ChondroGene Reports Second Quarter 2006 Financial Results

TORONTO, CANADA (August 17, 2006): ChondroGene Limited (TSX Venture: CDG) today announced its financial results for the second quarter ended June 30, 2006. The Company reported revenues of $873,020 for the period, compared to $1,498,472 for the three months ended June 30, 2005. Revenues were attributable to fees for service and amortization of the one time payment under the research collaboration with Pfizer that was announced in December 2004. The net loss for the quarter was $1,902,187 or $0.04 per share, compared to a net loss of $731,545 or $0.02 per share for the three-month period ended June 30, 2005. Revenues for the first six months of 2006 were $1,741,242 with a net loss of $4,106,290 or $0.10 per share, compared to revenues of $2,376,723 with a net loss of $1,858,140 or $0.05 per share, for the corresponding period in 2005. At the end of the quarter, the Company had $25,814,059 in cash and cash equivalents.

"In May, we completed our largest financing to date raising $25 million by way of a private placement. This will allow us to focus on the development and commercialization of our lead product ColonSentry™," stated K. Wayne Marshall, President and CEO of ChondroGene. "The financing was one of the largest biotech financings in Canada this year and is a major accomplishment for ChondroGene."

Also during the quarter, the Company entered into a collaborative research study with Kaiser Permanente in Northern California to access clinical samples from an enriched population of patients with colon pathologies. These samples will be used to refine and evaluate ChondroGene’s ColonSentry test. Kaiser Permanente is America’s leading integrated health plan with headquarters in Oakland, California. Kaiser Permanente serves the health care needs of 8.3 million members in 9 states and the District of Columbia.

The Company presented data on its work on colon cancer and prostate cancer at the American Society of Clinical Oncology (ASCO) Annual Meeting in June. ASCO is the world’s leading professional organization representing physicians who treat people with cancer and the Annual Meeting provides a venue where many new discoveries and innovations for cancer diagnosis and treatment are first disclosed. The two ChondroGene presentations were entitled “Novel blood biomarker panel detects human colorectal cancer" and "Blood-based biomarkers for detecting aggressive prostate cancer at time of biopsy".

A paper entitled "Novel Blood Biomarkers of Human Urinary Bladder Cancer" was also published in the June issue of Clinical Cancer Research, a journal that publishes original articles describing clinical research on the cellular and molecular characterization, prevention, diagnosis, and therapy of human cancer The paper describes the use of ChondroGene’s Sentinel Principle™ in a study to identify blood-based biomarkers for use in differentiating between bladder cancer and other genitourinary cancers, and between bladder cancer and healthy controls.

Financial statements are available in the attached pdf document.

About GeneNews

GeneNews is focused on the application of functional genomics to enable early diagnosis and personalized therapeutic intervention based on disease-specific biomarkers. The Company has developed a novel approach, the Sentinel Principle™, to detect and stage virtually any disease or medical condition from a simple blood sample. GeneNews is currently applying the Sentinel Principle™ in major areas with unmet clinical needs such as cancer, arthritis, cardiovascular disease and neurological disorders. GeneNews' first product, ColonSentry™, is a convenient and patient-friendly blood-based test that can assess an individual's current risk for colorectal cancer. For more information on GeneNews, visit www.genenews.com.

This press release contains forward-looking statements, which reflect the Company's current expectations regarding future events. The forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein. Investors should consult the Company's ongoing quarterly filings and annual reports for additional information on risks and uncertainties relating to these forward-looking statements. The reader is cautioned not to rely on these forward-looking statements. The Company disclaims any obligation to update these forward-looking statements.