SAN DIEGO, CA - October 23, 2001 -- Metabasis Therapeutics, Inc., a San Diego based biopharmaceutical company developing products for diabetes, hepatitis, liver cancer and other liver related diseases, announced today that it has completed a self-directed private placement of preferred stock raising a total of $19.2 million. This represents the second financing round for the company since it became an independent, private company in 1999. The Sprout Group led this round and was joined by the Company's current investors MPM Capital and Interwest Partners.

Metabasis has a novel gluconeogenesis inhibitor for diabetes, MB6322 in Phase 1 clinical trials and expects a second product MB6866, which is based on its proprietary HepDirect™ liver-targeting technology platform, to enter the clinic early next year for the treatment of hepatitis B. Development of these products is fully funded by the Company's partners, Sankyo Co., Ltd. and ICN Pharmaceuticals, Inc. respectively. A third product, also based on HepDirect, is expected to enter the clinic next year as a potential treatment for primary liver cancer and will be funded entirely by Metabasis.

Dr. Paul Laikind, Chairman, CEO and President of Metabasis stated, "This has been a very productive year for Metabasis with many important milestones achieved. Our diabetes project took a major step forward with the initiation of clinical testing of our novel gluconeogenesis inhibitor, MB6322. We also made significant advances in the development of our HepDirect liver targeting technology. We selected a HepDirect drug for the treatment of hepatitis B (MB6866) and recently entered into a major agreement with ICN Pharmaceuticals to accelerate its development. MB6866 is expected to begin clinical trials in the first half of next year. Our second HepDirect drug is being developed for the treatment of primary liver cancer and it is on schedule to begin clinical trials in late 2002. In addition, over the last year broad patents covering our core diabetes and HepDirect technologies have been granted and Metabasis has been awarded government (SBIR) grants to fund additional HepDirect applications. We have also made excellent progress on several earlier stage projects including an approach to treating hepatitis C using our HepDirect platform. All in all, we are approaching the end of 2001 in a very strong position."

Dr. Laikind further stated, "The steep decline in the stock markets over the last year, the tragic events of September 11 and the many repercussions since have all combined to make this a very challenging time to do a financing. Thus, we are very pleased that the progress we have made allowed us to complete this second round of financing at a reasonable step up in valuation to the first round that we closed on a little over a year ago. Moreover, the investors giving us that vote of confidence, Sprout Group, MPM Capital, and Interwest Partners are, in our opinion, the best in the medical technology investing business."

Kathleen La Porte, General Partner at Sprout Group said, "This is an important investment for the healthcare team at Sprout. As a clinical stage company, Metabasis addresses major disease markets, including diabetes and hepatitis B and C. The company's platform technology, HepDirect, has successfully generated a number of promising compounds that will soon enter clinical trials in hepatocellular carcinoma and hepatitis B. Metabasis has also executed strong partnerships on two programs to date, validating its technology platform."

John Beck, Vice President of Finance and CFO of Metabasis said, "We look forward to putting this funding to work. We currently employ 62 full-time individuals, many with advanced degrees and most working in the Research and Development group. The proceeds of this financing will be used to further expand the scientific infrastructure of the company, to fund our research efforts utilizing the HepDirect Technology, to support clinical development of our drug for primary liver cancer and generally to fund continuing operations. If all goes according to plan this should provide for several years of operations and we anticipate that our next major financing will be an initial public offering."

Metabasis Therapeutics, Inc. (http://www.mbasis.com) 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. The Company has developed the HepDirectTM Prodrug Technology that allows liver-specific delivery of new and existing drugs. The company has also 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.