Callisto Pharmaceuticals Announces Development of New Method to Synthesize Anti-Cancer Drug Candidate Annamycin; Synthesis Process Strengthens Commercial Viability of Novel Drug Intended as Therapy for Relapsed Leukemia.

NEW YORK, N.Y. -- Callisto Pharmaceuticals, Inc. (AMEX:KAL) (FWB:CA4), a developer of new drug treatments in the fight against hematological cancers and related diseases, has announced that one of its development partners has created a method to synthesize its anti-cancer drug candidate Annamycin in a highly cost-effective process that may substantially strengthen the drug's commercial viability.

Callisto, in collaboration with Dr. Waldemar Priebe, the discoverer of Annamycin, and Antibioticos, a leading Milan, Italy-based drug manufacturer that is the drug's commercial manufacturer, successfully developed the process to synthesize Annamycin, significantly streamlining the process of producing the drug. Annamycin is a member of the anthracycline family of anti-cancer drugs, which are typically difficult to synthesize cost-effectively.

"We have been able to produce very high purity (greater than 98%) Annamycin, and eliminate the costly use of chromatography for purification purposes," said Dr. Donald Picker, Callisto's Executive Vice President of Research and Development. "This novel chemical route is now clearly capable of the production of 20-40 kg amounts of material, more than enough for the commercial marketplace."

Callisto is developing Annamycin -- a compound with a novel therapeutic profile and with the expectation of reduced cardiotoxicity -- as a new treatment for patients with relapsed leukemia; patients are designated "relapsed" when they fail to respond to therapies. A significant number of leukemia patients stop responding to existing drug therapies, creating a void of treatment options that Callisto is seeking to fill.

"We believe that Annamycin can provide real hope for relapsed leukemia patients," said Dr. Picker. "An essential aspect of any successful drug development effort is to establish a commercially viable means of large-scale production."

Annamycin is planned to begin a clinical trial in adult acute lymphoblastic leukemia (ALL) patients in 4Q 2005. The FDA has designated Annamycin as an "orphan drug," providing specific development and commercial advantages including 7-year marketing exclusivity at time of drug approval.

About Callisto Pharmaceuticals, Inc.

Callisto is a biopharmaceutical company focused on the development of drugs to treat cancer and osteolytic bone disease. Callisto has two lead drugs in clinical development, Annamycin to treat relapsed leukemia, and Atiprimod to treat relapsed multiple myeloma. Callisto intends to initiate a clinical trial of Annamycin in relapsed acute lymphoblastic leukemia patients in 4Q 2005. Annamycin, a drug from the anthracycline family, has a novel therapeutic profile, including activity against resistant diseases and significantly reduced cardiotoxicity. Callisto's second drug, Atiprimod, is in a Phase I/IIa clinical trial in relapsed multiple myeloma patients, and is a small-molecule, orally available drug with antiproliferative and antiangiogenic activity. Callisto also has drugs in preclinical development for gastrointestinal inflammation, and a program focused on the development of a drug to protect against staphylococcus and streptococcus biowarfare agents. Callisto has exclusive worldwide licenses from AnorMED Inc. and M.D. Anderson Cancer Center to develop, manufacture, use and sell Atiprimod and Annamycin, respectively. For investor-specific information about Callisto, including recent news and stock price data, please visit http://www.trilogy-capital.com/tcp/callisto/. For an Investor Fact Sheet about Callisto, please visit http://www.trilogy-capital.com/tcp/callisto/factsheet.html. Callisto is also listed on the Frankfurt Stock Exchange under the ticker symbol CA4. For additional information, visit www.callistopharma.com.

Forward-Looking Statements

Certain statements made in this press release are forward-looking. Such statements are indicated by words such as "expect," "should," "anticipate" and similar words indicating uncertainty in facts and figures. Although Callisto believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations reflected in such forward-looking statements will prove to be correct. As discussed in the Callisto Pharmaceuticals Annual Report on Form 10-K/A for the year ended December 31, 2004, and other periodic reports, as filed with the Securities and Exchange Commission, actual results could differ materially from those projected in the forward-looking statements as a result of the following factors, among others: uncertainties associated with product development, the risk that products that appeared promising in early clinical trials do not demonstrate efficacy in larger-scale clinical trials, the risk that Callisto will not obtain approval to market its products, the risks associated with dependence upon key personnel and the need for additional financing.