Streamlining and Share Issue to Reach Profitability

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• Increased focus on phase III-project Lipsovir® and promising pre-clinical projects

• Planning commences for transfer of all research to Sweden and closure of site in Essex, England, lowering net costs by 50 million SEK annually

• Proposal of rights issue in amount of approximately 225 million SEK

The Board of Directors for Medivir AB (publ) decided on December 5, 2006, to hold an Extraordinary General Meeting (EGM). The EGM will decide about a rights share issue of approximately 225 million SEK. The new funds will be used towards the capital base for Medivir, allowing the group to focus further on its prioritized projects. The project for Lipsovir®, a completely new product against labial herpes, is in registration studies (Phase III) and is expected to be close to launch by late 2008. The projects Cathepsin K (MIV701) concerning osteoporosis and HCV PI concerning Hepatitis C are estimated to reach Phase I-studies in the near future.

Medivir has also decided, in order to focus the company’s resources on these prioritized projects, to concentrate all research operations to its facility in Huddinge, Sweden and to begin planning to close the UK site in Cambridge, Essex.

”By and large, we have completed the road map that we presented at the time of our share issue in 2004. We have a more efficient organization and some very promising projects. We can now take the next step and focus our resources on moving these projects forward. With the added funds that the share issue brings, we can move considerably closer to our goal of becoming a profitable pharmaceutical company,” says Lars Adlersson, Medivir’s CEO.

THE SHARE ISSUE AT A GLANCE
• Preferential rights for existing share holders

• Conditional on approval by the extraordinary general meeting on December 22, 2006

• Shares will be issued at 29 SEK per share

• Every five class A and/or class B share entitles holder to subscription for three new class B shares.

• If fully subscribed, the share issue will bring a maximum of 225 MSEK before transaction costs


PRESS CONFERENCE TODAY AT 11.30 AM
At the occasion of the planned share issue, Medivir holds a press conference today, December 6, 2006 at Salén Konferens & Matsalar, Norrlandsgatan 15, Stockholm where a light lunch will be served. Lars Adlersson, Medivir CEO, heads the press conference together with Medivir’s head of research Bertil Samuelsson and the company CFO Rein Piir.

The objectives for 2004-2006 reached
Medivir has in the last years taken several important steps towards becoming a profitable and sustainable research-based pharmaceutical company. Among the steps taken are guiding Lipsovir through stage III-studies and market registration on the company’s own accord; focusing on protease inhibitors; and spinning off and outlicensing polymerase-based projects. A vital part of the focus on protease inhibitors has been an increased commitment to several promising pre-clinical projects, for instance concerning hepatitis-C and osteoporosis. Three of the six polymerase based projects have been out-licensed and discussions are underway about the remaining projects.

Medivir’s already strong position in the field of proteases has been further emphasized by the fact that Tibotec chose to extend its collaboration agreement concerning Hepatitis C (the HCV-project) and also decided to launch a new collaboration based on Medivir’s protease inhibitor project against HIV. Clinical trials with the furthest advanced protease inhibitors in Medivir’s portfolio are estimated to start in the near future. The time when a drug could be available to market in the Nordic region by Johnson & Johnson, which constitutes a part of the HCV-collaboration with Tibotec, has been moved up in time thanks to the quick progress of the project.

The Cathepsin K-project now has a drug candidate, MIV-701, in a pre-clinical development phase. MIV-701 works against the indication of osteoporosis. Development of full-scale synthesis and manufacturing of large amounts of substance has already been conducted successfully and the safety studies are in their last stages. Medivir’s intention is to initiate phase Ia-studies by early 2007, followed by phase Ib-studies by late 2007. Medivir’s strategy for the MIV-701 project is to find an industrial partner after the phase Ib-studies, a partner that can help propel the project closer to a market registration.

Lipsovir can reach market registration in 2008
As one of just a few smaller European research-based companies, Medivir has a project, Lipsovir® (ME-609), in phase III-studies. Lipsovir® is developed to treat labial sores and it is Medivir’s goal to prove that treatment with Lipsovir® also prohibits the break-out of sores. The fact that Lipsovir® is now in phase III and that the product is based on known and well-documented substances, that each individually already are marketed, further contributes to lowering the risk level and increases the probability to obtain a marketing license by the regulatory bodies. It is Medivir’s hope to obtain all necessary licenses already in 2008. If this goal is met, Medivir could by turn of the year 2008/2009 have taken a large step closer to becoming a profitable research-based pharmaceutical company with its own sales force for specialist products in the Nordic market.

Streamlining and focusing of operational resources
To make Medivir’s operations more efficient, Medivir’s Board of Directors has decided to consolidate all research and development activities to Huddinge, Sweden and to consequently begin planning to close the facility in Essex, England.

Since the acquisition of the British research company Mimetrix in 2000, Medivir has integrated Mimetrix’ competence and technologies concerning protease inhibitors into the entire group. The company has built an integrated research organization which has initiated several pharmaceutical drug projects. The productivity of the organization and the commercial value of the initiated drug projects have been proved by, among other things, the two protease inhibitor deals that have been signed with Tibotec concerning Hepatitis C and HIV. Both these projects have been developed by Medivir’s Swedish research unit.

It is now deemed possible to fully concentrate all research operations to Sweden, while maintaining the same development rate. This restructuring effort will lead to annual cost savings of more than 50 million SEK. One-time costs for the restructuring process are estimated at 25 million SEK.

As a consequence of concentrating all operations to Sweden, the net number of full time equivalent (FTE) employees will be lowered by 30, after necessary recruitments are made in Sweden. The restructuring efforts will start as soon as negotiations with the employee organizations are completed and are estimated to be completed in the first six months of 2007.

The consolidation to Sweden also means that several duplicated functions are eliminated. In addition, some resources are transferred from explorative research to established drug projects. Medivir can thus, despite the reduction in FTE, continue to develop the pre-clinical projects Cathepsin K, Renin , KOL, HCV PI and HIV PI with undiminished speed. The project Cathepsin S, which is in an early pre-clinical phase, will however be put on hold for the time being. Medivir’s clinical projects – the projects that have entered testing on human subjects – are run exclusively from Sweden and the resources for these projects are not affected by the restructuring.

Share issue
The restructuring process will give Medivir an efficient research organization that is focused on a prioritized list of promising projects in phase III and pre-clinical phase. Among those projects are Lipsovir®, Cathepsin K and HCV. To further increase the development pace of these projects and to quicker reach the goal of becoming a profitable pharmaceutical company, the Board of Directors decided on December 5, 2006, to conduct a share issue. This issue is estimated to bring 225 million SEK to Medivir, before deduction for transaction costs, assuming that the issue is fully subscribed.

The share issue will bring the number of shares from 12902611 to a maximum of 20644178 shares , of which 660 000 shares are class A and a maximum of 19984178 shares are class B2. A full subscription of the issue means that the share capital will increase by at most 38707833 SEK , from 64513055 SEK to at most 103220888 SEK.

The issue is done with preferential rights for existing share holders on condition of approval by an Extraordinary General Meeting (EGM) on December 22, 2006. For more information about the EGM, please see separate invitation, which will be made public on or around December 8, 2006 and will be accessible from that date forward on the Medivir web site, www.medivir.se.

Prospectus, registration form and issue statement will be sent to Medivir’s share holders, starting January 11, 2007.

Carnegie is the financial advisor to Medivir regarding the share issue.

PRELIMINARY TIME PLAN
Extraordinary General Meeting (EGM)
22 December 2006

Prospectus made public
29 December 2006

Final day for trading in Medivir’s B-class share with participation rights
4 January 2007

Record day for participation in rights issue
9 January 2007

Distribution of prospect and registration form
11 January 2007

Trading in subscription rights
15 January – 30 January 2007

Subscription period
15 January – 2 February 2007

Huddinge, December 6, 2006

The Board of Directors, Medivir AB

For more information, contact.
Lars Adlersson, CEO, +46-8-546 831 00
Rein Piir, CFO and Vice President Investor Relations, +46-8-546 831 23 or +46-708-53 72 92


For more information about Medivir, please see the company’s website, www.medivir.se