Sale of Cabrellis Pharmaceuticals to Pharmion

Pharmion Acquires Cabrellis Pharmaceuticals

Pharmion Acquires Cabrellis Pharmaceuticals, Gains Rights to Amrubicin for North America and the European Union

BOULDER, CO - November 15, 2006 (PRNewswire-FirstCall) - Pharmion Corporation (Nasdaq: PHRM) today announced that it has acquired Cabrellis Pharmaceuticals, a clinical-stage private oncology company dedicated to the development of amrubicin, a third-generation synthetic anthracycline currently in advanced Phase 2 development for small cell lung cancer (SCLC) in North America and the EU.

Amrubicin has been approved in Japan since 2002, where it is marketed by Nippon Kayaku under the trade name CALSED(TM) for the treatment of SCLC and non-small cell lung cancer (NSCLC). Dainippon Sumitomo Pharmaceuticals, the original developer of amrubicin, licensed the Japanese marketing rights to Nippon Kayaku in January 2005, and the North America and EU rights to Cabrellis (then Conforma Therapeutics) in June 2005.

Anthracyclines are among the most widely used anticancer drugs in clinical use today. This class of drug includes doxorubicin, daunorubicin and epirubicin, each of which is a close analogue to the others and made semi- synthetically starting from natural products. However, using a natural product as the synthetic starting point significantly constrains the range of analogues that can be made.

Sumitomo Pharmaceuticals, now part of Dainippon Sumitomo Pharmaceuticals, developed the first totally synthetic anthracycline drugs, including amrubicin, which retains the broad activity of the anthracycline class while apparently reducing or eliminating the cumulative cardiotoxicity associated with the anthracycline class. Furthermore, clinical trial results demonstrate that amrubicin has substantial activity in lung cancer, far greater than that reported for other anthracyclines. This led to its regulatory approval in Japan, and attracted Pharmion to its acquisition of Cabrellis.

In Phase 2 studies conducted in Japan, amrubicin has demonstrated clinical efficacy both as a single agent and in combination with cisplatin. In previously untreated SCLC patients, amrubicin produced an overall response rate of 76 percent when administered as a single agent and 88 percent when administered in combination with cisplatin(1,2). Median survival with amrubicin as a single agent was 11.7 months and in combination with cisplatin, median survival was extended to 13.6 months(1,2). In Phase 2 studies of previously treated patients (sensitive or relapsed/refractory) with SCLC, amrubicin as a single agent has shown overall response rates ranging from 46 to 53 percent, with median overall survival rates of 9.2 to 11.7 months(3,4,5).

Based on these encouraging Phase 2 results, and an ongoing Phase 2 development program, Pharmion intends to initiate a Phase 3 registrational study in relapsed/refractory SCLC in the second half of 2007. Using data from these studies and supporting Japanese data, Pharmion expects to submit a New Drug Application (NDA) in the US and a Marketing Authorization Application (MAA) in the EU for amrubicin in the treatment of relapsed/refractory SCLC during 2009.

In addition to its clinical activity in SCLC, based upon clinical experience to date, amrubicin appears to lack the cumulative cardiotoxicity profile associated with traditional anthracyclines. More than 6,500 patients with SCLC or NSCLC have been treated with amrubicin, and to date no substantive cardiotoxicity-related safety issues have been reported. Anthracyclines have established activity against breast cancer but the cumulative cardiotoxicity of currently available anthracyclines limit their use with Herceptin. Accordingly, Pharmion intends to initiate a clinical study of amrubicin in metastatic breast cancer patients in combination with Herceptin in the next few months.

"The efficacy of chemotherapy for patients with small cell lung cancer has plateaued over the last two decades," said Mark R. Green, M.D., Clinical Professor of Medicine at the Medical University of South Carolina. "In particular, the outlook for patients with extensive SCLC at diagnosis and after failure of first line therapy remains poor. The current efficacy for amrubicin therapy in these SCLC settings is very encouraging. Preliminary activity data in the non-small cell lung cancer setting are also provocative. Furthermore, the apparent lack of cumulative cardiotoxicity with amrubicin therapy makes it a very attractive agent to study in other cancers where older, cardiotoxic anthracyclines are currently used."

"We are very pleased with this acquisition and the potential for amrubicin," said Patrick J. Mahaffy, president and CEO of Pharmion. "We have long stated our desire to expand our portfolio with an advanced stage oncology product with US and, if possible, EU rights, and amrubicin fits our target profile exactly. We believe that amrubicin will significantly alter treatment strategies for small cell lung cancer, a tumor with clear unmet medical need that is treated primarily with older drugs. Given its approval and use in Japan, we are confident in its activity in SCLC and given its encouraging cardiac profile, we are enthusiastic about its potential in other tumor types as well."

"We are delighted that Pharmion has prevailed among the several parties that expressed interest in acquiring Cabrellis," said Thomas M. Estok, president and CEO of Cabrellis. "We are confident that Pharmion's strategic vision and focus in oncology will broaden and accelerate the amrubicin development plan and that they will bring this potentially important new therapeutic to patients in North America and Europe in the near term."

Terms of the Acquisition

Under the terms of the agreement, Pharmion is acquiring Cabrellis for an initial cash payment of $59 million ($55 million after deducting the $4 million in net cash held by Cabrellis). In addition, Pharmion will make two additional payments of $12.5 million each upon approval of amrubicin by regulatory authorities in the U.S. and the E.U. Upon amrubicin's approval for a second indication in the US or EU, Pharmion would make an additional payment of $10 million for each market. The transaction, which is effective immediately, will result in a charge to earnings in the fourth quarter of 2006 of approximately $55 million for acquired in-process research and development.

Pharmion will assume responsibility for amrubicin development effective immediately, and Cabrellis' offices in San Diego will close within the next few months.

As a result of this transaction, Pharmion now expects to end 2006 with approximately $125 to $130 million in cash, cash equivalents and short-term investments. The Company has no debt outstanding.

About Pharmion Corporation

Pharmion is a pharmaceutical company focused on acquiring, developing and commercializing innovative products for the treatment of hematology and oncology patients in the US, Europe and additional international markets. Pharmion has a number of products on the market including the world's first approved epigenetic cancer drug, Vidaza(R), a DNA demethylating agent. For additional information about Pharmion, please visit the Company's website at www.pharmion.com.

SOURCE:Pharmion Corporation
11/15/2006