MGI PHARMA Reports 2001 Second Quarter Results.

Business Editors

MINNEAPOLIS--(BUSINESS WIRE)--July 18, 2001

MGI PHARMA, INC., (Nasdaq:MOGN) today reported that total revenues increased 51 percent to $11.0 million in the quarter ended June 30, 2001 from $7.3 million in the corresponding period a year ago. Total costs and expenses increased to $13.7 million from $7.3 million in the second quarter of 2000, excluding license fees for palonestron, the Company's novel and highly selective 5-HT3 receptor antagonist in Phase 3 development for the prevention of chemotherapy-induced nausea and vomiting (CINV). Including this charge, total costs and expenses were $26.8 million in the second quarter of 2001. The Company reported a net loss of $15.4 million for the second quarter of 2001, or $0.81 per share, compared to net income of $0.5 million, or $0.03 per diluted share in the second quarter of 2000.

Record growth in sales was due to a combination of continued growth in demand for Salagen(R) Tablets (pilocarpine hydrochloride) and a substantial increase in its distribution channel inventory, as well as sales of new products. Product sales revenue increased 66 percent to $10.2 million in the second quarter of 2001, from $6.1 million in the second quarter of 2000. Salagen Tablets are the Company's primary commercial product approved to treat the symptoms of dry-mouth caused by Sjogren's syndrome, an autoimmune disease of the salivary glands, and radiation therapy for head and neck cancer, and accounted for 92 percent of overall product sales in the second quarter of 2001.

"In addition to the strong sales we recorded during the quarter, we made substantial strides in the development of irofulven, our novel anti-cancer compound, through the initiation of a number of new clinical trials and the Fast Track designation we recently received from the FDA," commented Chuck Blitzer, president and chief executive officer of MGI PHARMA. "We also formally signed the license arrangement for palonosetron and completed a substantial financing during this quarter. We now look forward to the continued advancement of our oncology pipeline, including the Phase 3 programs for both palonosetron and irofulven."

In the first six months of 2001, MGI PHARMA's revenues increased 49 percent to $18.6 million from $12.5 million in the corresponding 2000 period. Net loss in the first half of 2001 was $18.5 million, or a loss of $1.04 per share, compared to $9.0 million, or a loss of $0.58 per share in the corresponding 2000 period. As previously noted, the prior year's results have been restated for the effect of implementing Staff Accounting Bulletin 101 as of January 1, 2000 which resulted in a charge of $9.4 million, or $0.61 per share, in the first half of 2000. Total costs and expenses in the first half of 2001 increased 194 percent to $37.9 million from $12.9 million in the corresponding 2000 period.

The increase in expenses is primarily due to increased research and development expenses relating to the clinical and preclinical development of the Company's broad pipeline of oncology products, and the in-licensing of palonosetron, as well as the expansion of MGI's commercial capacity. In addition, as noted above, during the quarter the company incurred a license fee of $13.1 million related to the definitive agreement with Helsinn Healthcare SA, granting MGI PHARMA exclusive U.S. and Canadian license and distribution rights to the compound.

At June 30, 2001 MGI PHARMA's assets totaled $67.3 million, including cash and investments of $42.7 million. Cash and investments include the net proceeds of $29.2 million from the Company's sale of common stock during the second quarter.

Second Quarter Developments

Palonosetron Update

Palonosetron is a potent, long-acting 5-HT3 receptor antagonist currently in Phase 3 development for the prevention of CINV. Second quarter highlights are as follows:

Signed Definitive Agreement - as noted above, MGI PHARMA formally secured the definitive agreement with Helsinn Healthcare SA, granting the Company exclusive U.S. and Canadian license and distribution rights to palonosetron.

Data Presented at ASCO -- Results of two separate Phase 1 trials in healthy volunteers to assess the pharmacokinetic properties and safety of palonosetron were presented. Palonosetron was well tolerated and had no unexpected or serious side effects recorded in these Phase 1 trials. Palonosetron was also found to have a plasma elimination half-life of 37 hours, which is at least three times longer than other marketed agents in its class.

Irofulven Update

During the quarter, the Company made substantial progress in the clinical development program for irofulven, its lead anti-cancer compound. Highlights include the following:

Fast Track Designation -- MGI PHARMA received Fast Track designation from the U.S. Food and Drug Administration for the use of irofulven in patients with Gemzar(R)-refractory pancreatic cancer.

Phase 3 Clinical Trial for Pancreatic Cancer -- Enrollment to date in the pivotal Phase 3 trial for the treatment of advanced pancreatic cancer is consistent with achieving the goal of full enrollment in third quarter of 2002.

Additional Clinical Trials -- MGI initiated three new clinical trials with irofulven:

-- Multi-center, Phase 2 trial in recurrent malignant glioma, the most common
type of brain cancer, to evaluate irofulven as a single agent in up to 27
patients.

-- Multi-center, Phase 2 trial in advanced or metastatic refractory soft tissue
sarcoma, to evaluate irofulven in up to 40 patients.

-- Phase 1 trial of irofulven in combination with Gemzar(R)in approximately 30
patients with advanced solid tumors.

Data Presented at ASCO:

-- Data were presented from a National Cancer Institute-sponsored

Phase 2 trial of irofulven in ovarian cancer patients at this

year's American Society of Clinical Oncology (ASCO) meeting

held in San Francisco on May 12-15, 2001. Interim results were

reported for 38 patients with recurrent disease following

platinum and paclitaxel treatments. Seven patients

demonstrated objective responses; one patient had a complete

clinical response, six patients had partial responses; and 13

had stable disease. Patients with partial responses remained

progression-free for more than five and up to 20 months, and

those with stable disease remained progression-free for two to

nine months.

-- Five abstracts were also published that included interim Phase

1 results for weekly dosing schedules of irofulven, as well as

a summary of irofulven's anti-tumor activity across Phase 1

and 2 trials. The data showed that patients had greatly

improved tolerance with weekly dosing schedules compared to

previous trials with four or five consecutive days of

treatment, while preserving anti-tumor activity.

DNA Methyltransferase Program

During the quarter a key patent for "Inhibition of DNA Methyltransferase" was granted to MethylGene Inc., the partner with whom the Company has an exclusive North American license and research and development agreement for inhibitors of DNA methyltransferase. As part of its existing agreement with MethylGene, MGI PHARMA has the exclusive license to develop, market and sell in North America MG98, a second-generation antisense mRNA inhibitor, and any small molecule inhibitor of DNA methyltransferase derived from the two companies' cancer research collaborations. This new patent, U.S. Patent No. 6,184,211, provides significant expansion of the intellectual property rights available under this exclusive agreement.

Salagen(R) Presentation at ASCO

The Radiation Therapy Oncology Group (RTOG) presented data from this 249-patient Phase 3 trial showing that concurrent use of Salagen(R) Tablets with radiation therapy gave a statistically significant improvement of salivary flow versus placebo in head and neck cancer patients. Based on these findings, RTOG concluded that this trial data provides new support for the use of Salagen Tablets during radiation treatment.

Financing

As noted above, in May the Company received net proceeds of approximately $29.2 million from the sale of four million shares of common stock to U.S. Bancorp Piper Jaffray Inc. These proceeds add to the funds available for further development of the Company's broad portfolio of oncology products, and the shares were placed with institutional investors.

2001 Financial Outlook

This section provides forward-looking information about MGI PHARMA's financial outlook for 2001. These projections include the impact of MGI's entire product portfolio, which comprises Salagen(R) Tablets, Hexalen(R) Capsules, Mylocel(TM) Tablets, irofulven and the other acylfulvenes, palonosetron, MG98 and the complementary small molecule inhibitor program. The disclosure notice paragraph regarding forward-looking statements at the end of this news release is especially applicable to this section. For the year ending December 31, 2001:

-- Product sales are currently projected to grow approximately 20

percent (a change from last quarter guidance),

-- Cost of product sales as a percent of sales revenue is

expected to range from 10 to 15 percent,

-- Licensing revenue is expected to be approximately $3 million

and would increase if commercial rights for irofulven outside

the United States are out-licensed,

-- R&D expense is expected to range from $35 to $45 million

depending on the pace of irofulven and MG98 development and

the timing of palonosetron milestone achievements,

-- Selling, general and administrative expenses are expected to

be approximately $25 million (a change from last quarter

guidance),

-- Amortization expense related to the acquisition of Hexalen

Capsules is expected to be approximately $1.2 million, and

-- Net loss is expected to range from $35 to $45 million.

Webcast of Second Quarter Conference Call

MGI PHARMA's 2001 second quarter conference call will be broadcast live over the Internet on Wednesday, July 18, 2001 at 1:00 p.m. Eastern Time. The Company's executive management team will review second quarter 2001 financial results, answer questions from analysts and investors, and provide commentary on MGI's product portfolio and business outlook. Interested parties may access the webcast via the corporate information section of MGI's web site at www.mgipharma.com .

About MGI PHARMA

MGI PHARMA, INC. is an oncology-focused pharmaceutical company that acquires, develops and commercializes proprietary products that address the unmet needs of cancer patients. MGI is building a balanced product portfolio of proprietary pharmaceuticals, and intends to become a leader in oncology. The Company focuses its sales efforts solely in the United States and collaborates with other pharmaceutical or biotechnology companies for its products in international markets. For more information about MGI, please visit the Company's web site at www.mgipharma.com.

This news release contains forward-looking statements that may include statements regarding intent, belief or current expectations of the Company and its management. These forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that may cause the Company's actual results to differ materially from the results discussed in these statements. Factors that might affect MGI PHARMA's results include, but are not limited to the ability of MGI PHARMA's product candidates to be proven safe and effective in humans and to ultimately compete successfully with other therapies, continued sales of MGI PHARMA's marketed products, development or acquisition of additional products, reliance on contract manufacturing, changes in strategic alliances, continued access to capital, and other risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission. MGI PHARMA does not intend to update any of the forward-looking statements after the date of this news release to conform them to actual results.

                           MGI PHARMA, INC.
                       Statements of Operations
                              (Unaudited)

                      Three Months Ended          Six Months Ended
                           June 30,                  June 30,
                   -----------------------  -------------------------
                      2000        2001         2000          2001
                   ---------- ------------  -----------  ------------
Revenues:
 Sales             $6,134,082 $ 10,161,386  $10,700,377  $ 17,145,494
 Promotion            269,874            0      519,874             0
 Licensing            896,813      850,902    1,257,869     1,442,571
                   ---------- ------------  -----------  ------------
                    7,300,769   11,012,288   12,478,120    18,588,065
                   ---------- ------------  -----------  ------------
Costs and Expenses:
 Cost of sales        393,142    1,031,483      697,213     1,820,836
 Selling, general
  & administrative  4,639,718    7,282,846    8,160,302    13,775,621
 Research and
  development       2,225,347   18,189,689    4,029,565    21,743,507
 Amortization               0      295,495            0       590,989
                   ---------- ------------  -----------  ------------
                    7,258,207   26,799,513   12,887,080    37,930,953
                   ---------- ------------  -----------  ------------

Income (loss)
 before interest
 and taxes         $   42,562 $(15,787,225) $  (408,960) $(19,342,888)

Interest income       539,680      377,640      912,526       813,806
                   ---------- ------------  -----------  ------------

Income (loss)
 before taxes         582,242  (15,409,585)     503,566   (18,529,082)
                   ---------- ------------  -----------  ------------

Provision for
 income taxes          35,184            0       96,463             0
                   ---------- ------------  -----------  ------------

Net income (loss)
 before cumulative
 effect of change
 in accounting
 principle         $  547,058 $(15,409,585) $   407,103  $(18,529,082)
                   ---------- ------------  -----------  ------------

Cumulative effect
 of change in
 accounting
 principle         $        0 $          0  $(9,402,643) $          0
                   ---------- ------------  -----------  ------------

Net income (loss)  $  547,058 $(15,409,585) $(8,995,540) $(18,529,082)
                   ========== ============  ===========  ============




                        Three Months Ended        Six Months Ended
                             June 30,                 June 30,

                      ----------------------  -----------------------
                          2000        2001        2000        2001
                      ----------- ----------  -----------  ----------
Net income (loss) per common share:
Basic
  Income (loss) from
   continuing
   operations         $      0.03      (0.81) $      0.03       (1.04)
  Cumulative effect of
   accounting change         0.00       0.00        (0.61)       0.00
                      ----------- ----------  -----------  ----------
  Net income (loss)   $      0.03      (0.81) $     (0.58)      (1.04)
                      =========== ==========  ===========  ==========

Assuming dilution
  Income (loss) from
   continuing
   operations         $      0.03      (0.81) $      0.03       (1.04)
  Cumulative effect of
   accounting change         0.00       0.00        (0.61)       0.00
                       ----------- ----------  -----------  ----------
   Net income (loss)  $      0.03      (0.81) $     (0.58)      (1.04)
                       =========== ==========  ===========  ==========

Weighted average
 number of common
 shares:
   Basic               15,812,118 18,987,549   15,514,659  17,766,891
   Assuming dilution   17,160,856 18,987,549   15,514,659  17,766,891


                          Balance Sheet Data
                              (Unaudited)

                                  December 31,   June 30,
                                     2000          2001
                                  -----------   -----------

Cash and short-term investments   $29,898,787   $42,712,415
Total assets                       52,743,570    67,276,816
Total stockholders' equity         26,045,617    41,047,936