Callisto Pharmaceuticals Reports on 2005 Clinical and Corporate Milestones and Achievements; Company Cites Progress in Anti-Cancer Drug Development and Development and Expansion of Intellectual Property.

NEW YORK -- Callisto Pharmaceuticals, Inc. (AMEX:KAL)(FWB:CA4), a developer of new drug treatments in the fight against cancer and other major health threats, has reported significant progress on several major fronts in its year-end corporate review of key business achievements for 2005.

Cited in the Company's report are a number of clinical and corporate milestones, including Callisto's initiation and further development of two different anti-cancer compounds in human clinical trials, and its advancement of a preclinical pipeline of additional novel compounds to treat conditions, including serious gastrointestinal inflammation and biological warfare threats to Homeland Security.

"We're delighted to report that the past year has been an especially productive and exciting period of growth at Callisto," said Dr. Gary S. Jacob CEO and Chief Scientific Officer. "The Company has achieved substantial progress in business and technical milestones as we continue to execute our mission to develop new and breakthrough drug candidates for cancer and other diseases. We have strengthened our intellectual property portfolio, received important recognition from the scientific community, and continued to make progress in clinical trials."

Callisto's major achievements for 2005 include the following development highlights:

L-Annamycin

Callisto is developing L-Annamycin as a new anti-cancer drug candidate to treat two forms of relapsed acute leukemia, a serious and currently incurable blood cancer. Among the drug's unique therapeutic benefits is an ability to attack cancers resistant to other available drugs. If approved, L-Annamycin could provide significant new hope for those patients whose conditions do not improve under any of the currently available therapies.

--Launched human clinical trials of the second-generation anthracycline drug, designed to treat both relapsed acute lymphoblastic (ALL) and myeloid (AML) leukemias. The trial was launched at the University of Texas M.D. Anderson Cancer Center, to study its effects on patients with adult relapsed or refractory acute lymphocytic leukemia. In the trial, researchers will be able to test the drug on adult patients with difficult-to-treat relapsed or refractory cases of acute lymphocytic leukemia. (Dec. 2005)

--Received FDA's Orphan Drug Designations for L-Annamycin to treat both ALL and AML. Orphan drug designation, along with approval by the FDA for commercialization of Annamycin, entitles Callisto to seven years of market exclusivity in the United States, provided Callisto continues to meet certain conditions established by the FDA. During the seven-year exclusivity period, the FDA will not accept or approve other applications to market the same medicinal product for the same therapeutic indication. (June 2005)

Atiprimod

Callisto is developing Atiprimod as an anti-cancer drug candidate to treat the blood cancer multiple myeloma, an invariably fatal disease that causes numerous devastating complications for patients. The drug candidate has demonstrated positive anti-tumor activity in recent pre-clinical animal model research.

--Launched human clinical trial of Atiprimod in patients with an advanced form of blood cancer known as multiple myeloma. The trial has since grown to four clinical sites in the U.S., mainly to test the toxicity of the drug by determining a "maximum tolerated dose" (MTD). The Phase I/IIa clinical trial of Atiprimod in relapsed or refractory multiple myeloma patients was conducted at four clinical sites in the U.S. Callisto's Phase I/IIa clinical trial tested escalating dosages of Atiprimod and the drug was generally well tolerated in this heavily pre-treated group of multiple myeloma patients. Significantly, an MTD was not yet reached. In an encouraging sign of a drug effect, two patients with rapidly rising serum M proteins -- a measure of tumor burden -- showed a transient but clear M protein reduction. (March 2005)

--Two research abstracts on Atiprimod's pre-clinical and clinical data were selected for oral presentations at the prestigious Annual Meeting of American Society of Hematology (ASH). Only abstracts of particular scientific note are selected for oral presentation at the ASH meeting, held recently in Atlanta, Ga on December 10-13th 2005.

--Atiprimod was granted the FDA's Orphan Drug Designation to treat multiple myeloma hematological cancer, providing Callisto market exclusivity following the drug's approval. (January 6, 2004)

SP304

Callisto is developing the drug candidate SP304 as a treatment for serious inflammatory gastro-intestinal disease, including ulcerative colitis, a chronic disease of the digestive tract that afflicts approximately 500,000 Americans. Ulcerative colitis can be painful and debilitating, and can lead to other serious and life-threatening complications. There is currently no medical cure. Callisto's SP304 drug candidate is the first-in-class in a new category of compounds with the potential to revolutionize therapy for gastro-intestinal disease, while presenting virtually no known side effects or toxicity. Callisto's SP304 drug candidate is designed to help replenish damaged cells in the lining of the colon -- cells that may become cancerous -- to function as therapies for people who have gastro-intestinal diseases such as ulcerative colitis. The drug candidate's market value could potentially be enormous, given the pervasiveness of the conditions that it could help to prevent and treat.

--Callisto's novel drug candidate, currently known as SP304, was evaluated in an important preclinical study of ulcerative colitis in a mouse model, for potential treatment of human gastro-intestinal inflammatory disease. Results of the animal study demonstrated a significant reduction in histopathological indicators of inflammation in the model. (June 2005)

--Received Notice of Allowance from the U.S. Patent and Trademark Office for a patent for SP304 drug compound created by Callisto scientists to treat and prevent a variety of inflammatory diseases of the bowel. The Notice of Allowance for Callisto's SP304 was given for the patent titled, "Guanylate Cyclase Receptor Agonists for the Treatment of Tissue Inflammation and Carcinogenesis." The USPTO has allowed key claims covering the composition of matter of the SP304 compound; additional claims are pending in divisional applications. The Company is developing the drug as a treatment for ulcerative colitis. The drug is first-in-class of a new category of compounds with the potential to revolutionize therapy for gastro-intestinal disease, while presenting virtually no known side effects or toxicity. An allowed patent is expected to issue in the near future. (November 2005)

Superantigen Bio-Warfare Vaccine Development Program

Callisto is involved in a joint biodefense program with the U.S. Army Medical Research Institute of Infectious Diseases, Fort Detrick, MD, and The Rockefeller University, New York, NY, to investigate and develop vaccines and treatments for use in bio-warfare applications. Callisto is developing monoclonal antibodies designed to act as broad-spectrum antidotes against the superantigen biowarfare toxins derived from staphylococcus and streptococcus pathogens, highly dangerous potential biowarfare toxins that are considered relatively easy to weaponize.

--Received a major biodefense grant award to develop antibacterial agents in the fight to defeat potential bio-warfare threats. The grant, from the National Institute of Allergy and Infectious Diseases (NIAID), is in excess of $885,000 and is dedicated to Callisto's development of a monoclonal antibody vaccine against superantigen toxins, considered to be lethal of toxins that could be weaponized. (April 2005).

--Data from Superantigen biodefense development program is selected for presentation at a "Late-Breaker Research Session" of the 45th annual Interscience Conference on Antimicrobial Agents and Chemotherapy ("ICAAC") on December 16-19, 2005, a high-profile international meeting at the Washington, DC, Convention Center. (Nov. 2005).

Intellectual Property Expansion

--Callisto established an Intellectual Property Division to expand its new drug pipeline and strengthen patent protections of its intellectual property portfolio. The Company named Dr. David Ladner, a veteran patent agent and research scientist with extensive background in the pharmaceutical and chemical industries, to head the unit in the position of Director of Intellectual Property. (Dec. 2005).

About Callisto Pharmaceuticals, Inc.

Callisto is a biopharmaceutical company focused on the development of new drugs to treat various forms of cancer and other serious afflictions. Callisto's drug candidates in development currently include anti-cancer agents in clinical development, in addition to drugs for a range of other significant health care market segments, including biodefense. One of the Company's lead drug candidates, L-Annamycin, is being developed as a treatment for forms of relapsed leukemia, a currently incurable blood cancer. Callisto initiated a clinical trial of L-Annamycin in adult relapsed acute lymphocytic leukemia patients in 4Q 2005. L-Annamycin, a new compound from the anthracycline family of proven anti-cancer drugs, has a novel therapeutic profile, including activity against resistant diseases and significantly reduced cardiotoxicity, or damage to the heart, compared to currently available drug alternatives. Another anti-cancer drug, Atiprimod, is in development to treat relapsed multiple myeloma, a blood cancer. Atiprimod has entered Phase I/IIa human clinical trials in relapsed multiple myeloma patients. Callisto also has drugs in preclinical development for gastro-intestinal 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 L-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. To view an informational presentation of the Company's development pipeline of drug candidates, visit http://www.trilogy-capital.com/tcp/callisto/powerpoint.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.