SAN DIEGO, CA - October 2, 2001 -- Metabasis Therapeutics, Inc. announced today that it has signed a development and license agreement with ICN Pharmaceuticals, Inc. (NYSE: ICN) Under the agreement, ICN will be responsible for worldwide development and commercialization of MB6866, a novel oral drug for the treatment of hepatitis type B discovered by Metabasis. MB6866 represents Metabasis' first clinical candidate from its HepDirect™ Prodrug Technology platform. The drug is expected to reach the clinic in 2002. In addition to fully funding development, the agreement with ICN includes a license fee, milestone payments and payment of royalties on sales of the product.

Hepatitis B, a serious disease caused by a virus that attacks the liver, can cause chronic infection, liver cirrhosis, liver cancer, liver failure and death. Hepatitis B is one of the most prevalent diseases in the world. The World Health Organization estimates 2 billion people worldwide have been infected with hepatitis B and about 350 million suffer from chronic infection. Of those 350 million chronic infections, 35 million are expected to progress to cirrhosis and 12 million will progress to liver cancer. In the United States, the Centers for Disease Control estimate 1.25 million Americans are chronically infected.

The HepDirect™ Technology is a proprietary platform technology developed and patented by Metabasis that allows liver targeting of the biologically active form of a wide variety of drugs. Using the HepDirect Technology, a biologically inactive form of a drug is made and administered to the patient. This inactive drug, termed a HepDirect Prodrug, distributes throughout the body and when it reaches the liver it is metabolized to a biologically active form. This approach should significantly improve the safety and efficacy of drugs for liver-related diseases. The Company's two most advanced HepDirect Prodrugs are MB6866 for hepatitis B, the subject of the agreement with ICN, and a second compound for the treatment of primary liver cancer. The company anticipates beginning human clinical trials of the HepDirect Prodrug for primary liver cancer in 2002. In addition, Metabasis is using the HepDirect Technology to develop new treatments for hepatitis type C, liver fibrosis and other liver-related disorders.

Dr. Paul Laikind, Chairman, CEO and President at Metabasis stated, "We are very pleased to complete this development and license agreement with ICN, a major participant in the field of hepatitis. ICN's drug Ribavirin, used in combination with interferon, is a first-line product in the fight against the worldwide epidemic of hepatitis C. ICN is focused on the discovery and development of new antiviral, anticancer and immunomodulatory therapies. They have assembled an excellent team and we are confident that, working together, we will rapidly advance MB6866 into clinical testing next year."

Dr. Laikind further stated, "This agreement also represents a business development milestone for Metabasis. It is our second major agreement since becoming independent - the first being with Sankyo Co., Ltd. for a diabetes product - and our first agreement for a product derived from our HepDirect Technology platform. We believe that the HepDirect Technology will allow us to generate many more drugs for liver-related disease. In addition, given that the HepDirect Technology is applicable to a wide range of compounds, we believe other companies could use the technology for their proprietary drugs or candidate compounds. We are currently in discussions with several companies that may wish to apply the HepDirect Technology in this way."

Metabasis Therapeutics, Inc. is a privately-held, biopharmaceutical company that develops proprietary products for the treatment of human disease with a current 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 the HepDirect™ Prodrug Technology that allows liver-specific delivery of new and existing drugs the company has discovered and developed a new class of drugs for treating diabetes that act to lower liver glucose production in diabetic patients. The first drug from this program is being developed in collaboration with Sankyo Co., Ltd. and is currently undergoing Phase I clinical testing. The Company occupies state-of-the-art research facilities in San Diego, California.