MethylGene and EnVivo Pharmaceuticals to collaborate in Neurodegenerative Diseases

Melthylgene and EnVivo Pharmaceuticals to Collaborate in Neurogenerative Diseases - EnVivo and MethylGene to develop isotypic selective HDAC inhibitors to treat neurodegenerative diseases

Montreal, Québec, July 13, 2004 - MethylGene Inc. (TSX:MYG), a biopharmaceutical company, and EnVivo Pharmaceuticals, Inc., a private U.S. biopharmaceutical company focusing on the treatment and prevention of neurodegenerative diseases, today announced that EnVivo has exercised its option to enter into an exclusive research, collaboration and license agreement to exploit MethylGene’s isotypic selective small molecule histone deacetylases (HDAC) inhibitors for the treatment of neurodegenerative diseases such as Alzheimer’s, Parkinson’s and Huntington’s disease.

In March 2004, MethylGene and EnVivo entered into a proof of concept and option agreement to discover HDAC inhibitors in neurodegenerative diseases. MethylGene received a contract research payment and an upfront option fee. Upon execution of the collaboration agreement, MethylGene will receive an upfront license payment and contract research payments totaling U.S.$1.1 million. MethylGene will also receive a milestone payment based on an early stage clinical development milestone. The parties intend to jointly fund research and development and commercialization as well as equally share resulting profits, subject to opt-out provisions.

"This collaboration is consistent with our strategy to build value around our isotypic selective HDAC expertise beyond our current oncology focus. This strategy entails identifying collaborators, such as EnVivo, with excellent biology and in vivo expertise in non-oncology indications to share research, development and commercialization," said Donald F. Corcoran, President and CEO of MethylGene. "Our goal is to leverage our isotypic selective HDAC inhibitor technology in non-oncology indications by establishing proof of concept and intellectual property with partners and moving quickly toward clinical development."

"Using EnVivo’s proprietary humanized Drosophila discovery platform and vertebrate assays, we rapidly characterize novel compounds that may be effective as new treatments for neurodegenerative diseases. HDACs are attractive pharmaceutical targets of potential high relevance to these diseases, and we are looking forward to working with MethylGene as we move ahead with this exciting new approach," said Dr. David A. Lowe, President and CEO of EnVivo.

Upon execution of the agreement, MethylGene will contribute its proprietary chemistry and functional genomics expertise for HDAC inhibitors to be further researched in collaboration with EnVivo’s proprietary in vivo models and discovery platforms for neurodegenerative diseases.

About 4.5 million patients in the United States suffer from Alzheimer’s disease, 1.5 million from Parkinson’s disease and 30,000 from Huntington’s disease. The worldwide market for drugs to treat these diseases is currently estimated at more than U.S. $3.5 billion.

About HDAC
Histone deacetylases (HDAC) are a family of 11 enzymes that are involved in the regulation of gene expression and may as such be a master regulator for disease. It has been established in the scientific literature and observed by our scientists and potential collaborators that isotypic selective inhibition of HDAC enzymes may have the potential to impact diseases including cancer, diabetes, inflammation, cardiovascular and neurodegenerative diseases. It has been demonstrated that transcriptional dysregulation by HDAC may play a role in neurodegenerative disease and that HDAC therapy may prevent or slow down the neurodegenerative disease process. MethylGene is currently developing MGCD0103, an isotype selective inhibitor targeting specific HDAC enzymes involved in the regulation of tumour suppressor genes in cancer. MGCD0103 is currently in two Phase I monotherapy trials against solid tumors.

About EnVivo
EnVivo Pharmaceuticals (located in Watertown, MA) is a biopharmaceutical company dedicated to discovering and developing drugs for central nervous system (CNS) disorders currently focusing on Alzheimer’s Disease, Parkinson’s Disease, Huntington’s Disease, and Spinocerebellar ataxias. The company has created a new paradigm in drug discovery using a proprietary screening platform based on humanized Drosophila disease models to rapidly identify hits that are then tested in vertebrate assays. For more information about EnVivo, please visit www.envivopharma.com.

About MethylGene
MethylGene is a biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics with an initial focus on cancer and infectious disease. Two cancer product candidates, MG98 and MGCD0103, are currently in clinical trials. MG98 is partnered with MGI Pharma in North America, and MGCD0103 is partnered with Taiho Pharmaceuticals for certain Asian countries. Both product candidates target enzymes that regulate gene expression, especially the expression of tumor suppressor genes. MG98 is currently in a Phase I dose-escalation monotherapy trial and is expected to enter a randomized two-step Phase II combination trial with interferon alpha in metastatic renal cell cancer in Q3 2004. MGCD0103 is currently in two Phase I monotherapy trials against solid tumors. In infectious disease, MethylGene is developing small molecule _-lactamase inhibitors in collaboration with Merck that target antibiotic resistance by increasing the effectiveness of existing _-lactam antibiotics. Please visit www.methylgene.com.

Except for historical information, this press release may contain forward-looking statements, which reflect the Company’s current expectation regarding future events. These forward-looking statements involve risk and uncertainties, which may cause but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time to time in the Company’s ongoing quarterly and annual reporting.

For MethylGene Inc.:
Donald F. Corcoran
President & CEO
MethylGene Inc.
Tel.: 514-337-3333 ext. 224
Fax: 514-337-0550
corcorand@methylgene.com

James Smith
The Equicom Group
Investor and Media Inquiries
Tel: 416-815-0700 ext. 229
Fax: 416-815-0080
jsmith@equicomgroup.com

For EnVivo Pharmaceuticals, Inc.:
Media Relations
Tel: 617-563-5800