SAN DIEGO, CA ‚ March 20, 2001 -- Metabasis Therapeutics, Inc. announced today that it has agreed with Sankyo Co., LTD to extend their joint research collaboration to develop additional novel oral drugs to treat diabetes mellitus. The companies plan to continue joint development efforts and Sankyo will extend research funding to Metabasis through May 2002. Financial terms were not further disclosed. Metabasis expects clinical testing of the first diabetes drug developed under this agreement to begin this year.

The Sankyo collaboration was initiated in 1997 after Metabasis' discovery of the first potent and selective inhibitors of the gluconeogenesis pathway. This pathway is responsible for the abnormal overproduction of glucose in the liver of patients with Type 2 diabetes mellitus. If successfully developed, oral gluconeogenesis inhibitors are expected to treat both early- and late-stage diabetics either alone or in combination with other diabetes drugs including the class of drugs known as insulin sensitizers. Sankyo has been a leader in the diabetes field having developed the first insulin sensitizer.

Dr. Mark Erion, Executive Vice President of Research and Development at Metabasis stated, "The decision to extend the collaboration for an additional year will allow us to continue what has already been a very successful collaboration. With the first product reaching the clinic this year, we plan to use the extended research term to identify backup compounds and to bolster our already strong patent position." Dr. Paul Laikind, Chairman, President and CEO of Metabasis stated, "We are very pleased with the progress we have made on the diabetes project and are looking forward to beginning clinical testing this year. We expect our oral gluconeogenesis inhibitor to be an important new therapy for this devastating disease. Based on the large, unmet medical need associated with diabetes, the growing diabetic patient population and considering the marketing success seen with the insulin sensitizer class of diabetes drugs, we expect our product to have true blockbuster potential. We believe that successful clinical development of our diabetes drug will significantly drive value for our shareholders in the coming years".

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 proprietary expertise in liver biology and organ-specific drug delivery. In addition to developing novel drugs to treat diabetes, Metabasis has developed the HepDirect™ Prodrug Technology that allows liver-specific delivery of new and existing drugs. Two novel HepDirect™ small molecule drugs to treat hepatitis B and hepatocellular carcinoma are in advanced preclinical development. Metabasis' patent portfolio includes over 26 issued patents in its fields of study. The Company occupies state-of-the-art research facilities in San Diego, California.

Sankyo Co., Ltd. is the second largest pharmaceutical company in Japan. Headquartered in Tokyo and established in 1899, Sankyo employs nearly 7,000 people. Sankyo also has marketing activities in the U.S. and Europe through Sankyo Pharma Group and in Asia through its branch offices and joint ventures. As a research-based developer, manufacturer and marketer, Sankyo has introduced several breakthrough drugs to the international market, including its own ethical drug, pravastatin (Mevalotin(TM) or Pravachol(TM)), an anti-hyperlipidemic, cefpodoxime proxetil (Banan(TM) or Vantin(TM)), an oral anti-infective, and loxoprofen sodium (Loxonin(TM)), the largest anti-inflammatory drug in Japan.