ChondroGene Reports First Quarter 2006 Financial Results

TORONTO, CANADA (May 31, 2006): ChondroGene™ Limited (TSX Venture: CDG) today announced its financial results for the first quarter ended March 31, 2006. The Company reported revenues of $868,222 for the period compared to $878,251 for the three months ended March 31, 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 $2,204,103 or $0.06 per share, compared to a net loss of $1,126,595 or $0.03 per share for the three-month period ended March 31, 2005.

"Since the beginning of the year, we have made significant progress in the development of our blood-based colon cancer test, ColonSentry. We announced preliminary performance results of our test, had an abstract accepted at the Association of Clinical Oncology (ASCO) meeting to be held in early June, and entered into a clinical collaboration with Kaiser Permanente to further refine and evaluate the test," stated K. Wayne Marshall, President and CEO of ChondroGene. "We had a significant paper published during the quarter in the Journal of Laboratory and Clinical Medicine that, for the first time in a peer reviewed publication, described the application of the Sentinel Principle" in a wide variety of tissues associate with various diseases - brain, colon, heart, kidney, liver, lung, prostate, spleen, and stomach. The lead author of this paper was Dr. C.C. Liew, ChondroGene’s Chief Scientist and the discoverer of the Sentinel Principle™. In the latter part of quarter, we sponsored and organized a conference in Malaysia - the 2006 Biotechnology Symposium: Developing Medical Biotechnology in Malaysia, from Start-up to IPO. This conference not only allowed us to promote our company and technology in Malaysia but also to solidify our relationships there and attract new investors."

Subsequent to the quarter end, the Company closed a $25 million private placement financing with a syndicate, led by Westwind Partners Inc., which included PowerOne Capital Markets Limited, Canaccord Capital Corporation, Loewen, Ondaatje, McCutcheon Limited and Paradigm Capital Inc., by issuing 15,625,000 common shares at a price of $1.60 per share. The financing was placed with institutional and accredited Canadian, US, Asian and other offshore investors.

Dr. Marshall added that “completion of the offering provides sufficient capital to drive commercialization of our lead product, ColonSentry. It also enables us to leverage our platform technology for biomarker discovery and validation, the Sentinel Principle, in order to provide content for our Sentry line of diagnostic products and to provide biomarker content for strategic partners in the diagnostic and pharmaceutical industries”

Annual General Meeting

ChondroGene’s Annual General Meeting will be held at 4:30 PM on June 12, 2006 at the Toronto Board of Trade, 1 First Canadian Place.

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.