MONTREAL, QUEBEC, Jul 30, 2008 (MARKET WIRE via COMTEX) ----MethylGene Inc. (TSX: MYG), today announced operational and financial results for the second quarter ended June 30, 2008.

Financial Results Reported in Canadian Dollars

Revenue for the three-month period ended June 30, 2008 was $4.3 million compared to revenue of $3.7 million for the second quarter of 2007. This $627,000 increase was primarily due to higher revenue from partners Celgene and Otsuka related to clinical development and research activities. Total expenses for the quarter ended June 30, 2008 were $11.7 million compared to expenses of $9.9 million for the second quarter of 2007. The increase in expenses was primarily due to increased expenditures for the MGCD0103 and MGCD265 clinical programs, Investigational New Drug (IND) enabling studies for MGCD290, higher professional and consulting fees, legal fees and the inclusion of corporate/transaction costs which had previously been capitalized. The Company reported a net loss for the quarter ended June 30, 2008 of $7.4 million or $0.20 per share compared to a net loss of $6.2 million or $0.17 per share for the same period last year.

Revenue for the six-month period ended June 30, 2008 was $8.5 million compared to revenue of $7.2 million for the same period in 2007. Total expenses for the six-month period were $21.1 million compared to $16.7 million for the same six-month period last year. The Company reported a net loss for the six months ended June 30, 2008 of $12.6 million or $0.34 compared to a net loss of $9.5 million or $0.27 for the same period last year.

At June 30, 2008 MethylGene had $48.3 million in cash, cash equivalents and marketable securities. The Company believes that its current financial resources will be sufficient to carry out its current research and development plans into the third quarter of 2009.

About MethylGene

MethylGene Inc. (TSX: MYG) is a publicly-traded, clinical stage, biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics for cancer. The Company's clinical-stage oncology products include lead compound, MGCD0103, an oral, isoform-selective HDAC inhibitor and MGCD265, an oral, multi-targeted kinase inhibitor targeting the c-Met, Tie-2, Ron and VEGF receptor tyrosine kinases. In addition, MethylGene's preclinical programs include: MGCD290, an HDAC inhibitor used in combination with azoles for fungal infections, a kinase inhibitor program for ocular diseases, and a sirtuin inhibitor program for cancer. MethylGene's development and commercialization partners include Celgene Corporation, Taiho Pharmaceutical Co. Ltd., Otsuka Pharmaceutical Co. Ltd. and EnVivo Pharmaceuticals. 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 MGCD290; the ability to scale up, formulate and manufacture sufficient GMP, clinical or commercialization quantities of MGCD0103, MGCD265 or MGCD290, 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 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, which you are urged to read, as described in MethylGene's Annual Information Form for the fiscal year ending December 31, 2007, under the heading 'risk factors,', 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 Quebec Companies Act UNAUDITED INTERIM BALANCE SHEETS (In thousands of Canadian
   dollars) June 30, December 31, 2008 2007 $ $ --------------------------------------------------------------------- ASSETS
   Current Cash and cash equivalents 26,597 3,208 Available-for-sale marketable securities 21,728 57,525 Research and development
   tax credits receivable 1,232 465 Unbilled revenue 4,381 4,196 Interest receivable 257 612 Other current assets 1,326 886 ---------------------------------------------------------------------
   Total current assets 55,521 66,892 Security deposits 325 325 Property, plant and equipment 2,630 3,089 Intangible assets 1,955
   2,007 --------------------------------------------------------------------- 60,431 72,313 ---------------------------------------------------------------------
   --------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts
   payable and accrued liabilities 8,134 7,680 Current portion of unearned revenue 4,344 4,117 Current portion of lease abandonment
   cost 177 186 --------------------------------------------------------------------- Total current liabilities 12,655 11,983
   Unearned revenue 14,252 14,558 Lease abandonment cost 439 524 ---------------------------------------------------------------------
   Total liabilities 27,346 27,065 --------------------------------------------------------------------- Shareholders' equity
   Capital stock 118,095 118,095 Contributed surplus 8,699 8,445 Deficit (93,798) (81,196) Accumulated other comprehensive income
   (loss) 89 (96) --------------------------------------------------------------------- Total shareholders' equity 33,085 45,248
   --------------------------------------------------------------------- 60,431 72,313 ---------------------------------------------------------------------
   --------------------------------------------------------------------- UNAUDITED INTERIM STATEMENTS OF OPERATIONS AND DEFICIT
   (In thousands of Canadian dollars, except for share and per share amounts) Three-month periods Six-month periods ended June
   30, ended June 30, -------------------------------------------------------------------------- 2008 2007 2008 2007 $ $ $ $
   -------------------------------------------------------------------------- REVENUES Research collaborations and contract revenues
   3,192 2,635 6,391 5,160 License and up-front fees 1,088 1,018 2,117 2,036 --------------------------------------------------------------------------
   4,280 3,653 8,508 7,196 -------------------------------------------------------------------------- EXPENSES Research and development
   10,469 8,803 19,360 15,538 Government assistance (419) (313) (783) (678) --------------------------------------------------------------------------
   Net research and development 10,050 8,490 18,577 14,860 General and administrative 1,378 1,244 3,059 2,428 Interest income
   (419) (833) (1,012) (1,589)Amortization of property, plant and equipment 4 5 8 9 Write-off of property, plant & equipment
   - 33 - 33 Corporate and other transaction costs 503 - 503 - Bank charges and interest 9 2 19 16 Foreign exchange loss (gain)
   126 918 (44) 899 -------------------------------------------------------------------------- 11,651 9,859 21,110 16,656 --------------------------------------------------------------------------
   Net loss for the period (7,371) (6,206) (12,602) (9,460) Deficit, beginning of period (86,427) (62,428) (81,196) (59,174)
   -------------------------------------------------------------------------- Deficit, end of period (93,798) (68,634) (93,798)
   (68,634) -------------------------------------------------------------------------- --------------------------------------------------------------------------
   Basic and diluted loss per share (0.20) (0.17) (0.34) (0.27) --------------------------------------------------------------------------
   -------------------------------------------------------------------------- Weighted average number of common shares outstanding
   36,682,398 36,673,509 36,682,398 34,783,859 -------------------------------------------------------------------------- --------------------------------------------------------------------------
   UNAUDITED INTERIM STATEMENTS OF COMPREHENSIVE LOSS (In thousands of Canadian dollars) Three-month periods Six-month periods
   ended June 30, ended June 30, -------------------------------------------------------------------------- 2008 2007 2008 2007
   $ $ $ $ -------------------------------------------------------------------------- Net loss for the period (7,371) (6,206)
   (12,602) (9,460) -------------------------------------------------------------------------- Other comprehensive income (loss)
   Change in unrealized gains (losses) on available-for- sale cash equivalents and marketable securities 161 (202) 292 (405)
   Reclassification adjustment to net loss for realized losses (gains) on available -for-sale cash equivalents and marketable
   securities (171) 133 (107) 175 -------------------------------------------------------------------------- (10) (69) 185 (230)
   -------------------------------------------------------------------------- Comprehensive loss for the period (7,381) (6,275)
   (12,417) (9,690) -------------------------------------------------------------------------- --------------------------------------------------------------------------
   UNAUDITED INTERIM STATEMENTS OF CASH FLOWS (In thousands of Canadian dollars) Three-month periods Six-month periods ended
   June 30, ended June 30, -------------------------------------------------------------------------- 2008 2007 2008 2007 $ $
   $ $ -------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss for the period
   (7,371) (6,206) (12,602) (9,460) Items not affecting cash: Amortization of property, plant and equipment 298 332 612 678 Amortization
   of intangible assets 32 40 63 78 Write-off of property, plant and equipment - 33 - 33 Stock-based compensation expense 92
   181 254 247 -------------------------------------------------------------------------- (6,949) (5,620) (11,673) (8,424) Net
   change in non-cash working capital balances related to operations 1,905 (605) (442) (2,317) Unrealized gain on available -for-sale
   cash equivalents 11 133 152 6 Change in long-term portion of unearned revenue (1,087) (1,010) (314) (1,982) --------------------------------------------------------------------------
   Cash flows related to operating activities (6,120) (7,102) (12,277) (12,717) --------------------------------------------------------------------------
   INVESTING ACTIVITIES Acquisitions of property, plant and equipment (42) (150) (153) (316) Acquisitions of intangible assets
   (11) (130) (11) (263) Purchases of available-for- sale marketable securities (17,681) (44,845) (43,683) (73,681) Proceeds
   from maturities of available-for-sale marketable securities 27,499 27,630 79,513 83,393 --------------------------------------------------------------------------
   Cash flows related to investing activities 9,765 (17,495) 35,666 9,133 --------------------------------------------------------------------------
   FINANCING ACTIVITIES Issuance of common shares - 54 - 20,192 Share issue costs - (30) - (1,403) --------------------------------------------------------------------------
   Cash flows related to financing activities - 24 - 18,789 --------------------------------------------------------------------------
   Increase (decrease) in cash and cash equivalents 3,645 (24,573) 23,389 15,205 Cash and cash equivalents, beginning of period
   22,952 40,458 3,208 680 -------------------------------------------------------------------------- Cash and cash equivalents,
   end of period 26,597 15,885 26,597 15,885 -------------------------------------------------------------------------- --------------------------------------------------------------------------
   Cash and cash equivalents consist of: Cash 2,136 1,779 2,136 1,779 Cash equivalents 24,461 14,106 24,461 14,106 --------------------------------------------------------------------------
   26,597 15,885 26,597 15,885 -------------------------------------------------------------------------- --------------------------------------------------------------------------
   

 Contacts: Rx Communications Group, LLC Rhonda Chiger 917-322-2569 rchiger@rxir.com MethylGene Inc. Donald F. Corcoran
   President & CEO 514-337-3333 ext. 373 mctavishk@methylgene.com 

SOURCE: MethylGene Inc.

mailto:rchiger@rxir.com
   mailto:mctavishk@methylgene.com 

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