Friday December 2, 4:01 pm ET

Report Cites Key Strategic Research Partnerships and Demand for New Anti-Cancer Drugs and Novel Treatments

NEW YORK--(BUSINESS WIRE)--Dec. 2, 2005--Callisto Pharmaceuticals, Inc. (AMEX:KAL - News; FWB:CA4), a developer of new drug treatments in the fight against cancer and other serious healthcare threats, today announced that equity analysis firm EquityNet Research has initiated paid research coverage of the Company with a detailed report that recommends a "Buy" rating, and projects a 12-month share price target of $3.45.

In determining its projected share price appreciation for Callisto, EquityNet noted a number of core growth factors, including the Company's diverse and unique intellectual property portfolio. This currently includes Callisto's multiple drug development programs for new and needed cancer treatments, a biodefense Homeland Security program, and a proprietary drug for gastro-intestinal inflammation. The report also cited Management's strategic vision to continue to expand its development pipeline through development and acquisition of potential high-revenue drug technologies and candidates.

"Rather than a typical fledgling biopharmaceutical company, we see KAL as a bona-fide drug development concern, one that has great leadership and alignment with top-notch scientific community institutions and members," wrote EquityNet Research analyst Randy D. Lewis, CFA. "The cancer treatment market is hungry for new, more successful treatments, and should the Company prove efficacy in any of many indications, future earnings performance should be outstanding."

Callisto's R&D diversity is one of its key competitive advantages, because this multi-pronged development strategy reduces dependence on any one drug or market segment for its success, according to the EquityNet Research report. Callisto has also increased efforts to identify promising in-licensing opportunities to extend its IP portfolio with new drug candidates that present potential high-growth revenue opportunities.

Callisto's two lead anti-cancer drug candidates, Atiprimod and L-Annamycin, are being developed respectively to treat multiple myeloma and two forms of relapsed leukemia. The Company is also developing a drug to treat inflammatory bowel disease, and has a novel homeland defense initiative termed the Superantigen Biodefense Project, which is exploring development of a drug and vaccine to protect against biowarfare agents from the class of Staphylococcus and Streptococcus pathogens.

Additional competitive advantages described in the report include:

    * Minimizing Competition: The Company's initial focus has been on smaller markets that the big Pharmas don't traditionally pursue, such as treatments for relapsed or refractory cases of cancer, potentially minimizing competition and eliminating the need to go head-to-head with larger industry players.
    * Marketing Exclusivity Protection: The FDA's designation of "orphan drug" status for two of Callisto's drug candidates provides market exclusivity and other advantages.
    * Revolutionary Drug Development: Callisto has received patent protection for its drug SP304, a first-in-class drug candidate for the treatment of ulcerative colitis, a frequently devastating gastro-intestinal inflammatory disease.
    * Homeland Security Market Opportunity: The biodefense aspect of the Company's model provides additional large market and diversification benefits, as well as speculative appeal. 

CEO and Chief Scientific Officer, Dr. Gary S. Jacob said, "Callisto has engaged EquityNet Research to conduct a thorough, responsibly researched and credible analysis of Callisto and the market. Though it is paid research, we believe the EquityNet report presents an engaging, balanced and detailed view of our company and its new drug candidates in development to treat a wide range of diseases and conditions."

Callisto has compensated EquityNet Research to conduct a comprehensive and objective third party research report, and the resulting analysis and assessment is EquityNet's own independent work product. Callisto did not participate in the creation of the conclusions in the report, nor its price growth projections.

The full report, produced under compensation terms described below, can be found at http://www.equitynet.net/.

About Callisto Pharmaceuticals, Inc.

Callisto is a biopharmaceutical company committed to the development of innovative new drugs to treat cancer and other major diseases and health threats. Currently, the Company's drug development pipeline includes anti-cancer drugs to treat blood, or hematological, cancers, and related diseases, as well as new drugs with Homeland Security applications designed to protect against potential bio-warfare agents, including staphylococcus and streptococcus. Currently, Callisto is developing two anti-cancer drug candidates to treat multiple myeloma and leukemia, both serious blood cancers. The Company's L-Annamycin drug candidate is presently planned to enter a clinical trial to treat adult relapsed or refractory acute lymphocytic leukemia (ALL) in Q4 2005. L-Annamycin has a novel therapeutic profile that includes the potential to treat patients whose cancers have shown resistance to other cancer drugs; it also has shown potential for significantly reduced cardiotoxicity, or danger to the heart, compared with existing anthracycline cancer drugs. Callisto's anti-cancer drug Atiprimod is being explored as a treatment for relapsed or refractory multiple myeloma. Atiprimod is currently in a Phase I/IIa clinical trial in relapsed or refractory multiple myeloma patients at four clinical sites in the United States.

Callisto also has another exciting program based on its proprietary technology on guanylate cyclase receptor agonist (GCRA). U.S. Patent and Trademark Office has given a Notice of Allowance on a patent for a novel drug compound created by Callisto scientists to treat a variety of inflammatory diseases of the bowel, including colon cancer. 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. The preclinical efficacy of the lead GCRA peptide SP304 has been demonstrated in animal models for ulcerative colitis. Callisto plans to advance the lead drug candidate for clinical evaluation in humans in 2006. Callisto also has received a major biodefense partnership grant from the National Institute of Allergy and Infectious Diseases (NIAID) to develop a monoclonal antibody and vaccine against bacterial superantigen toxins. Bacterial superantigens are among the most lethal of toxins that can potentially be used as bioweapons. 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, please visit www.callistopharma.com.

Compensation Disclosures

EquityNet Research is an independent research firm and has been compensated $8,000 by the subject company for this research report. The information contained herein has been obtained from sources which are believed to be reliable, but the accuracy or completeness of the contents cannot be guaranteed. Any opinions and/or projections expressed herein are solely of the writer and are subject to change without notice. This report under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report contains forward-looking statements include expressions of belief, expectation, contemplation, estimation and other expressions not relating to historical facts and circumstances. These forward-looking statements are subject to numerous risks and uncertainties that may cause such statements not to prove accurate. Any recommendations contained in this report may not be suitable for all investors. Any investment recommendations in this report contain a high degree of risk and a prospective investor is encouraged to review in detail the company's prospectus, SEC filings, and/or other additional information. Any projections or estimates herein made assume certain economic and industry conditions and parameters subject to change.

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.

Contact:

Callisto Pharmaceuticals, Inc.
Dan D'Agostino, 212-297-0010 x227
dagostino@callistopharma.com
or
Trilogy Capital Partners, Inc.
Paul Karon, 800-592-6067 (Financial Communications)
paul@trilogy-capital.com

Source: Callisto Pharmaceuticals, Inc.