SAN DIEGO, CA - August 1, 2001 -- Metabasis Therapeutics, Inc. announced today the initiation of a Phase 1 human clinical trial on its oral drug for the treatment of Type 2 diabetes mellitus (diabetes). The drug is the first of a new class of drugs discovered by Metabasis that act to reduce the over production of the sugar called glucose by the liver and thereby lower blood sugar levels. Patients with Type 2 diabetes have chronically elevated blood sugar levels and consequently often suffer from severe complications, including heart disease, stroke, blindness, peripheral vascular disease, kidney disease and death. Normalizing elevated glucose in diabetic patients remains the goal for diabetes drug therapy since the currently available therapies only achieve modest glucose lowering for the vast majority of patients. Metabasis' strategic partner for the diabetes project, Sankyo Co., Ltd., is funding and directing the clinical development of the drug.

According to the American Diabetes Association almost 6% of the population in the United States has diabetes, totaling approximately sixteen million people. The vast majority of these patients, approximately 90 to 95%, have Type 2 diabetes. The number of new cases of diabetes is rising rapidly with about 800,000 cases expected to be diagnosed this year. Diabetes is the sixth-leading cause of death by disease in the United States.

Over production of glucose results from excessive flux through the pathway primarily responsible for synthesis of glucose in the liver, the gluconeogenesis pathway. In 1997, Metabasis capitalized on its earlier discovery of a series of potent and selective inhibitors of the gluconeogenesis pathway by establishing a strategic collaboration with Sankyo. If successfully developed, oral gluconeogenesis inhibitors are expected to be used to treat both early- and late-stage diabetics either alone or in combination with other diabetes drugs, such as the insulin sensitizers. Sankyo has been a leader in the field of diabetes and discovered the first insulin sensitizer.

Dr. Paul Laikind, Chairman, President and CEO of Metabasis stated, "We are very excited about the potential of our new drug for treating Type 2 diabetes. Diabetes is a major medical problem throughout the world with devastating and costly consequences. New approaches such as ours are needed to treat this disease."

Dr. Mark Erion, Executive Vice President of Research and Development at Metabasis said, "We believe that our approach of specifically targeting the gluconeogenesis pathway is novel and that our drug has the potential to improve the lives of patients with this devastating disease. Current drugs generally focus on removal of excess glucose from the blood of diabetic patients. Our drugs specifically target what is now recognized as a significant medical problem for these patients, that is the over production of glucose by the liver. Our preclinical data suggest that specific inhibitors of gluconeogenesis, when used either as a mono-therapy or combined with drugs that enhance glucose removal from the blood, will reduce this overproduction and significantly lower blood glucose levels. "

Dr. Laikind further stated, "The initiation of this clinical trial is an important step forward for Metabasis for a number of reasons. First, we believe our oral gluconeogenesis inhibitors will be an important new therapy that will address a major market opportunity. Second, initiating clinical development of our drug for diabetes represents tangible evidence of the success of our collaboration with Sankyo Co., Ltd. Finally, it is a major milestone for our company since this is our first product to enter human clinical trials since Metabasis was established. Our current plans are to begin clinical testing of two more products next year, one for the treatment of hepatitis type B and the other for the treatment of primary liver cancer. Both of these products were developed using our HepDirect™ Technology that provides a means to target drugs to the liver. We believe that the successful clinical development of these potential new drugs should 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 fields 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™ drugs targeting hepatitis B and hepatocellular carcinoma are in advanced preclinical development. Metabasis' patent portfolio includes over 27 issued patents. The Company occupies state-of-the-art research facilities in San Diego, California.