Viragen, Inc.'s CEO Provides Outlook For 2007

PLANTATION, Fla., Jan. 24 /PRNewswire-FirstCall/ -- The following is Part I of a letter from Charles A. Rice, President and CEO of Viragen, Inc. and Viragen International, Inc. . In addition to these comments, stockholders and potential investors are referred to: the Company's SEC filings, including Form 10-K and Form 10-Q (Annual and Quarterly Reports); press releases; website; and other publicly disseminated information, which is available free of charge upon request by contacting the Company. Part II of Mr. Rice's letter will be issued tomorrow.

Dear valued Stockholder,

While no one is satisfied with the current valuation of our Company, the key for our success is to achieve the refocused objectives we have identified for the next twelve months. These include:

- accomplishing our regulatory strategy in Europe for Multiferon(R); licensing Multiferon(R) for marketing in the European Union (EU) to generate revenues; - developing the final pre-clinical supporting data for our anti-cancer candidates, so that we are prepared to meet with U.S. and EU regulatory authorities to agree on designs for human clinical trials; - selecting an initial therapeutic protein candidate for OVA(TM)-expressed production to proceed along a regulatory pathway; - debuting VG106, a new product candidate, with supporting in-vitro and in-vivo anti-cancer data; and - securing appropriate funding through financings, grants and/or strategic initiatives.

In this, Part I of my letter, I will provide updates on our Multiferon(R) activities, to be followed by Part II, which will detail our anti-cancer candidates and the OVA(TM) System -- our avian transgenics program.

Multiferon(R)

In order to capitalize on the Multiferon(R) European market opportunity, it was imperative that it first be approved in Sweden, a member of the European Union, for the first-line adjuvant treatment of malignant melanoma, which it was in February 2006. This approval was no small achievement, as long-term clinical data needed to be resurrected, patients located for further follow-up, and statistics recomputed, managed and formatted into a complex application that presented a compelling argument to regulatory authorities. We did indeed accomplish these goals, and I applaud our team in Sweden at ViraNative for their relentless work and excellent results, advancing our objective to position Multiferon(R) as the most prescribed human alpha interferon in the world.

While the alpha interferon market is quite competitive, the limitations of recombinant alpha interferon products are widely recognized and improvements are desirable. Multiferon(R) offers significant improvements in some settings, such as malignant melanoma, and we are committed to promoting its adoption by clinicians around the world.

As part of this campaign, our Swedish team has forged a presence at the major international melanoma conferences throughout the year, helping us to bring the clinical data to the forefront of prescribing physicians around the world. This effort will continue as part of our ongoing sales and marketing efforts, as message repetition is highly important to achieving our goals.

When Multiferon(R) was approved for the first-line melanoma indication in February 2006, it was approved in an ampoule presentation. However, since late 2004, we have progressed plans to convert from glass ampoules to a new pre-filled syringe (PFS), which you can now view on the home page of our website. This change facilitates compliance for patients and makes administration of Multiferon(R) much more convenient and error-free. After collecting the required stability data over the product's expected two-year shelf life, we submitted this PFS application to the Swedish authorities in December 2006 for their review. We expect this review to be completed in the second quarter of 2007.

Once the new PFS presentation is approved in Sweden, we are prepared to proceed with an EU regulatory process, through a registration pathway called the Mutual Recognition Procedure (MRP). This procedure allows a single registration dossier to be filed for approval among a targeted group of EU countries via one application and review process. Provided the Swedish approval and the MRP application go well, the MRP decision could be expected as early as the second half of this year.

We know our stockholders are extremely anxious to know where we stand in relation to licensing exclusive marketing rights to a European marketer. It is critical that the product is expertly marketed by a specialty sales force to the appropriate audience in each country, and our selection will be vital to our ultimate sales success. While the licensing process has been lengthy, evolving and complex, completing these negotiations to result in a final agreement is among our highest priorities. Additionally, we have built new relationships with key opinion leaders in the EU and put together a team of melanoma advisors, comprised of some of the more prominent clinical thought leaders within and outside the EU. Such relationships are anticipated to support our licensee's marketing efforts.

At the current time, we are reviewing multiple proposals for licensure of Multiferon(R) for the EU. Our intent will be to enter into the best arrangement possible to result in realization of significant sales of Multiferon(R) at the earliest possible date. The EU represents our first "major market" opportunity for Multiferon(R).

We are proceeding with plans to conduct a post-marketing clinical trial in high-risk malignant melanoma. This trial is scheduled to begin this year, assuming we secure the necessary funding to support it. The trial is planned to include approximately 800 patients internationally, with centers in at least 16 different countries participating. The physician investigators that will administer therapy in this trial are among the more influential thought- leaders and experts in the field of melanoma in their respective countries.

While we have rightfully prioritized Europe, we have not ignored the promise of other countries contributing to the growth of Multiferon(R). However, some of our existing smaller active markets have been disappointing. As a result, we have notified certain distributors that near-term performance measures must be reached in order to retain their rights to market Multiferon(R). With regards to such changes, we have agreed with our South Korean licensee, Kuhnil Pharmaceuticals, to terminate their exclusive license to Multiferon(R). We will continue to seek regional licensure for Multiferon(R), including for this valuable country.

Beyond Europe, there are other countries where we aim to launch Multiferon(R). Just last month, we reported a new agreement with Orphan Australia, granting exclusive marketing rights in Australia and New Zealand, which report the highest melanoma incidence rates in the world. We continue to field indications of interest from other parts of the world as well.

Working with independent researchers in Sweden, the United Kingdom and the U.S., we have expanded our research work on Multiferon(R). We plan to report progress on these studies in the coming months, which will lead us toward the next indication(s) and future clinical trials with Multiferon(R).

Part II of Mr. Rice's Letter will be issued tomorrow.

About Viragen, Inc.:

With international operations in the U.S., Scotland and Sweden, we are a bio-pharmaceutical company engaged in the research, development, manufacture and commercialization of therapeutic proteins for the treatment of cancers and viral diseases. Our product and product candidate portfolio includes: Multiferon(R) (multi-subtype, human alpha interferon) which is uniquely positioned in valuable niche indications, such as high-risk malignant melanoma, other niche cancer indications and selected infectious diseases; VG101, a humanized monoclonal antibody that binds selectively to an antigen over-expressed on Stage IV malignant melanoma tumors; and VG102, a highly novel humanized monoclonal antibody that binds selectively to an antigen that is over-expressed on nearly all solid tumors. We are also pioneering the development of the OVA(TM) System (Avian Transgenics), with the renowned Roslin Institute, the creators of "Dolly the Sheep", as a revolutionary manufacturing platform for the large-scale, efficient and economical production of human therapeutic proteins and antibodies, by expressing these products in the egg whites of transgenic hens.

For more information, please visit: http://www.Viragen.com Viragen, Inc. Corporate Contact: Douglas Calder, Director of Communications Phone: (954) 233-8746; Fax: (954) 233-1414 E-mail: dcalder@viragen.com

The foregoing letter contains forward-looking statements that can be identified by such terminology such as "believes," "expects," "potential," "plans," "suggests," "may," "should," "could," "intends," or similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. In particular, management's expectations regarding future research, development and/or commercial results could be affected by, among other things, uncertainties relating to clinical trials and product development; availability of future financing; unexpected regulatory delays or government regulation generally; the success of third- party marketing efforts; our ability to retain third-party distributors; our ability to obtain or maintain patent and other proprietary intellectual property protection; and competition in general. Forward-looking statements speak only as to the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

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CONTACT: Douglas Calder, Director of Communications of Viragen, Inc.,+1-954-233-8746, or fax, +1-954-233-1414, or dcalder@viragen.com

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