SAN DIEGO, CA - August 30, 2001 -- Metabasis Therapeutics, Inc. announced today that it had been awarded a $156,115 Phase I grant by the National Institute of Allergy and Infectious Diseases, National Institutes of Health. The grant, entitled "Liver-Targeted Prodrugs for the Treatment of Hepatitis B" will support the synthesis and characterization of novel prodrugs of various known antiviral nucleosides with the purpose of identifying new drugs with improved efficacy for the treatment of hepatitis B.

The grant will further expand the company's existing hepatitis B program that already includes a drug that is expected to be in the clinic next year. That drug, and the grant project are both based on Metabasis' proprietary HepDirect™, liver-targeting technology. The HepDirect™ Technology is a broad-based, platform technology that enables the company to develop liver-specific prodrugs of a wide variety of new or existing drugs thereby increasing liver specificity and reducing peripheral exposure to the active compound. By achieving these objectives, HepDirect™ has the promise to increase both the safety and efficacy of drugs used to treat liver-related diseases such as Hepatitis B and C, and primary liver cancer, among others.

Hepatitis B remains a significant unmet medical problem which affects an estimated 300 million people worldwide and which can cause severe liver damage leading to acute and chronic hepatitis, cirrhosis and primary liver cancer. The World Health Organization estimates that hepatitis B infection results in more than one million deaths each year worldwide. Metabasis believes that drugs developed using its HepDirect™ Technology, if approved, will be effective in addressing this large and underserved market.

John Beck, Vice President of Finance and CFO of Metabasis stated "We are very excited to have the promise of our HepDirect™ Technology and its potential for treating this deadly disease recognized by the NIH. To date, the HepDirect™ Technology has allowed us to identify advanced compounds to treat both hepatitis B and primary liver cancer, both of which are expected to enter clinical trails within the next twelve months. This preclinical success, and the support shown by the NIH in awarding this grant increase our confidence that HepDirect™ will continue to pay dividends in the form of additional clinical products, grants and collaborations in the months to come. In addition, this first NIH grant opens up a new, non-dilutive financing source for expanding the Metabasis technology base and pipeline. We look forward to additional early and later stage NIH support of this important work."

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 27 issued patents. The Company occupies state-of-the-art research facilities in San Diego, California.