Year 2003 revenues up 23%, expenses down 12%, cash burn down 77%

Paradigm Genetics, Inc. (Nasdaq: PDGM), a biotechnology company, today reported financial results for the quarter and year ended December 31, 2003. The Company reported improved revenues, reduced expenses and reduced cash burn for the fourth quarter and year 2003, as compared to the same periods in 2002.

Paradigm Genetics reported a fourth quarter 2003 net loss of $2.2 million, or $0.07 per common share, which was in line with earlier guidance provided by the company of $0.04 to $0.07 loss per common share. This represents an improvement over the fourth quarter 2002 net loss of $9.3 million, or $0.29 per common share. The fourth quarter 2002 results included losses from discontinued operations of $2.7 million, or $0.09 per common share, resulting from the Company's 2002 divestiture of its ParaGen plant genotyping business.

Total revenues for the fourth quarter 2003 increased to $5.5 million compared to $1.9 million in the fourth quarter 2002, a quarter during which the Company worked with the Monsanto Company to refocus the scope of its research collaboration, resulting in delayed revenue recognition for Paradigm. Fourth quarter 2003 revenue improvements were primarily due to increases in revenue from its National Institute of Environmental Health Sciences (NIEHS) and Monsanto contracts and an Advanced Technology Program (ATP) grant, partially offset by previously completed commercial agreements.

Total operating expenses for the fourth quarter 2003 decreased to $7.7 million compared to $8.5 million in fourth quarter 2002, due primarily to continued cost controls and productivity gains. Some of the savings from productivity gains have been reinvested to accelerate current R&D programs in agriculture and human health.

As of December 31, 2003, the Company reported unrestricted cash and investments in the amount of $16.3 million, in the form of cash, cash equivalents, short- and long-term investments. This balance compares favorably to its guidance of $13 to 15 million and reflects the benefits of the Company's ongoing cost control and cash management activities.

The Company reported that for the year 2003, revenues increased 23% to $21.1 million compared to $17.2 million for the same period in 2002. Expenses for the year decreased 12% to $32.8 million compared to $37.3 million, and the net decrease in cash, cash equivalents and investments ("cash burn") was reduced by 77% to $4.9 million from $21.8 million.

"I view 2003 as the year in which we achieved a critical transformation of our company - financially, commercially and strategically," said Heinrich Gugger, Ph.D., President and CEO of Paradigm Genetics. "We significantly improved our financial health. We reinvigorated our agricultural endeavors not only by signing significant profit generating commercial contracts with Pioneer/Dupont and Bayer CropScience, but also by launching promising internal research projects targeting proprietary product concepts in the area of chemical genetics. And we made excellent progress in our human health program. The acquisition of TissueInformatics, which we expect to close during the first quarter, will further propel us toward the creation of a truly unique integrated systems biology offering."

Gugger continued, "Looking into 2004, we want to build on this new momentum. In agriculture, we will continue to broaden and deepen our customer base using the foundation of our enhanced platform capabilities. In human health, we should see significant impact of our acquisition of TissueInformatics, which brings us not only powerful technology and an emerging product and sales pipeline but also key people with the extensive medical, business development and sales experience in the pharmaceutical sector that Paradigm has been seeking. I am truly excited for our shareholders, employees, partners and customers as we build the leading systems biology company."

Fourth Quarter 2003 Commercial Contracts

Paradigm Genetics reported the following commercial contracts in agriculture during the fourth quarter 2003:

• Extension of its collaboration with Bayer CropScience taking the partnership through September 2006. This extension underscores the vital role Paradigm Genetics plays in Bayer CropScience herbicide discovery program.

• Fungicide evaluation agreement with Bayer CropScience, whereby Bayer will test several fungicidal compounds validated by Paradigm Genetics.

• This agreement represents a first step in commercializing the Company's proprietary fungicide assets.

• Three-year, $9 million collaboration with Pioneer/Dupont to identify genes that influence crop traits. The company will leverage its high-throughput GeneFunction Factory(R) for this work.

On the healthcare side, Paradigm Genetics entered into two proof-of- concept agreements, one with a major pharmaceutical company and one with a leading biotechnology company. These agreements highlight the company's initial success in penetrating the pharmaceutical industry and lay the groundwork for significant future healthcare collaborations.

Paradigm Genetics is a biotechnology company applying a unique systems biology approach to life sciences discovery. The Company is focused on the discovery and validation of genes, targets and biomarkers for product development in the pharmaceutical and agricultural industries, with an internal focus on metabolic disorders, pathway engineering and chemical genetics. The Company also provides value-added services in microarray processing (Paradigm Array Labs(TM)), gene-based discovery (GeneFunctionFactory®) and high throughput assay development. Paradigm Genetics has five major customers: Bayer CropScience, Monsanto Company, the National Institute of Environmental Health Sciences, the National Institute of Standards & Technology's Advanced Technology Program and Pioneer Hi-Bred International.