9	-78.6	-17.1
Profit from financial investments	6.6	-17.2	-10.1
Profit after financial items	-77.3	-95.8	-27.2
Net profit	-77.3	-95.8	-27.2

PARENT COMPANY BALANCE SHEET	2008	2007	2007
SUMMARY (SEK m)	30 Jun	30 Jun	31 Dec
Assets
Intangible fixed assets	0.7	1.2	0.9
Tangible fixed assets	32.4	35.9	35.9
Financial fixed assets	19.4	14.7	19.0
Current receivables	12.7	19.4	69.5
Short-term investments	263.7	307.0	311.5
Cash and bank balances	62.4	5.7	14.5
Total assets	391.4	383.9	451.3
Liabilities and shareholders' equity
Shareholders' equity	308.3	305.2	384.2
Long-term liabilities, non interest-bearing	0.0	0.0	0.6
Current liabilities, interest-bearing	0.0	2.3	0.0
Current liabilities, non interest-bearing	83.1	76.4	66.5
Total liabilities and shareholders' equity	391.4	383.9	451.3

Accounting policies

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 2007. 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'.

Review report

We have conducted a limited review of the Financial Statement for Medivir AB (publ) for the period 1 January – 30 June 2008. The preparation and presentation of these interim financial statements pursuant to IAS 34 and the Swedish Annual Accounts Act are the responsibility of the Board of Directors and Chief Executive Officer. 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. 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 IAS 34 and the Swedish Annual Accounts Act for the group, and pursuant to the Swedish Annual Accounts Act for the parent company, in all material respects.

Claes Dahlén Authorized Public Accountant PricewaterhouseCoopers AB

Stockholm, Sweden, 9 July 2008

For more information, please contact:

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

Forthcoming financial information

The Nine-month Interim Report will be published on 20 October 2008.

The report will be available at Medivir's Website, www.medivir.se from this date under the 'Investor/Media' heading.