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MethylGene Will Not Pursue Additional Cinical Trials For MG98; Company To Increase Investment In HDAC And Kinase 'c-MET' Small Molecule Programs



12/15/2006 9:15:28 AM

Montreal, Quebec. December 15, 2006 – MethylGene Inc. (TSX: MYG) today announced that based on recent R&D successes in its small molecule oncology programs and a strategic review of its cancer pipeline, it will not pursue additional clinical trials for MG98, its second generation antisense compound targeting DNA methyltransferase. This decision is made with its North American co-development partner for the compound, MGI PHARMA, INC. The companies have agreed to seek alternative development partners or arrangements for the MG98 program.

MethylGene will continue to focus its clinical development investment in more commercially attractive alternatives such as MGCD0103, its oral isotype-selective histone deacetylase (HDAC) inhibitor which is currently in Phase II monotherapy and Phase I/II combination trials; and MGCD265, its recently selected oral, multi-targeted kinase (c-MET) clinical candidate. The company will also continue to concentrate its efforts in other HDAC programs including MG3290, an HDAC inhibitor to overcome antifungal resistance to azoles, and HDAC inhibitors for Huntington’s disease for which clinical candidates and potential Investigational New Drug (IND) applications are expected in 2007.

“We believe this decision along with the positive data recently disclosed at ASH for MGCD0103 and the selection of our multi-targeted kinase (c-MET) clinical candidate will enhance shareholder value as we build upon the positive momentum achieved to date.” commented Donald F. Corcoran, President and Chief Executive Officer, MethylGene. “While we are encouraged by the positive data reported on MG98 at ASCO in June, prioritization of our pipeline is key to success and it is important to allocate resources to the most promising and commercially attractive compounds and activities. We hope to attract new partners or arrangements for MG98, where the compound will be a priority and may advance based on its own merits.”

By not initiating additional MG98 clinical trials, approximately $3 million will be reallocated to these other programs in 2007 and 2008 and the company will still maintain its forecast of sufficient cash resources into the fourth quarter of 2008. No significant financial contribution from MGI PHARMA, INC. was expected over this period.

About MethylGene

MethylGene is a publicly-traded biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics in cancer. The cancer product candidate MGCD0103 is currently in clinical development with partners Pharmion Corporation and Taiho Pharmaceutical Co., Ltd. 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 (c-MET) 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. 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 MGCD0103, MGCD265 or MG98; 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 MGCD0103, MGCD265 and MG98. 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.

Investor Relations Contacts:

Rhonda Chiger Donald F. Corcoran

Rx Communications Group, LLC President & CEO

Phone: 917-322-2569 MethylGene Inc.

rchiger@rxir.com Phone: 514-337-3333 ext. 373

mctavishk@methylgene.com

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