SAN DIEGO, CA July 18, 2000 --
Metabasis Therapeutics, Inc. today announced that it has completed a private placement of preferred stock that raised $13 million for the San Diego based biotechnology company. The investors were MPM Capital Management and Interwest Partners. This represents the first round of funding since Metabasis began operating as an independent, privately held company following a restructuring and management buyout in June 1999. The company intends to use the funds to further support the development of its novel treatment for type 2 diabetes that is set to enter the clinic next year and to expand its focus on drugs which specifically target the liver using its proprietary HepDirect™ Technology.
Dr. Paul Laikind, Chairman, President and CEO of the company stated, "We are very pleased to have two of the leading medical technology investment groups, namely MPM and Interwest, invest in our company. In addition to providing funding, they bring expertise and experience to the company that will help us achieve our business goals. This private placement is an important step in our plan to establish Metabasis as a leading company for the development of small molecules for the treatment of important, often difficult to treat diseases. Since establishing Metabasis in 1997 and achieving our independence last year from SICOR, Inc., we have made tremendous progress. We have completely restructured and refocused the company to target exciting new opportunities that build on the strengths and know-how we have developed over the years. This has led to development of a new treatment for diabetes and a liver targeting technology that allows us to develop drugs for diseases such as hepatitis, liver cancer and liver fibrosis".
In collaboration with Sankyo Co., Ltd., Metabasis is developing a new class of drugs to treat patients with diabetes. The drugs are potent and selective inhibitors of the gluconeogenesis pathway. This pathway is responsible for the abnormal overproduction of glucose by the liver of patients with Type 2 diabetes. Gluconeogenesis inhibitors are expected to treat both early and late stage diabetics either alone or in combination with other diabetes drugs including the relatively new class of drugs known as insulin sensitizers. The collaboration with Sankyo was extended last year and the companies announced that a clinical candidate had been selected with clinical trials scheduled to begin in 2001.

Dr. Mark Erion, Executive Vice President of Research, said, "We are very pleased with the progress that we and our partner, Sankyo, are making on the diabetes project. Diabetes is a debilitating and often fatal disease that touches the lives of over 16 million people in the United States alone. Our research supports the belief that specifically targeting liver glucose production will play a major role in the management of this disease. We are looking forward to beginning the first clinical trials next year. Based on the expected activity of our drug we should know if we are achieving the desired effect relatively early in the clinical testing program."

Metabasis's second major research and development focus is on the HepDirect™ Technology, a platform technology that enables the company to target drugs specifically to the liver. The HepDirect™ Technology involves adding a small proprietary group to a known drug rendering it inactive except in the liver, where it is converted to its biologically active form. Accordingly, the technology enables higher drug levels in the liver and lower levels of drug outside of the liver, which should greatly enhance efficacy and/or reduce side effects. The HepDirect™ Technology may be used with new or proven drugs for the treatment of diseases such as hepatitis (both type B and type C), liver cancer and liver fibrosis. Paul Laikind stated, "Using the HepDirect™ Technology, we have developed a pipeline of drug candidates for partnering and internal development. We already have several potential clinical candidates derived from the HepDirect™ Technology and we are in discussions with potential partners that are interested in using the HepDirect™ Technology to target their proprietary drugs to the liver. With this funding we expect to move at least one HepDirect™ Prodrug into the clinic next year."
Metabasis Therapeutics, Inc. is a privately held, biopharmaceutical company that develops proprietary products for the treatment of human disease with a focus on diseases that involve the liver. The Company is a leader in the field of nucleoside/nucleotide metabolism and chemistry and has expertise and proprietary technology in the fields of liver biology and organ-specific drug delivery. Metabasis, in addition to developing novel drugs to treat diabetes, has also developed a platform technology, the HepDirect™ Technology, which results in liver targeting of new and existing drugs. Metabasis' patent portfolio includes over 23 issued United States patents in its fields of study. The Company occupies state-of-the-art research facilities in San Diego, California.