METABASIS ANNOUNCES INITIATION OF A MULTI-CENTER PHASE 2 CLINICAL TRIAL OF REMOFOVIR FOR THE TREATMENT OF HEPATITIS B

SAN DIEGO, CA - August 3, 2004 - Metabasis Therapeutics, Inc. (NASDAQ: MBRX) announced today the initiation of a multi-center, multi-national Phase 2 study to evaluate the orally administered antiviral compound remofovir mesylate in chronic hepatitis B (HBV) infected patients. Metabasis discovered remofovir using its HepDirect™ prodrug technology. In October 2001, Metabasis entered into an exclusive worldwide development and license agreement with Valeant Pharmaceuticals International, under which Valeant is primarily responsible for the clinical development and registration of remofovir.

This Phase 2 study of remofovir is an open-label, randomized, multiple oral dose study that will enroll 220 patients with compensated hepatitis B infection at approximately 20 sites in the U.S., Taiwan, Singapore and Korea. The study consists of five treatment groups: remofovir - 5, 10, 20 and 30 mg/day, and Hepsera (adefovir dipivoxil) - 10 mg/day. Treatment duration will be 48 weeks and an interim analysis will be conducted following 24 weeks of dosing to evaluate drug safety and efficacy and, if warranted, will be used for selection of a dose for Phase 3 studies.

Remofovir was developed using Metabasis' proprietary HepDirect technology, a broadly applicable, liver-targeting prodrug technology that was recently described in a Journal of the American Chemical Society article entitled "Design, Synthesis, and Characterization of a Series of Cytochrome P(450) 3A-Activated Prodrugs (HepDirect Prodrugs) Useful for Targeting Phosph(on)ate-Based Drugs to the Liver," (J. Am. Chem. Soc. 126, 5154-5163 (2004)). A prodrug is a drug to which a chemical modification has been made that renders the target drug inactive until enzymes in the body convert it to its active form. In the case of a HepDirect prodrug, the enzyme that converts it to an active form is found predominantly in the liver. Remofovir is a HepDirect prodrug of a compound called adefovir. Adefovir is the active component of the approved hepatitis B drug Hepsera (adefovir dipivoxil). Hepsera is also a prodrug, however, it is converted to the active form predominantly in the plasma. Remofovir is designed to generate an active form of adefovir primarily in the liver, where the virus resides, while limiting exposure outside the liver. While the safety and efficacy of this approach remains to be definitively proven in the clinic, this is potentially important because while adefovir is associated with significant decreases in HBV DNA levels, it also appears to be associated with treatment limiting renal toxicity.

"We expect this new clinical trial to build on the pre-clinical and clinical results we have seen to date with remofovir," commented Dr. Paul Laikind, Metabasis' Chairman, President and CEO. "Valeant submitted an abstract to the American Association for the Study of Liver Diseases (AASLD) describing the safety, tolerance, pharmacokinetic and pharmacodynamic results from a recently completed clinical trial of remofovir in patients infected with hepatitis B virus. If the abstract is accepted, the results of this trial would be presented at the 55th Annual Meeting of the AASLD in Boston in October/November 2004. The findings from that trial led to the decision to proceed with the Phase 2 study announced today. This new study is designed to assess the maximally effective dose of remofovir and assist in dose selection for the pivotal Phase 3 studies that are expected to begin next year should the results warrant it."

Hepatitis B remains a significant medical problem that affects an estimated 300 million people worldwide and can cause severe liver damage leading to liver cirrhosis and primary liver cancer. The World Health Organization estimates that hepatitis B infection results in more than one million deaths each year worldwide.

Dr. Mark Erion, Executive Vice President of Research and Development at Metabasis stated, "In addition to representing an important milestone in the development of remofovir, the initiation of this study also gives us further confidence in the potential of our HepDirect technology. In addition to remofovir, the HepDirect technology was used to develop MB07133, a HepDirect prodrug of an oncolytic agent. MB07133 is currently being studied in patients with primary liver cancer, a deadly disease with few treatment options. The HepDirect technology is also being used in our collaboration with Merck & Co., Inc. to discover novel products for the treatment of hepatitis C. Finally, we continue to evaluate the technology and its use in certain other programs."

About Metabasis (www.mbasis.com):
Metabasis Therapeutics, Inc. is a biopharmaceutical company focused on the discovery, development and commercialization of novel small molecule drugs principally to treat metabolic diseases linked to pathways in the liver and to treat liver diseases. The company has established a broad product pipeline targeting large markets with significant unmet medical needs. Metabasis has three internally discovered, novel product candidates in clinical development: CS-917, remofovir and MB07133, indicated for the treatment of type 2 diabetes, hepatitis B and primary liver cancer, respectively. All three products are being studied in patients and preliminary evidence of efficacy has been demonstrated with CS-917 and remofovir. Metabasis has developed several proprietary technologies for use in discovering and optimizing drugs, including the NuMimetic™ technology and the HepDirect technology. The NuMimetic technology was used to discover CS-917, a first-in-class gluconeogenesis inhibitor, and was also used to identify MB07803, a 2nd generation gluconeogenesis inhibitor that is expected to enter the clinic in 2005 for the treatment of type 2 diabetes. The HepDirect technology, a liver-targeting prodrug technology, was used to develop remofovir and MB07133 and is also being used in a partnership with Merck to discover new treatments for hepatitis C. Metabasis is continuing to identify and develop new product candidates using its proprietary technologies and know-how.

Forward-Looking Statements:
Statements in this press release that are not strictly historical in nature constitute "forward-looking statements." Such statements include, but are not limited to, references to Metabasis' drug candidate remofovir and its apparent activities, efficacy and clinical development, the HepDirect technology and its applications and capabilities and the market potential for drugs developed using the HepDirect technology as well as statements about Metabasis' other proprietary technologies as well as its product candidates and research programs. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause Metabasis' actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, risks and uncertainties related to the progress and timing of clinical trials for Metabasis' product candidates; the fact that positive results from pre-clinical studies and early clinical trials does not necessarily mean later clinical trials will succeed; difficulties or delays in development, testing, obtaining regulatory approval, producing and marketing Metabasis' product candidates; adverse side effects or inadequate efficacy of Metabasis' product candidates or proprietary technologies; Metabasis' dependence on its licensee Valeant, which is primarily responsible for the clinical development and registration of remofovir; the scope and validity of intellectual property protection for Metabasis' product candidates, proprietary technologies and their uses; competition from other pharmaceutical or biotechnology companies; Metabasis' ability to obtain additional financing to support its operations; and other factors discussed in the "Risk Factors" section of Metabasis' prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b)(4) of the Securities Act on June 16, 2004. All forward-looking statements are qualified in their entirety by this cautionary statement. Metabasis is providing this information as of this date of this release and does not undertake any obligation to update any forward-looking statements contained in this release as a result of new information, future events or otherwise.