New direction comes after strategic review of pipeline and at the expense of the company’s antisense compound.

MethylGene will not pursue additional clinical trials for MG98, its second-generation antisense compound targeting DNA methyltransferase, based on recent R&D successes in its small molecule oncology programs and a strategic review of its cancer pipeline.

This decision is made with its North American co-development partner for the compound, MGI Pharma. The companies have agreed to seek alternative development partners or arrangements for the MG98 program.

MethylGene says that it will continue to focus its clinical development investment in more commercially attractive alternatives, such as MGCD0103, its oral isotype-selective histone deacetylase (HDAC) inhibitor that is currently in Phase II monotherapy and Phase I/II combination trials; and MGCD265, its recently selected oral, multitargeted kinase (c-MET) clinical candidate. The company will also continue to concentrate its efforts on 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 IND applications are expected in 2007.

By not initiating additional MG98 clinical trials, approximately $3 million will be reallocated to these other programs in 2007 and 2008. The company will still maintain its forecast of sufficient cash resources into the fourth quarter of 2008.

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