1. Kanaan really fathered him. Michael just wants him because he's Teyla's, and Kanaan is already part of his army, so the baby will follow.
2. Michael tricked her mind into thinking he was Kanaan (just look at the way Kanaan stares before him, he can do that to all Athosians simultaneously, so he could walk among them on New Athos, too, if he wanted to) and got her pregnant himself, like this. So it's his baby. It's pretty clear he's *definitely* interested in her, now, and he wants her very much alive and on his side. Whether he will take over her mind too, I don't know. Might depend on her reactions after she's given the treatment.
3. The Wraith scientist who did the experiments with the Wraith DNA behind the other Wraiths backs? Maybe it was Michael? The boy has showed he's got a lot to learn, still, when creating those Bugs. Humanoids were better, like he has now. The scientist might have, or probably has used his own DNA and put it in those people. If that's true, and Teyla has that DNA, the baby will have it too, and therefore the Wraith part of Teyla, the baby, and all the other Athosians, is Michael's. He's brought his 'family' home to fight for him. The only ones he's got left.
Why not do it sooner? Michael had Carson Beckett, and dug around in his mind. The experi-Wraith thought everybody was dead. He saw in Carson's mind that this was not the case. Suddenly, he had a new family, and there started his new plans. I don't know if Michael really knew before what was so special about Teyla. And hearing, in the past, that Teyla had some Wraith DNA might not have raised too much questions with him, as he thought that experiment was all over. You never know if others started an alike one, or if they got the DNA in another way. Carson does know where it comes from.
Maybe the third option makes most sense, now. Either way, I think Michael is gonna play daddy. You can clearly see he's emotional towards both Teyla and the baby. I can't wait to see the next episode and get even more answers. And I hope Michael is going to turn her into a Half-Wraith. And that they're gonna win and that then time will be reset.
Michael mentions there's a deeper bond between himself and Teyla than she knows about. If he's talking about his Wraith DNA in her, that's true. Maybe he can affect her so much, or take her over so well (he's the only one who could do that to her? Have we seen a male do this before?) because he's kind of connecting to his own DNA.
He also says that, when the baby gets there, their bond will be even stronger. This is of course the part where he shoves even more of his DNA in her. Again, there was only one 'Wraith' around to take DNA from, for his experiments, and that's himself yet again? So more of his DNA she will get.
Have you seen those Athosians? Well, Kanaan alone, so far? He was totally blanked out, about like she was after he took control of her in "Michael", so he could get free. If Kanaan has more of Michael's own DNA in himself, this might be very possible? We haven't really seen it before. But maybe now we're there?
I don't know if he'll make her mind go numb like with the others. He seems to want her to understand things, and with a dead mind that won't work. He wants her by his side, as his Queen, and mindlessness isn't exactly the way that works, right? So when she's had her baby (they might just not show it as extendedly as they plan to do it in S&R?), and Michael still holds her people there, together with the little son, what will she do? He'll alter her, that's for sure. She might like the power. With most people she cares for with Michael, she'll stay. She's going to have to put her child first. She'll want to see how he's raised, do it herself. Stop Michael from poisoning his mind.