Operational highlights of the quarter include:

- The U.S. Food and Drug Administration lifted the partial clinical hold for new patient enrollment previously placed on mocetinostat (MGCD0103), a histone deacetylase inhibitor for cancer. With the partial hold lifted, the Company expects to enroll new patients as soon as possible in its Phase II clinical trial in patients with relapsed or refractory follicular lymphoma (Trial 008).

- The Company initiated its Phase II program for MGCD265, a multi-targeted (c-Met) kinase inhibitor. The initial trial which is divided into two stages will first enroll patients with advanced metastatic malignancies and then patients with advanced non-small cell lung cancer. MGCD265 will be tested alone and also in combination with either Tarceva(R) (erlotinib) or docetaxel. Two Phase I trials are ongoing. Data will be reported in a poster presentation at the upcoming EORTC-NCI-AACR conference in Boston for Trial 102 (intermittent schedule).

- MGCD290, MethylGene's antifungal compound, demonstrated favorable results in three Phase I clinical studies. The data were reported at the 49th Annual Interscience Conference on Antimicrobial Agents and Chemotherapy (ICAAC) Annual Meeting in September. Plans to initiate a 14-day study in combination with fluconazole are currently underway. This study is expected to commence by year-end.

- The Company also announced that Otsuka Pharmaceutical Co. Ltd. extended its funded research collaboration with MethylGene, initially formed in March 28, 2008, for an additional six-month period ending March 2010. This research in kinase inhibitors for ocular diseases provides MethylGene with an additional US$625,000 in research funding and Otsuka maintains the right to further extend the collaboration. Also in October, as part of the original March 2008 agreement, Otsuka purchased US$1.5 million of MethylGene common shares.

Financial Results Reported in Canadian Dollars

Total revenues for the third quarter ended September 30, 2009 were $485,000 compared to $5.8 million for the same period last year. This reduction in revenue was primarily due to the termination of our collaboration agreement with Celgene Corporation which was partially offset by revenues from our collaboration with Otsuka. Partially offsetting the decline in revenue, were savings in net research and development of $4.1 million or 48.6 percent compared to the third quarter of 2008.

Gross research and development expenditures in the third quarter of 2009 were $4.6 million compared to $8.8 million in the third quarter of 2008. This decrease relates primarily to lower expenses for discovery research and for development of mocetinostat and MGCD290. These decreases were partially offset by higher clinical trial expenditures for MGCD265, including scale-up and optimization efforts for MGCD265 clinical drug supply. General and administrative expenses in the third quarter of 2009 of $1.3 million were essentially flat with the same period last year. MethylGene incurred a foreign exchange loss of $188,000 in the third quarter of 2009 versus a gain of $437,000 in the third quarter of 2008 and earned interest income of $13,000 in the third quarter of 2009 versus $331,000 in the third quarter of 2008. As a result, the net loss for the third quarter ended September 30, 2009 was $5.4 million or ($0.15) per share compared to a net loss of $3.3 million or ($0.09) per share for the corresponding period last year.

As at September 30, 2009, the Company had $19.6 million (excluding the US$1.5 million received from Otsuka in October) of cash, cash equivalents and marketable securities, a decrease of $19.0 million from December 31, 2008. Operations were realigned in order to focus our resources on development of our clinical pipeline and significant non-funded discovery research has been discontinued. Based on our current assumptions, the Company believes that its current cash, cash equivalents, marketable securities, interest income, projected revenues from current collaborations, projected timing of clinical trials and refundable investment tax credits will be sufficient to carry out its currently planned research and development plans and operations into the fourth quarter of 2010. In the event of a material change to our assumptions, the impact could result in an increase to the cash outflow and a shortfall into the third quarter of 2010. The Company continues to evaluate various options to extend its financial resources beyond these timelines.

About MethylGene

MethylGene Inc. (TSX: MYG) is a publicly-traded, clinical stage, biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics with a focus on cancer. The Company's product candidates include: MGCD265, an oral, multi-targeted kinase inhibitor targeting the c-Met, VEGF, Ron and Tie-2 receptor tyrosine kinases that is in Phase I and Phase II clinical trials for cancers; MGCD290, a fungal Hos2 inhibitor being developed for use in combination with fluconazole for serious fungal infections that is in Phase I clinical studies; and mocetinostat (MGCD0103), an oral, isoform-selective HDAC inhibitor for cancers which has been in multiple Phase II clinical trials and is licensed to Taiho Pharmaceutical Co. Ltd in certain Asian countries. A fourth compound discovered using MethylGene's HDAC platform, EVP-0334 - a potential cognition enhancing agent, is in a Phase I study sponsored by EnVivo Pharmaceuticals Inc. MethylGene also has a funded collaboration with Otsuka Pharmaceutical Co. Ltd. for applications in ocular diseases using the Company's proprietary kinase inhibitor chemistry. Please visit our website at www.methylgene.com.

Certain statements contained in this news release, other than statements of fact that are independently verifiable at the date hereof, may constitute forward-looking statements. Such statements, based as they are on the current expectations of management of MethylGene, inherently involve numerous risks and uncertainties, known and unknown, many of which are beyond MethylGene's control. These risks and uncertainties could cause future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Such results, performance or achievements include, but are not limited to, the timing and effects of regulatory action; the continuation of collaborations; the results of clinical trials; the timing of enrollment or completion of clinical trials; the success, efficacy or safety of MGCD0103, MGCD265 or MGCD290; the ability to scale up, formulate and manufacture sufficient GMP, clinical or commercialization quantities of MGCD0103, MGCD265 or MGCD290, and the relative success or the lack of success in developing and gaining regulatory approval and/or market acceptance for any compound or new product including MGCD0103, MGCD265 or MGCD290. Such risks include, but are not limited to, the impact of general economic conditions, economic conditions in the pharmaceutical industry, changes in the regulatory environment in the jurisdictions in which MethylGene does business, stock market volatility, fluctuations in costs, expectations with respect to our intellectual property position and our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others, changes in the competitive landscape including changes in the standard of care for the various indications in which MethylGene is involved, and changes to the competitive environment due to consolidation, as well as other risks, which you are urged to read, as described in MethylGene's Annual Information Form for the fiscal year ending December 31, 2008, under the heading 'risk factors and all other documents filed by the Company that can be found at www.sedar.com. Consequently, actual future results may differ materially from the anticipated results expressed in the forward-looking statements. The reader should not place undue reliance on the forward-looking statements included in this presentation. These statements speak only as an update on the date they are made and MethylGene is under no obligation to revise such statements as a result of any event, circumstance or otherwise except in accordance with law.

MethylGene Inc.
Incorporated under the Quebec Companies Act
                     UNAUDITED INTERIM BALANCE SHEETS
(In thousands of Canadian dollars)
                                               September 30,  December 31,
                                                       2009          2008
                                                          $             $
-------------------------------------------------------------------------
                                                                (Restated)
ASSETS
Current
Cash and cash equivalents                            15,027         5,947
Marketable securities                                 4,568        32,659
Research and development tax credits receivable       2,276         1,473
Unbilled revenue                                        335         4,435
Interest receivable                                      91           326
Other current assets                                  1,174         1,034
-------------------------------------------------------------------------
Total current assets                                 23,471        45,874
Security deposits                                       385           325
Property, plant and equipment                         1,382         2,131-------------------------------------------------------------------------
                                                     25,238        48,330
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities              5,336         9,192
Current portion of unearned revenue                     549           549
Current portion of lease abandonment cost               189           192
-------------------------------------------------------------------------
Total current liabilities                             6,074         9,933
Unearned revenue                                      2,447         2,859
Lease abandonment cost                                  259           399
-------------------------------------------------------------------------
Total liabilities                                     8,780        13,191
-------------------------------------------------------------------------
Shareholders' equity
Capital stock                                       118,095       118,095
Contributed surplus                                   8,986         8,855
Deficit                                            (110,570)      (92,122)
Accumulated other comprehensive income                  (53)          311
-------------------------------------------------------------------------
Total shareholders' equity                           16,458        35,139
-------------------------------------------------------------------------
                                                     25,238        48,330
-------------------------------------------------------------------------
-------------------------------------------------------------------------
MethylGene Inc.
            UNAUDITED INTERIM STATEMENTS OF OPERATIONS AND DEFICIT
(In thousands of Canadian dollars,
 except for share and per share amounts)
                                 Three-month                   Nine-month
                        periods September 30,        periods September 30,
                         2009           2008           2009          2008
                            $              $              $             $
-------------------------------------------------------------------------
                                   (Restated)                   (Restated)
REVENUES
Research collaborations
 and contract revenues    347          2,994          2,125         9,385
License and up-front
 fees                     138          2,838            413         4,955
-------------------------------------------------------------------------
                          485          5,832          2,538        14,340
-------------------------------------------------------------------------
EXPENSES
Research and
 development            4,579          8,796         17,741        28,104
Government assistance    (238)          (346)          (803)       (1,128)
-------------------------------------------------------------------------
Net current research
 and development        4,341          8,450         16,938        26,976
General and
 administrative         1,283          1,250          3,621         4,308
Interest income           (13)          (331)          (169)       (1,344)
Amortization and
 write-off of property,
 plant and equipment        3              4             13            13
Gain on sale of
 property, plant and
 equipment                  -              -             (6)            -
Corporate and other
 transaction costs         42            222            160           725
Bank charges and interest   6              8             21            27
Foreign exchange loss
 (gain)                   188           (437)           269          (481)
-------------------------------------------------------------------------
                        5,850          9,166         20,847        30,224
-------------------------------------------------------------------------
Loss for the period
 before income tax     (5,365)        (3,334)       (18,309)      (15,884)
Future income tax
 expense                   55              -            139             -
-------------------------------------------------------------------------
Net loss for the
 period                (5,420)        (3,334)       (18,448)      (15,884)
-------------------------------------------------------------------------
Deficit, beginning of
 period, as
 previously reported (105,150)       (93,798)       (90,175)      (81,196)
Change in accounting
 policy                     -         (1,955)        (1,947)       (2,007)
-------------------------------------------------------------------------
Deficit, beginning
 of period,
 as adjusted         (105,150)       (95,753)       (92,122)      (83,203)
-------------------------------------------------------------------------
Deficit, end of
 period              (110,570)       (99,087)      (110,570)      (99,087)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted
 loss per share         (0.15)         (0.09)         (0.50)        (0.43)
Weighted average
 number of
 common shares     36,682,398     36,682,398     36,682,398    36,682,398
-------------------------------------------------------------------------
MethylGene Inc.
             UNAUDITED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
(In thousands of Canadian dollars)
                                 Three-month                   Nine-month
                  periods ended September 30,        periods September 30,
                         2009           2008           2009          2008
                            $              $              $             $
-------------------------------------------------------------------------
                                   (Restated)                   (Restated)
Net loss for
 the period            (5,420)        (3,334)       (18,448)      (15,884)
-------------------------------------------------------------------------
Other comprehensive
 loss
Change in unrealized
 gains and (losses)
 on cash equivalents
 and marketable
 securities, net of
 income tax recovery
 of nil for the
 three-month
 period ended
 September 30, 2009
 and tax expense of
 $81 for the nine-
 month period ended
 September 30, 2009
 (2008-nil)               (54)           193            127           486
Reclassification
 adjustment to net
 loss of realized
 (gains) losses on
 cash equivalents
 and marketable
 securities, net of
 income tax recovery
 of $55 for the three-
 month period ended
 September 30, 2009
 and $220 for the
 nine-month period
 ended September 30,
 2009 (2008-nil)         (122)          (163)          (491)         (270)
-------------------------------------------------------------------------
                         (176)            30           (364)          216
-------------------------------------------------------------------------
Comprehensive loss
 for the period        (5,596)        (3,304)       (18,812)      (15,668)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
MethylGene Inc.
                   UNAUDITED INTERIM STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars)
                                 Three-month                   Nine-month
                  periods ended September 30,        periods September 30,
                         2009           2008           2009          2008
                            $              $              $             $
-------------------------------------------------------------------------
                                   (Restated)                   (Restated)
OPERATING ACTIVITIES
Net loss for
 the period            (5,420)        (3,334)       (18,448)      (15,884)
Items not
 affecting cash:
  Amortization of
   property, plant
   and equipment          241            285            758           897
  Write-off of property,
   plant and equipment      -              -              2             -
  Gain on sale of
   property, plant
   and equipment            -              -             (6)            -
  Future income tax
   expense                 55              -            139             -
  Stock-based
   compensation expense    21             80            131           334
-------------------------------------------------------------------------
                       (5,103)        (2,969)       (17,424)      (14,653)
Net change in non-cash
 working capital
 balances related to
 operations              (869)         8,714           (666)        8,272
Change in long-term
 portion of unearned
 revenue                 (138)       (11,248)          (412)      (11,562)
-------------------------------------------------------------------------
Cash flows related to
 operating activities  (6,110)        (5,503)       (18,502)      (17,943)
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisitions of
 property, plant and
 equipment                 (7)           (89)           (16)         (242)
Purchases of
 marketable securities (1,500)       (32,525)       (25,578)      (76,208)
Proceeds from
 maturities of
 marketable securities 13,177         21,683         53,119       101,196
Proceeds from
 disposition of
 property, plant and 
 equipment                  -              -             11             -
-------------------------------------------------------------------------
Cash flows related to
 investing activities  11,670        (10,931)        27,536        24,746
-------------------------------------------------------------------------
Foreign exchange on
 cash equivalents
 held in foreign
 currency                (138)           (89)            46            63-------------------------------------------------------------------------
Increase (decrease)
 in cash and cash
 equivalents during
 the period             5,422        (16,523)         9,080         6,866
Cash and cash
 equivalents,
 beginning of period    9,605         26,597          5,947         3,208
-------------------------------------------------------------------------
Cash and cash
 equivalents, end
 of period             15,027         10,074         15,027        10,074
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash and cash
 equivalents
 consist of:
Cash                    3,549          1,888          3,549         1,888
Cash equivalents       11,478          8,186         11,478         8,186
-------------------------------------------------------------------------
                       15,027         10,074         15,027        10,074
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Contacts:
Investor Relations:
Rx Communications Group, LLC
Rhonda Chiger
917-322-2569
rchiger@rxir.com

MethylGene Inc.
Donald F. Corcoran
President & CEO
514-337-3333 ext. 373
mctavishk@methylgene.com
www.methylgene.com

SOURCE: MethylGene Inc.

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