MethylGene Inc.
TSX : MYG

MethylGene Inc.

August 22, 2006 14:00 ET

MethylGene's HDAC Inhibitor, MGCD0103, Enters Phase II Clinical Trial in Patients With Refractory or Relapsed Hodgkin's Lymphoma

-Company to Receive Milestone Payments Totaling U.S. $5.5 Million

MONTREAL, QUEBEC--(CCNMatthews - Aug. 22, 2006) - MethylGene Inc. (TSX:MYG) a biopharmaceutical company focused on epigenetic regulation, today announced that it has enrolled its first patient in a single-agent Phase II clinical trial of its lead HDAC compound, MGCD0103, in patients with relapsed or refractory Hodgkin's lymphoma, a cancer initially located in the lymph nodes. The initiation of this Phase II study results in milestone payments from the Company's partners, Pharmion Corporation and Taiho Pharmaceutical, of U.S. $4.0 million and U.S. $1.5 million, respectively.

In this open-label trial, MGCD0103 will be given orally at a dose of 110 mg, three times per week to patients with Hodgkin's lymphoma who have failed other treatments or whose disease has relapsed. Key objectives of the study will be to determine the effectiveness of MGCD0103 as a treatment option for patients with refractory or relapsed Hodgkin's lymphoma. Effectiveness, or the success rate, will be measured by the combined total of complete responses, partial responses and patients who experience stable disease for six cycles or more (a cycle is equal to four weeks). Secondary objectives include determining the safety profile, as well as assessing biomarkers and predictive markers for MGCD0103. The study is expected to enroll up to 35 patients at several leading cancer centers in North America and take approximately 12 to 15 months to complete.

"We are pleased to be steadily moving our HDAC cancer program forward and the initiation of this first Phase II trial of our lead product candidate is an important achievement, resulting in U.S. $5.5 million of milestone payments. In addition to studying MGCD0103 in Hodgkin's lymphoma, we expect to embark, with our partners Pharmion and Taiho, on additional Phase II trials with our compound in other cancer indications where epigenetics appears to play a role," commented Donald F. Corcoran, President and CEO, MethylGene Inc.

"Epigenetic modulation by histone deacetylase appears to be critical in the pathobiology of Hodgkin's lymphoma. We are very enthusiastic about starting this trial in a patient population where there is a significant need for new therapies," commented Dr. Anas Younes, Professor, Lymphoma/Myeloma at MD Anderson Cancer Center and lead investigator for this trial.

About MGCD0103, an Oral HDAC Inhibitor

MGCD0103 is a rationally designed, oral, isotype-specific HDAC inhibitor. In addition to the clinical trial noted above, MethylGene continues to enroll patients in a Phase I monotherapy trial evaluating MGCD0103 on a twice weekly oral schedule (Trial 004) and a Phase I/II combination trial with demethylating agent Vidaza® (azacitidine, for injectable suspension, marketed by Pharmion), in patients with advanced myelodysplastic syndrome (MDS) or acute myelogenous leukemia (AML) (Trial 005). The Company previously completed enrollment in three Phase I trials with MGCD0103 in solid tumors or MDS/AML and expects to embark on additional monotherapy and/or combination trials in solid and hematological cancers.

About Hodgkin's Lymphoma (HL)

Hodgkin's lymphoma or Hodgkin's disease develops in the body's lymph system and arises from abnormal lymphocytes (white blood cells) known as Reed-Sternberg cells. Although HL can be initiated in any part of the body, it most often begins in the lymph nodes in the upper part of the body. The National Cancer Institute estimated on January 1, 2003, there were approximately 147,387 people in the United States with a history of Hodgkin's lymphoma (active disease or in remission) and this disease may qualify as an Orphan Drug indication. It is estimated by the American Cancer Society that 7,800 new cases of Hodgkin's lymphoma will be diagnosed and 1,490 deaths will occur during 2006 in the U.S. A majority of patients can be initially treated with chemotherapy or a combination of chemotherapy and radiation therapy. Unfortunately, approximately 20 percent of patients relapse or are refractory to the standard treatment and require alternative treatment options.

About MethylGene

MethylGene is a publicly-traded biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics in cancer and infectious diseases. We intend to exploit our HDAC inhibitor technology in other diseases, such as diabetes, inflammation, fungal infections and neurodegenerative disorders. Two cancer product candidates are currently in clinical trials: MGCD0103, partnered with Pharmion Corporation and Taiho Pharmaceutical Co., Ltd., and MG98, partnered with MGI Pharma, Inc. MethylGene has an exclusive license agreement with Merck & Co. for the development and commercialization of small molecule beta-lactamase inhibitors to overcome antibiotic resistance. MethylGene has partnered its non-oncology HDAC program for neurodegenerative diseases with EnVivo Pharmaceuticals. MethylGene has a portfolio of preclinical programs for its multi-targeted kinase and histone deacetylase (HDAC) inhibitors for both oncology and non-oncology indications, and continues to seek partnering opportunities in these areas. Please visit our website at www.methylgene.com.

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. 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, which you are urged to read, as described in MethylGene's Annual Information Form for the fiscal year ending December 31 2005, under the heading "risk factors," that can be found at www.SEDAR.com. 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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