MethylGene Announces First Quarter 2005 Results; Company Announces Additional Research Data from Collaborators

Business Wire, April 28, 2005

MONTREAL -- MethylGene Inc. (TSX:MYG) a biopharmaceutical company, today announced operational and financial results for the first quarter ended March 31st, 2005. MethylGene also announced research results from its collaboration with EnVivo Pharmaceuticals and results from a collaboration with Johns Hopkins in the area of breast cancer research.

First Quarter Highlights:

- Advanced clinical programs for MG98 and MGCD0103, and preclinical
  programs for dual action kinase inhibitors, non-oncology HDAC
  indications, next generation oncology HDAC inhibitors and beta-
  lactamase inhibitors for antibiotic resistance.
- Signed an exclusive research, collaboration and license agreement
  with EnVivo Pharmaceuticals to exploit MethylGene's isotypic
  selective HDAC inhibitor technology for the treatment of
  neurodegenerative diseases. This agreement will result in total
  proceeds in 2005 of US $1.1 million, including an upfront license
  amount of US$500,000 and US$600,000 in contract research payments.
  This quarter, the Company received US$650,000 of the aforementioned
  US $1.1 million.
- Recognized revenue of $1.9 million from its partnerships with Taiho
  Pharmaceutical, Merck & Co., Inc., and EnVivo Pharmaceuticals.
- Announced research results with EnVivo demonstrating promising
  results for HDAC inhibitors in the area of neurodegeneration.
- Announced research results with Johns Hopkins for work performed in
  breast cancer research.
- Issued patent for beta-lactamase inhibitors (U.S. Patent
  #6,884,791)

"We continue to make progress advancing both of our clinical stage products and our multiple research programs, which will yield our next generation product candidate," said Mr. Donald F. Corcoran, President and CEO of MethylGene. "Revenues from our partnerships continue to partially offset our expenditures, although we do anticipate our cash burn to rise as we continue to ramp up development activities for our clinical stage products."

Collaboration Research Results:

MethylGene's collaborator, EnVivo Pharmaceuticals Inc, announced positive preclinical results for a set of MethylGene's HDAC inhibitorsin the area of neurodegenerative disease in a presentation entitled, "Automated Screening of Drosophila Neurodegenerative Disease Models Facilitates CNS Drug Discovery" at the SRI 7th International Conference: Neurodegeneration in Alzheimer's Disease; Parkinson's Disease & Related Disorders, in Princeton, NJ, on April 19th. In this presentation, EnVivo discussed experiments in which MethylGene's HDAC molecules were screened in EnVivo's proprietary neurodegenerative Drosophila disease model assays as well as in a variety of primary mammalian neuronal assays. Based on this work EnVivo was able to identify and select a group of compounds that are currently being investigated for their in vivo efficacy and safety properties in transgenic vertebrate disease models.

"EnVivo's data demonstrated that the specificity of our inhibitors may result in less toxic molecules with a higher therapeutic index," stated Dr. Jeffrey Besterman, Senior VP of R&D of MethylGene. "The next step will be to further investigate these molecules in EnVivo's neurodegenerative models to further determine their safety and efficacy in vivo."

MethylGene also published research results, in collaboration with Johns Hopkins Bloomberg School of Public Health, that histone deacetylase (HDAC) and DNA methyltranferase (DNMT) inhibitors modulate histone methylation to allow for the reactivation of estrogen receptor genes. Estrogen receptor genes are found to be silenced, or turned off, in human breast cancer cells and thus the reactivation of these genes using HDAC and DNMT inhibitors may provide insight in developing drug targets to treat breast cancer. More details can be found in Molecular Endocrinology (2005) March 3; (Electronically published ahead of print).

As a further update of our preclinical efforts, the second generation HDAC inhibitor program is progressing as planned with Taiho. The Company is in the process of evaluating a subset of next generation molecules with the goal to identify an additional clinical candidate for cancer in the next 9 to 12 months. In the beta-lactamase inhibitor program, MethylGene and Merck continue to advance research. The research collaboration component of the Exclusive License and Research Collaboration Agreement will be completed in June 2005 after which a subset of optimized lead candidates may be further developed under the continuing exclusive license agreement by Merck, with the goal to identify a clinical candidate by year end. Finally, the Company continues to optimize its lead dual kinase inhibitor molecules and expects to choose a clinical candidate in the next 9 to 15 months.

Milestones Anticipated for the Balance of 2005:

- Initiate the second monotherapy, dose escalating, Phase I trial for
  MGCD0103, an isotypic selective HDAC inhibitor, in hematological
  tumors in Q2 2005.
- Disclose additional data from the seven day continuous infusion
  Phase I monotherapy trial for MG98 in solid tumors at the annual
  ASCO (American Society of Clinical Oncology) meeting in Orlando,
  Florida in May 2005.
- Disclose preliminary data from the ongoing Phase I HDAC trials in
  conjunction with the publication of the Company's accepted HDAC
  scientific abstracts in the 2005 ASCO Meeting Proceedings for May
  2005.
- Commence the initial MGCD0103 Phase I/II combination trial or a
  Phase II monotherapy trial in a specific tumor type during Q3,
  2005 and complete enrollment in the three ongoing Phase I trials.
- Identify the optimal schedule from the first step of the Phase II
  MG98 combination trial with interferon alpha in metastatic renal
  cell cancer by the end of 2005 or early 2006.
- Consolidate research facilities into one building, providing for
  greater efficiency and productivity.
- Advance other research programs towards selection of an additional
  clinical candidate.