Modigene Reports Second Quarter Financial Results

VIENNA, Va., Aug. 14 /PRNewswire-FirstCall/ -- Modigene Inc., today announced financial results for the second quarter and six months ending June 30, 2007.

Modigene reported a net loss of $12.4 million and $12.0 million, or $0.63 and $0.46 per basic and diluted share, for the six and three months ending June 30, 2007, respectively, compared to a net loss of $0.96 million and $0.55 million, or $0.07 and $0.04 per basic and diluted share, for the six and three month periods ending June 30, 2006, respectively. The increase in net loss was primarily the result of recognition of a one-time, non-cash $11 million goodwill charge resulting from the purchase of Modigene Delaware. The goodwill was recognized as an in-process research and development expense when the acquisition closed during the second quarter of 2007.

As expected, the Company has not generated any substantial revenue during the six and three months ended June 30, 2007. To date, Modigene has funded its operations primarily through he sale of equity securities and grants from the Israeli Office of the Chief Scientist.

In the three month periods ending June 30, 2007 and June 30, 2006, Modigene incurred a gross research and development expense of $412,392 and $169,876, respectively. In the six month periods ending June 30, 2007 and June 30, 2006, the Company incurred a gross research and development expense of $640,787 and $291,629, respectively. This expected increase in R&D expense reflected an increase in activities associated with the advancement of Modigene's lead preclinical compounds towards clinical trials.

In the three month periods ending June 30, 2007 and June 30, 2006, Modigene incurred a gross general and administrative expense of $588,059 and $376,690, respectively. In the six month periods ending June 30, 2007 and June 30, 2006, the Company incurred a gross general and administrative expense of $822,320 and $667,404, respectively. The increase in G&A expense reflected the increased level of activity associated with Modigene's public company status.

"This was a transformational quarter for Modigene, as we completed our merger with Modigene Delaware, began trading on the OTC Bulletin Board, raised gross proceeds of $15 million in new capital and welcomed life sciences industry veterans Dr. Philip Frost and Dr. Jane Hsiao to our Board of Directors," said Abraham Havron, Ph.D., Chief Executive Officer of Modigene. "We made important gains in our drug development efforts, successfully completing critical preclinical experiments for our longer-acting human growth hormone (hGH-CPT), interferon beta (IFN beta-CTP) and erythropoietin drug candidates, which further confirmed the good biologic activity and long duration of action demonstrated in earlier studies."

Dr. Havron continued, "Our confidence about our core CTP technology was bolstered by the success of Organon in moving its CPT-FSH fertility hormone into Phase 3 trials, a milestone further validating the clinical promise of our approach. Modigene took an important step towards the goal of initiating our own clinical trials by entering into an agreement for the GMP manufacture of our longer-acting human growth hormone. We are very pleased with the

momentum we have achieved in advancing our lead product candidates during the quarter and we look forward to continued progress in the coming months."

On June 30, 2007, Modigene had approximately $13 million in cash and marketable securities. The Company anticipates that current cash should be sufficient to fund operations through early 2009, including advancing the preclinical and clinical development of its longer-acting protein drug candidates, hGH-CTP and IFN beta-CTP.

ABOUT CTP

Modigene's technology was discovered by researchers at Washington University in St. Louis, Missouri and is based on a short amino acid sequence, the Carboxyl Terminal Peptide (CTP). CTP occurs naturally in humans, and when attached to a therapeutic protein, extends the time that the protein is active in the body. The potential utility of the technology has been demonstrated by Organon, which licenses the CTP technology for fertility applications only. Phase II trials of its CTP follicle stimulating hormone product (FSH-CTP) demonstrated that a single injection provides the same clinical effect as seven consecutive daily injections of standard FSH. These trials also demonstrated that attaching the CTP peptide did not affect the therapeutic activity of FSH or cause a negative immune system response. Modigene has an exclusive license from Washington University for use of CTP with all proteins except fertility hormones. Modigene is initially focusing on three CTP- enhanced compounds in preclinical development and is preparing to initiate clinical trials in 2008.

ABOUT MODIGENE

Modigene Inc. is a biopharmaceutical company applying its patented CTP technology to develop longer-acting, proprietary versions of already approved therapeutic proteins that currently generate billions of dollars in annual global sales. Modigene is currently developing long-acting versions of human growth hormone, erythropoietin, interferon beta, and GLP-1, which are in late preclinical development. For more information on Modigene, please visit http://www.modigeneinc.com.

Safe Harbor Statement

This press release contains forward-looking statements, including statements regarding the results of current studies and preclinical experiments and the effectiveness of Modigene's long-acting protein programs and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements involve risks and uncertainties that may affect Modigene's business and prospects, including the risks that Modigene may not succeed in developing any commercial products based upon its long-acting protein technology, including any long-acting versions of human growth hormone, erythropoietin, interferon beta or GLP-1; that the long-acting products in development may fail, may not achieve the expected results or effectiveness and/or may not generate data that would support the approval or marketing of these products for the indications being studied or for other indications; that ongoing studies may not continue to show substantial or any activity; and other risks and uncertainties that may cause results to differ materially from those set forth in the forward-looking statements. The development of any products using the CTP platform technology could also be affected by a number of other factors, including unexpected safety, efficacy or manufacturing issues, additional time requirements for data analyses and decision making, the impact of pharmaceutical industry regulation, the impact of competitive products and pricing and the impact of patents and other proprietary rights held by competitors and other third parties. In addition to the risk factors set forth above, investors should consider the economic, competitive, governmental, technological and other factors discussed in Modigene's filings with the Securities and Exchange Commission.

MODIGENE CONTACT: MEDIA CONTACT: Shai Novik, President Barbara Lindheim Modigene Inc. GendeLLindheim BioCom Partners Tel: +1 866 644-7811 Tel: +1 212 918-4650 Email: shai@modigeneinc.com

CONTACT: Shai Novik, President of Modigene, +1-866-644-7811,shai@modigeneinc.com, or Barbara Lindheim of GendeLLindheim BioComPartners, +1-212-918-4650, for Modigene

Web site: http://www.modigeneinc.com/