MethylGene Inc.

MethylGene Inc.

September 16, 2010 17:22 ET

MethylGene Enters Into $15 Million Equity Line Facility Agreement


MethylGene Inc. (TSX:MYG) today announced it has entered into an agreement with Dutchess Opportunity Cayman Fund Limited ("Dutchess") for an Equity Line Facility (ELF) of up to $15 million of capital over 36 months, at MethylGene's discretion, through the subscription of newly issued common shares.

"This facility provides us with flexible access to capital at reasonable terms to help us achieve our goals," said Charles Grubsztajn, President and Chief Executive Officer of MethylGene. "We continue to progress our pipeline, with a focus on completing the three clinical trials evaluating MGCD265, our proprietary multi-targeted (Met) kinase inhibitor, in preparation for a randomized Phase II trial in non-small cell lung cancer patients. Accessing this new capital, coupled with our commitment to leverage the opportunities that our proprietary pipeline offers, is a positive step forward that demonstrates our dedication to enhancing shareholder value."

MethylGene can draw on Dutchess' commitment by sending draw down notices from time to time. Each draw down notice is subject to a maximum amount, as well as a minimum price, below which the Company will not issue shares to Dutchess. Subject to the applicable minimum price, the common shares will be issued at a discount of four percent to the prevailing share price. The Company is restricted from issuing shares under a draw down to the extent such shares would result in Dutchess and its affiliates owning more than 9.9 percent of the issued and outstanding shares of the Company. The maximum number of shares that the Company can issue under the agreement is limited to the lower of 10,104,645 of the Company's common shares (being 25 percent of the Company's currently issued and outstanding shares) and 25 percent of the Company's issued and outstanding common shares at any given time.

The ELF remains subject to certain conditions precedent, including the filing of a preliminary short-form base shelf prospectus with the securities authorities in each of the provinces of Canada. This filing will allow the Company to qualify the shares issued under the ELF and make other offerings of common shares, preferred shares, debt securities, warrants, units or combinations thereof during the next 25 months; however, the Company is not required to file a renewal prospectus to continue the ELF after 25 months have expired. The agreement can be terminated at any time by the Company without the payment of any additional fees to Dutchess.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States or to United States persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

About Dutchess Capital

Dutchess Capital is an investment manager which provides creative financing for public companies. Founded in 2000, funds managed by Dutchess have made over $200 million in direct investments in companies throughout North America, Europe and Asia.

For almost a decade, Dutchess has been a global leader in Equity Line Facilities (ELFs) and has transacted in excess of $1.8 billion in such financings worldwide. The ELF is a flexible financing structure by which publicly traded companies can raise capital quickly, efficiently and with less dilution than most traditional offerings. For more information, please visit:, a fund managed by

About MethylGene

MethylGene Inc. (TSX:MYG) is a publicly-traded, clinical stage biopharmaceutical company focused on the development and commercialization of novel therapeutics with a focus on cancer. The Company's product candidates include: MGCD265, an oral, multi-targeted kinase inhibitor targeting the Met, VEGF, Ron and Tie-2 receptor tyrosine kinases that is in multiple clinical trials for cancer; MGCD290, a fungal Hos2 inhibitor for use in combination with fluconazole for fungal infections which has completed Phase I clinical studies; and mocetinostat (MGCD0103), an oral, isoform-selective HDAC inhibitor for cancer which has been in multiple Phase II clinical trials and is currently in a Phase II trial in refractory or relapsed follicular lymphoma. Mocetinostat is licensed to Taiho Pharmaceutical Co. Ltd in certain Asian countries. A fourth compound discovered using MethylGene's HDAC platform, EVP-0334 - a potential cognition enhancing agent for neurodegenerative diseases has successfully completed Phase I trials sponsored by EnVivo Pharmaceuticals Inc. MethylGene also has a funded collaboration with Otsuka Pharmaceutical Co. Ltd. for applications in ocular diseases using the Company's proprietary kinase inhibitor chemistry. Please visit our website at

Certain statements contained in this news release, other than statements of fact that are independently verifiable at the date hereof, may constitute forward-looking statements. Such statements, based as they are on the current expectations of management of MethylGene, inherently involve numerous risks and uncertainties, known and unknown, many of which are beyond MethylGene's control. These risks and uncertainties could cause future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Such results, performance or achievements include, but are not limited to, the timing and effects of regulatory action; the continuation of collaborations; the results of clinical trials; the timing of enrollment or completion of clinical trials; the success, efficacy or safety of MGCD265, MGCD290 or mocetinostat (MGCD0103); the ability to scale up, formulate and manufacture sufficient GMP, clinical or commercialization quantities of MGCD265, MGCD290 or mocetinostat, and the relative success or the lack of success in developing and gaining regulatory approval and/or market acceptance for any compound or new product including MGCD265, MGCD290 or mocetinostat. Such risks include, but are not limited to, the impact of general economic conditions, economic conditions in the pharmaceutical industry, changes in the regulatory environment in the jurisdictions in which MethylGene does business, stock market volatility, fluctuations in costs, expectations with respect to our intellectual property position and our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others, changes in the competitive landscape including changes in the standard of care for the various indications in which MethylGene is involved, and changes to the competitive environment due to consolidation, as well as other risks, as described in MethylGene's Annual Information Form for the fiscal year ending December 31, 2009, under the heading "Risk Factors" which you are urged to read and all other documents filed by the Company that can be found at Consequently, actual future results may differ materially from the anticipated results expressed in the forward-looking statements. The reader should not place undue reliance on the forward-looking statements included in this presentation. These statements speak only as an update on the date they are made and MethylGene is under no obligation to revise such statements as a result of any event, circumstance or otherwise except in accordance with law.

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