MethylGene Reports Third Quarter 2010 Financial Results and Provides Clinical Update for MGCD265

MONTREAL, QUEBEC--(Marketwire - November 12, 2010) - MethylGene Inc. (TSX: MYG) today announced financial results for the third quarter ended September 30, 2010. In addition, the Company provided a clinical trial update for its multi-targeted (Met) kinase oncology inhibitor, MGCD265.

Financial Results Reported in Canadian Dollars

Total revenues for the third quarter ended September 30, 2010 were $587,000 compared to $485,000 for the same period last year due to increased collaboration revenue from Otsuka.

Gross research and development expenditures in the third quarter of 2010 were $3.0 million, down 34 percent, compared to $4.6 million in the third quarter of 2009. This decrease is due to lower research and development expenses for MGCD265 and MGCD290. General and administrative expenses in the third quarter of 2010 were $2.7 million, an increase of $1.5 million compared to the third quarter of 2009 as we recorded a $1.5 million expense in relation to the departure of the previous President and Chief Executive Officer. MethylGene incurred a foreign exchange loss of $26,000 in the third quarter of 2010 versus a loss of $188,000 in the third quarter of 2009. The lower loss is the result of lower average U.S. denominated assets and a higher average exchange rate for the Canadian dollar versus the U.S. dollar. The net loss for the third quarter ended September 30, 2010 was $4.8 million or ($0.12) per share compared to a net loss of $5.4 million or ($0.15) per share for the corresponding period last year, reflecting lower operating expenses due to continued cost control efforts.

As of September 30, 2010, the Company had $10.6 million of cash, cash equivalents, and restricted cash. Based on current assumptions, the Company believes that its current cash, cash equivalents, interest income, projected revenues from current collaborations, projected timing of clinical trials and refundable investment tax credits should be sufficient to carry out its planned research and development plans and operations to the end of the first quarter of 2011. Management is actively pursuing various alternatives.

MGCD265 Update

Over 120 patients have been enrolled in three ongoing MGCD265 Phase 1 and Phase 1/2 clinical trials. The compound has been well tolerated and has demonstrated preliminary clinical activity as a single agent and in combination with docetaxel and erlotinib.

In the Phase 1/2 docetaxel-arm of Trial 265-103 (MGCD265 in combination with full-dose docetaxel), the maximum-tolerated dose (MTD) has been reached and the Company is defining the recommended Phase 2 dose. Five patients have been on the study for more than four months. Of these, four non-small cell lung cancer (NSCLC) patients have experienced stable disease for durations ranging from 8 to 13 months. One NSCLC patient achieved a confirmed partial response and the other three patients all had tumor shrinkage accompanying their stable disease. These results exceed the expectation for docetaxel alone. In the erlotinib-arm of Trial 265-103 (MGCD265 in combination with full-dose erlotinib), dose escalation continues and MethylGene believes that it is close to reaching the MTD. Twelve patients have been on study for more than four months. Of these, there is one gastric cancer patient who is currently experiencing stable disease for 11 months. The most frequent MGCD265-related toxicities in both arms of Trial 265-103 are fatigue and diarrhea, consistent with Trials 265-101 and 265-102.

In monotherapy Trial 265-101, seven patients have been on study for more than four cycles. Dose escalation is continuing in order to determine the MTD. In monotherapy Trial 265-102, the MTD has been reached and the recommended Phase 2 dose is being confirmed. Ten patients have been on study for more than four cycles, including a papillary renal cell carcinoma patient and sarcomatoid bladder cancer patient with extended stable disease durations of approximately one year. In both Trials 265-101 and 265-102, MGCD265 is well tolerated with fatigue, diarrhea and elevated lipase the most common toxicities.

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 1 clinical studies; and mocetinostat (MGCD0103), an oral, isoform-selective HDAC inhibitor for cancer which has been in multiple Phase 2 clinical trials and is currently in a Phase 2 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 1 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 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 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 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.

MethylGene Inc.                                                            
Incorporated under the Canada Business Corporation Act                     

                             UNAUDITED INTERIM                             
                              BALANCE SHEETS                               



(In thousands of Canadian dollars)                                         

                                              September 30,   December 31, 
                                                       2010           2009 
                                                          $              $ 
                                             ----------------------------- 

ASSETS                                                                     
Current                                                                    
Cash and cash equivalents                             9,629         14,210 
Marketable securities                                     -          3,863 
Restricted cash                                         200              - 
Research and development tax credits                                       
 receivable                                           1,525            992 
Unbilled revenue                                        422            328 
Interest receivable                                      17             17 
Other current assets                                    917          1,033 
Assets held for sale                                     57              - 
                                             ----------------------------- 
Total current assets                                 12,767         20,443 
Security deposits                                       210            385 
Restricted cash                                         800              - 
Property, plant and equipment                           554          1,173 
                                             ----------------------------- 
                                                     14,331         22,001 
                                             ----------------------------- 
                                             ----------------------------- 

LIABILITIES AND SHAREHOLDERS' EQUITY                                       
Current                                                                    
Accounts payable and accrued liabilities              5,147          5,811 
Current portion of unearned revenue                     584            584 
Current portion of lease abandonment cost               192            196 
                                             ----------------------------- 
Total current liabilities                             5,923          6,591 
Unearned revenue                                      2,091          2,529 
Lease abandonment cost                                  236            380 
                                             ----------------------------- 
Total liabilities                                     8,250          9,500 
                                             ----------------------------- 

Shareholders' equity                                                       
Capital stock                                       119,189        119,189 
Contributed surplus                                  15,336          9,014 
Deficit                                            (128,443)      (115,712)
Accumulated other comprehensive income                   (1)            10 
                                             ----------------------------- 
Total shareholders' equity                            6,081         12,501 
                                             ----------------------------- 
                                                     14,331         22,001 
                                             ----------------------------- 
                                             ----------------------------- 




MethylGene Inc.                                                            


                             UNAUDITED INTERIM                             
                   STATEMENTS OF OPERATIONS AND DEFICIT                    




(In thousands of                                                           
 Canadian dollars,                                                         
except for share and                                                       
 per share amounts)                                                        


                              Three-month period         Nine-month period 
                             ended September 30,       ended September 30, 
                               2010         2009         2010         2009 
                                  $            $            $            $ 
                       --------------------------------------------------- 

REVENUES                                                                   
Research collaborations                                                    
 and contract revenues          441          347        1,134        2,125 
License and up-front                                                       
 fees                           146          138          439          413 
                       --------------------------------------------------- 
                                587          485        1,573        2,538 
                       --------------------------------------------------- 

EXPENSES                                                                   
Research and                                                               
 development                  3,036        4,579        9,801       17,741 
Government assistance          (424)        (238)        (814)        (803)
                       --------------------------------------------------- 
Net research and                                                           
 development                  2,612        4,341        8,987       16,938 
General and                                                                
 administrative               2,739        1,283        5,280        3,621 
Interest income                 (17)         (13)         (33)        (169)
Amortization and write-                                                    
 off of property, plant                                                    
 and equipment                    3            3            9           13 
Gain on disposal of                                                        
 property, plant and                                                       
 equipment                       (2)           -           (7)          (6)
Corporate and other                                                        
 transaction costs                -           42            -          160 
Bank charges and                                                           
 interest                         7            6           24           21 
Foreign exchange loss            26          188           40          269 
                       --------------------------------------------------- 
                              5,368        5,850       14,300       20,847 
                       --------------------------------------------------- 
Loss before income tax       (4,781)      (5,365)     (12,727)     (18,309)
Future income tax                                                          
 expense                        (14)         (55)          (4)        (139)
                       --------------------------------------------------- 
Net loss for the period      (4,795)      (5,420)     (12,731)     (18,448)

Deficit, beginning of                                                      
 period                    (123,648)    (105,150)    (115,712)     (92,122)
                       --------------------------------------------------- 
Deficit, end of period     (128,443)    (110,570)    (128,443)    (110,570)
                       --------------------------------------------------- 
                       --------------------------------------------------- 

Basic and diluted loss                                                     
 per share                    (0.12)       (0.15)       (0.32)       (0.50)
Weighted average number                                                    
 of common shares        40,418,580   36,682,398   40,418,580   36,682,398 
                       --------------------------------------------------- 




                             UNAUDITED INTERIM                             
                     STATEMENTS OF COMPREHENSIVE LOSS                      



(In thousands of                                                           
 Canadian dollars)                                                         



                              Three-month period         Nine-month period 
                             ended September 30,       ended September 30, 
                               2010         2009         2010         2009 
                                  $            $            $            $ 
                       --------------------------------------------------- 

Net loss for the period      (4,795)      (5,420)     (12,731)     (18,448)
                       --------------------------------------------------- 

Other comprehensive                                                        
 loss                                                                      
Unrealized gains                                                           
 (losses) on cash                                                          
 equivalents and                                                           
 marketable securities,                                                    
 net of income tax                                                         
 expense of nil for the                                                    
 three-month period                                                        
 ended September 30,                                                       
 2010 (2009 - nil) and                                                     
 $11 for the nine-month                                                    
 period ended September                                                    
 30, 2010 (2009 - $81)           (1)         (54)          24          127 

Reclassification to net                                                    
 loss of realized gains                                                    
 on cash equivalents                                                       
 and marketable                                                            
 securities, net of                                                        
 income tax recovery of                                                    
 $14 for the three-                                                        
 month period ended                                                        
 September 30, 2010                                                        
 (2009 - $55) and a tax                                                    
 recovery of $15 for                                                       
 the nine-month period                                                     
 ended September 30,                                                       
 2010 (2009 - $220)             (33)        (122)         (35)        (491)
                       --------------------------------------------------- 
                                (34)        (176)         (11)        (364)
                       --------------------------------------------------- 
Comprehensive loss for                                                     
 the period                  (4,829)      (5,596)     (12,742)     (18,812)
                       --------------------------------------------------- 
                       --------------------------------------------------- 




MethylGene Inc.                                                            

                             UNAUDITED INTERIM                             
                         STATEMENTS OF CASH FLOWS                          


(In thousands of                                                           
 Canadian dollars)                                                         

                              Three-month period         Nine-month period 
                             ended September 30,       ended September 30, 
                               2010         2009         2010         2009 
                                  $            $            $            $ 
                        -------------------------------------------------- 

OPERATING ACTIVITIES                                                       
Net loss for the period      (4,795)      (5,420)     (12,731)     (18,448)
Items not affecting cash                                                   
  Amortization of                                                          
   property, plant and                                                     
   equipment                    160          241          568          758 
  Write-off of property,                                                   
   plant and equipment            -            -            -            2 
  Gain on disposal of                                                      
   property, plant and                                                     
   equipment                     (2)           -           (7)          (6)
  Stock-based                                                              
   compensation expense           9           21           56          131 
  Future income tax                                                        
   expense                       14           55            4          139 
                        -------------------------------------------------- 
                             (4,614)      (6,110)     (12,110)   (17,424!) 
Net change in non-cash                                                     
 working capital                                                           
 balances related to                                                       
 operations                     525         (869)      (1,148)        (666)
Change in long-term                                                        
 portion of unearned                                                       
 revenue                       (145)        (138)        (438)        (412)
                        -------------------------------------------------- 
Cash flows related to                                                      
 operating activities        (4,234)      (6,110)     (13,696)     (18,502)
                        -------------------------------------------------- 

INVESTING ACTIVITIES                                                       
Acquisitions of                                                            
 property, plant and                                                       
 equipment                       (3)          (7)          (8)         (16)
Purchases of marketable                                                    
 securities                       -       (1,500)      (2,751)     (25,578)
Restricted cash                   -            -       (1,000)             
Proceeds from maturities                                                   
 of marketable                                                             
 securities                   1,652       13,177        6,614       53,119 
Proceeds from disposal                                                     
 of property, plant and                                                    
 equipment                        3            -            9           11 
                        -------------------------------------------------- 
Cash flows related to                                                      
 investing activities         1,652       11,670        2,864       27,536 
                        -------------------------------------------------- 

FINANCING ACTIVITIES                                                       
Proceeds from                                                              
 reorganization                  31            -        7,216            - 
Costs of reorganization         (50)           -         (950)           - 
                        -------------------------------------------------- 
Cash flows related to                                                      
 financing activities           (19)           -        6,266            - 
                        -------------------------------------------------- 

Foreign exchange gain                                                      
 (loss) on cash                                                            
 equivalents held in                                                       
 foreign currency               (48)        (138)         (15)          46 
                        -------------------------------------------------- 

Increase (decrease) in                                                     
 cash and cash                                                             
 equivalents                 (2,649)       5,422       (4,581)       9,080 
Cash and cash                                                              
 equivalents, beginning                                                    
 of period                   12,278        9,605       14,210        5,947 
                        -------------------------------------------------- 
Cash and cash                                                              
 equivalents, end of                                                       
 period                       9,629       15,027        9,629       15,027 
                        -------------------------------------------------- 

Cash and cash                                                              
 equivalents consist of:                                                   
Cash                          1,162        3,549        1,162        3,549 
Cash equivalents              8,467       11,478        8,467       11,478 
                        -------------------------------------------------- 
                              9,629       15,027        9,629       15,027 
                        -------------------------------------------------- 
                        -------------------------------------------------- 


Contacts:
Rx Communications Group, LLC
Rhonda Chiger
917-322-2569
rchiger@rxir.com

MethylGene Inc.
Charles Grubsztajn
President & CEO
514-337-3333 ext. 373
mctavishk@methylgene.com

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