MONTREAL, QUEBEC--(Marketwire - May 14, 2012) - MethylGene Inc. (TSX:MYG) today reported financial results for the first quarter ended March 31, 2012 and provided an update on clinical programs.

Highlights

• Rachel W. Humphrey, MD was appointed as Executive Vice President and Chief Medical Officer on January 4, 2012.
• During this quarter, we strengthened our Board of Directors with the appointments of Henry J. Fuchs MD and Peggy Mulligan FCA.
• Our MGCD290 Phase II clinical trial and MGCD265 Phase I/II clinical trials continued to enroll patients.
• Preclinical data from our MGCD265 oncology program was presented at the American Association for Cancer Research Annual Meeting.
• In May 2012, we opened our US office in Princeton, New Jersey.
• We finished the quarter with $25.1 million in cash and cash equivalents.

"MethylGene continued to make solid progress in this quarter," said Charles Grubsztajn, President and CEO of MethylGene. "The clinical programs for both MGCD290 and MGCD265 continue to progress, and we made key additions to our management team and Board of Directors to ensure that we have the optimal balance of skills and experience to lead us through the next steps."

First Quarter 2012 Financial Results Reported in Canadian Dollars

The Company's financial statements for the period ended March 31, 2012 have been prepared in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB).

We had minimal revenues in the first quarter ended March 31, 2012 compared to $1.3 million for the first quarter of 2011, as the research component of the agreement with Otsuka Pharmaceutical Co. Ltd. ended in June 2011 and we had fully amortized the remaining deferred revenues for both Otsuka and Taiho Pharmaceutical Co. Ltd. in the second and fourth quarters of 2011, respectively.

Research and development expenditures, net of investment tax credits, for the first quarter of 2012 were $2.2 million compared to $1.8 million for the first quarter of 2011. This increase is due to increased clinical development activity with both the MGCD290 and MGCD265 programs, increased compensation costs with the appointment of the Chief Medical Officer and was partly offset by higher investment tax credits.

General and administrative expenses in the first quarter of 2012 were $1.2 million compared to $1.0 million in the first quarter of 2011. This primarily relates to higher non-cash stock option expenses.

Financial income of $69,000, relating primarily to interest income, in the first quarter of 2012 was $62,000 higher compared to the first quarter of 2011 due to increased cash balances versus the prior year. The Company recorded a foreign exchange gain of nil in the first quarter of 2012 compared to a loss of $11,000 in the first quarter of 2011.

The net loss and comprehensive loss for the first quarter ended March 31, 2012 was $3.4 million, or ($0.01) per share, compared to a net loss and comprehensive loss of $1.6 million, or ($0.04) per share, for the same period last year. The decreased loss per share relates to the higher number of shares outstanding at the end of the first quarter 2012 versus the first quarter of 2011.

Cash, cash equivalents, marketable securities and restricted cash totaled $25.1 million as at March 31, 2012 compared to $29.6 million on December 31, 2011. The Company believes it has sufficient financial resources to carry forward its current clinical development and operating plans into the fourth quarter of 2013.

MGCD290 Clinical Development Update

MGCD290 is a first-in-class, selective, oral small molecule inhibitor of the fungal enzyme Hos2, initially being developed in combination with fluconazole, the most widely used triazole antifungal. We recently commenced a randomized controlled phase II trial of MGCD290 in moderate to severe acute vulvovaginal candidiasis (VVC), a form of yeast infection for which there is only limited response from standard treatments. This trial will assess the effectiveness of MGCD290 in combination with fluconazole, as compared to fluconazole alone. Initially, a higher than expected number of patients were ineligible at screening, leading us to amend the protocol and add additional sites in order to accelerate recruitment. We expect that most of the new sites will be open under the new protocol this quarter. We continue to expect to report topline data from this trial around year end 2012. We are also planning to initiate a second randomized trial in VVC. We completed a fifth phase I study in the first quarter of 2012 to assess the effect of food on MGCD290 bioavailability, as well as to evaluate its distribution to clinically relevant tissues. The study has been completed and no serious adverse events were reported. The data suggest food increased exposure and that MGCD290 was present in clinically relevant tissues. The data from this trial will be used to guide future studies.

MGCD265 Clinical Development Update

MGCD265 is a rationally designed, orally available kinase inhibitor targeting a unique spectrum of RTKs including Met, VEGFR 1, 2, and 3, RON and Tie-2. We continue to enroll patients in MGCD265 phase I/II monotherapy trials and combination trials with erlotinib or docetaxel and as of April 30, 2012 over 198 patients have been treated in these trials. We also recently completed a food effect study with MGCD265. Preliminary results from this study suggest that combining MGCD265 with food improves exposure to the drug and we have incorporated this into our ongoing trials. Our development plan for MGCD265 is to expand the monotherapy and combination therapy trials with selected cohorts of tumor types once the maximum tolerated dose is reached. The data from the expansion cohorts will be used to guide randomized phase II studies.

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 II trials for vulvovaginal candidiasis and MGCD265, an oral Met/VEGF receptor kinase inhibitor that is in Phase I/II 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 our other programs; the ability to scale up, formulate and manufacture sufficient GMP, clinical or commercialization quantities of MGCD265, MGCD290 or our other products, 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 or MGCD290. 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 expressly disclaims any duty, obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in MethylGene's expectations with regard thereto of any change in events, conditions or circumstances on which any such statements are based except in accordance with law.