Medicago is raising $17 M, through issuance of 34 M shares at a price of .51. There was no price discount to the market, with only a quarter warrant priced at .75. Although the 34 M share dilution is bringing the number of outstanding shares close to 200 M, financing terms were pretty good. There is a lot of interest in Medicago and in this financing.


This is not surprising given the numerous milestones Medicago is set to achieve in 2011: completion of pandemic influenza vaccine Phase II trial, Phase I influenza seasonal vaccine trial, and completion of the DARPA-sponsored manufacturing facility.


In addition, Medicago is likely to land a partnership and/or more research deals in the future. Recently Novavax, a $280 M market-cap, influenza vaccine company in similar stage of clinical development as Medicago, has landed two major deals. First a $179 M development contract with U.S. Dept. of Health and Human Services, and a licensing deal with LG for South Korea.


Recent research report by Roth Capital Partners set a 12 month price target for Medicago at $1.41. Target was based on future earnings potential and strong possibility of a partnership for Medicago. Report commented on Medicago's interim phase II results, which seemed better in direct comparison with competitors.


Following the latest financing, Medicago's market cap will be close to $100 M, meaning the company is undervalued compared to its peers. I view this as a good buying opportunity for a 100% return within 6 months.

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