SAN DIEGO, CA - November 1, 2001 -- Metabasis Therapeutics, Inc. announced today that it has been awarded a $153,103 Phase I grant by the National Institute of Diabetes and Digestive and Kidney Diseases. The grant, entitled "Adenosinergic Therapy for Treatment of Hepatic Fibrosis", represents the second Phase I grant awarded to Metabasis in the past three months for drug discovery research on liver diseases.

The grant supports research underway at Metabasis focused on compounds that activate adenosine receptors and their use with the company's proprietary liver targeting technology, termed the HepDirectÔ Technology, for treating liver fibrosis. Metabasis has an extensive library of proprietary compounds that either directly activate adenosine receptors or indirectly activate the receptors by enhancing local adenosine production. The latter is achieved through inhibition of enzymes involved in adenosine metabolism or production. The HepDirect Technology is a broad-based, platform technology developed and patented by Metabasis that enables liver-targeting of the biologically active form of a wide variety of new and existing drugs. Liver targeting can increase liver drug levels and reduce peripheral exposure to the active compound and thereby result in safer and more effective drugs for liver diseases.

Fibrosis is a pathologic response to tissue injury involving excessive production and deposition of extracellular matrix proteins. Chronic liver injury arising from viral infection or alcoholism causes progressive fibrosis, a condition that frequently results in liver cirrhosis and death. Liver cirrhosis is the ninth leading cause of death in the US and is even more common worldwide. At present, no safe and effective liver anti-fibrotic therapies are known due in large part to the inability of most drugs to inhibit fibrosis in the liver without simultaneously affecting the production of extracellular matrix in other tissues. Given the worldwide increase in liver disease resulting primarily from chronic hepatitis infections and the lack of safe and effective antifibrotic therapies, Metabasis believes that the medical need and the potential market for a liver-specific anti-fibrotic agent will be large.

John Beck, Vice President of Finance and CFO stated "This award successfully demonstrates our ongoing strategy to seek Phase I as well as Phase II SBIR grant funding as non-dilutive financing sources with which to expand the Metabasis' technology base and pipeline. To date, the HepDirectÔ Technology has resulted in two advanced compounds, namely a compound designated as MB6866, which we recently licensed to ICN Pharmaceuticals as a novel oral hepatitis B drug, and a compound for hepatocellular carcinoma. Both compounds are expected to begin clinical testing in 2002. This preclinical success, and now the support shown by the NIH for our discovery stage work in fibrosis demonstrates how important a role this technology has had in the development of both our early and late stage products".

Mark Erion, Executive Vice President of Research and Development stated "We are pleased to receive additional support from the NIH for our on-going efforts to maximize the potential of our HepDirect Technology. We have a large library of compounds that either directly or indirectly activate adenosine receptors and believe that by using the HepDirect Technology we can deliver these compounds to the liver and optimize their potential as liver-specific anti-fibrotic agents."

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 acts 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 1 clinical testing. The Company occupies state-of-the-art research facilities in San Diego, California.