MONTREAL, QUEBEC--(Marketwire - March 15, 2012) - MethylGene Inc. (TSX:MYG) today reported financial results for the fourth quarter and full year ended December 31, 2011.

Highlights

• During the fourth quarter we commenced our first randomized, controlled Phase 2 study with MGCD290, and our two Phase 1 dose escalation studies with MGCD265 continued to enroll patients.
• On January 4^th, 2012 we strengthened our management team with the appointment of Rachel Humphrey, MD as Executive Vice President and Chief Medical Officer.
• On November 13^th, 2011 we reported final results for MGCD265 Trial 265-102 at the 2011 AACR-NCI-EORTC Molecular Targets and Cancer Therapeutics Conference.
• We finished the quarter with over $29 million in cash and equivalents to fund our development programs.

"Last year was a very successful year for MethylGene," said Charles Grubsztajn, President and CEO of MethylGene. "In 2011 we raised $34.5 million from thought-leading investors, made key additions to our management team and Board of Directors, reported data on MGCD265 at ASCO in June, and commenced a randomized, controlled Phase 2 trial with our first-in-class antifungal agent MGCD290. We expect continued clinical progress, and to report additional clinical data, in 2012."

International Financial Reporting Standards

The financial statements of the Company for the year ended December 31, 2011, have been prepared for the first time in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). They have been prepared: on a historical cost basis, except for financial instruments that have been measured at fair value; in accordance with IAS 1, Presentation of Financial Statements; in accordance with IFRS 1, First-time Adoption of IFRS; and in accordance with IFRS standards and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these statements.

Fourth Quarter 2011 Financial Results Reported in Canadian Dollars

Revenues for the fourth quarter of 2011 of $468,000 were $348,000 lower versus the fourth quarter of 2010 due to lower research collaborations and contract revenues from Otsuka Pharmaceutical Co. Ltd. ("Otsuka"), as the research component of our collaboration agreement ended in June 2011.

Research and development expenditures, net of investment tax credits, for the fourth quarter of 2011 were $3.1 million compared to $1.9 million for the fourth quarter of 2010. This increase is mainly due to higher compensation and third-party clinical costs as we increased clinical development activities related to both of our lead programs, MGCD290 and MGCD265. These increases were partially offset by lower lease-related costs.

General and administrative expenses in the fourth quarter of 2011 were $1.0 million compared to $879,000 in the fourth quarter of 2010. This increase relates to higher compensation costs partially offset by lower professional fees.

Financial income of $82,000, relating primarily to interest income, in the fourth quarter of 2011 was $67,000 higher compared to the fourth quarter of 2010 due to increased cash balances and higher average interest rates versus the prior year. The Company recorded a foreign exchange loss of $9,000 in the fourth quarter of 2011 versus a loss of $17,000 in the fourth quarter of 2010.

The net loss and comprehensive loss for the fourth quarter of 2011 was $3.6 million, or ($0.01) per share, versus a net loss and comprehensive loss of $2.0 million or ($0.05) per share for the same period last year. The improved loss per share relates to the higher average number of shares outstanding at the respective quarter ends, partially offset by the higher loss in the fourth quarter of 2011 compared to the fourth quarter of 2010.

Full Year 2011 Financial Results in Canadian Dollars

Revenues for 2011 of $3.1 million were $703,000 higher versus 2010, as higher license and up-front fees from Otsuka and Taiho Pharmaceutical Co. Ltd. offset lower research collaborations and contract revenues from Otsuka as the research component of the collaboration agreement ended in June 2011.

Research and development expenditures, net of investment tax credits, for 2011 were $8.8 million versus $10.9 million for 2010. This decrease is mainly due to lower lease-related costs and lower compensation costs. Third-party clinical development costs in connection with our lead programs MGCD290 and MGCD265 were marginally higher in 2011 as compared to 2010.

General and administrative expenses in 2011 were $4.3 million versus $6.1 million in 2010. This decrease relates primarily to the one-time costs of $1.5 million associated with the departure of the previous CEO in 2010, which was partially offset by higher non-cash stock option expenses in 2011.

Financial income of $262,000 for 2011, relating primarily to interest income, was $238,000 higher versus 2010 due to increased cash balances and higher average interest rates versus the prior year. The Company recorded a foreign exchange gain of $42,000 in 2011 compared to a loss of $72,000 in 2010.

The net loss and comprehensive loss for 2011 was $9.7 million, or ($0.04) per share, versus a net loss and comprehensive loss of $14.7 million or ($0.36) per share for the same period last year. The improved loss per share relates to the higher average number of shares outstanding at the respective year ends and the lower loss in 2011 compared to 2010.

Cash, cash equivalents, marketable securities and restricted cash totaled $29.6 million as at December 31, 2011 compared to $8.6 million as at December 31, 2010. Due to increased clinical activity, the Company believes it has sufficient financial resources to carry forward its current clinical development and operating plans only into the fourth quarter of 2013.

About MethylGene

MethylGene Inc. (TSX:MYG) is a small molecule drug development company that is advancing two novel therapeutics for cancer and infectious disease in human clinical trials. The Company's lead product candidates are: MGCD290, an oral antifungal agent targeting the fungal Hos2 enzyme, that is currently in Phase 2 trials for vulvovaginal candidiasis and MGCD265, an oral Met/VEGF receptor kinase inhibitor that is in Phase 1/2 clinical trials for solid tumor cancers. MethylGene owns all rights to its lead product candidates, and has partnerships with Otsuka Pharmaceutical Co. Ltd., Taiho Pharmaceutical Co. Ltd., and EnVivo Pharmaceuticals, Inc. for its other pipeline programs.

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 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

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