Research Triangle Park, North Carolina
November 7, 2002

Paradigm Genetics, Inc. (Nasdaq: PDGM), a biotechnology company, today reported financial results for the third quarter ended September 30, 2002.

For the three months ended September 30, 2002, total revenue decreased 16% to $5.2 million, compared to $6.3 million for the same period in 2001. Despite this revenue decrease, overall profitability slightly improved when compared to the same period last year. For the nine months ended September 30, 2002, total revenue decreased 8% to $16.4 million compared to $17.8 million for the same period in 2001. The decrease in revenue, which we anticipated, resulted primarily from lower
throughput in the GeneFunction Factory(TM) under Paradigm's commercial partnership with Bayer AG. This lower throughput was due to Paradigm's shift from the target discovery phase of the Bayer partnership to the assay development phase. The revenue decrease was partially offset by higher throughput in GeneFunction Factory(TM) under the commercial partnership with The Monsanto Company and revenue from the VDDI research collaboration, which was signed in February 2002.

Total operating expenses for the three months ended September 30, 2002 decreased 12% to $9.0 million compared to $10.2 million for the same period in 2001. Total operating expenses for the nine months ended September 30, 2002 were $30.2 million compared to $30.3 million for the same period in 2001. The decrease in operating expenses resulted primarily from our internal restructuring which we completed in April 2002 and continued cost control.

Including non-cash compensation charges, the company reported a third quarter 2002 net loss of $3.9 million, or $0.12 per common share. This compares to a net loss of $4.1 million, or $0.15 per common share, for the same period in 2001. Excluding the non-cash compensation charges, the net loss for the three months ended September 30, 2002 would have been $3.8 million, or $0.12 per common share. For the nine months ended September 30, 2002, the company reported a net loss of $14.2 million, or $0.44 per common share, which includes non-cash compensation charges of $544,000. This compares to a net loss of $12.4 million, or $0.47 per common share, for the same period in 2001.

"In the past 90 days, we set our strategy and secured a key toxicogenomics contract, resulting in the creation of important momentum for the company," said Heinrich Gugger, Ph.D., president and CEO. "This momentum has enabled us to hire two very accomplished executives -- Phil Alfano as Chief Financial Officer and Barry Buzogany as General Counsel -- thus completing our executive team. We now have the necessary competence and firepower to shift gears from strategy to implementation and to tackle the growth opportunities inherent in our new approach.

"Our goal now is to expand the market access for our suite of proven and emerging technologies. We believe we can significantly improve the research productivity of our existing and future partners by applying our gene expression and biochemical profiling technologies and data coherence tools throughout the full product lifecycle, from early discovery to in-market products."

Highlights
During the third quarter 2002, Paradigm:

• Received a five-year, $23.8 million toxicogenomics contract from the National Institute of Environmental Health Sciences. The contract is focused on determining how toxicants work and cause damage at the cellular level. The research may result in better methods of risk assessment and compound optimization for both the pharmaceutical and agricultural chemical industries.
• Paradigm and Agilent Technologies Inc. announced the commercial availability of an Arabidopsis microarray kit featuring more than 14,800 plant gene sequences derived from public domain databases. The specific gene sequences contained on one industry-standard glass slide will enable scientists to conduct high-content, genome-wide screening of Arabidopsis thaliana, a model organism used in the research and development of new plants and foods.
• Paradigm's Board of Directors appointed Heinrich Gugger, Ph.D., as President and Chief Executive Officer. Dr. Gugger brings to Paradigm extensive general management experience in a wide variety of industries, including crop protection, electronic materials, and laser applications.
• Paradigm appointed Thomas Colatsky, Ph.D., to the position of Vice President, Healthcare Research. Colatsky brings significant pharmaceutical industry experience to Paradigm, including 17 years at Wyeth-Ayerst, most recently as Vice President, Cardiovascular and Metabolic Disorders, Discovery Research and three years at Physiome Sciences as Executive Vice President and Chief Scientific Officer.

Strategic Actions

In line with Paradigm's efforts to focus its business and restructure its current economics in line with its strategy, the company took the following actions:

• Completed a revision of its research plan in its commercial partnership with Monsanto, providing an improved product to Monsanto, in line with its current agbiotech strategy. This rescope has no effect on the company's cash projection. However, it alters the timing of revenue recognition. The revised partnership better captures efficiencies developed in the GeneFunction Factory(TM) resulting in improved profitability for Paradigm.
• Decided to divest ParaGen, its plant genotyping business. This business is not envisioned as adding to our toxicogenomics and biomarker discovery program. We feel ParaGen will be more attractive to companies focused on plant breeding.
• Decided to sell its fungicide assets, which are not capitalized on the company's books.
• Deferred providing further research services to the fermentation and nutrition industries.

As a result of these strategic actions, Paradigm revises its guidance for fourth quarter 2002 from a $0.12 loss per share to a $0.29 loss per share.

"It is very important to understand that the increase in the fourth quarter 2002 loss is not performance related and does not affect cash flow negatively. Rather, it is a reflection of critical decisions to improve our profitability, sharpen our focus and better position us for 2003 and beyond," said Gugger. "The Monsanto rescope affects the timing, not the amount, of the revenues. The ParaGen divestiture is financially neutral and frees up essential resources."

Paradigm is a biotechnology company aiming to increase R&D productivity by focusing its integrated suite of technologies on the product development cycle, from target discovery to subsequent enhancement of the safety and efficacy profiles of development candidates. Paradigm chooses a systems biology approach to understand gene function in the context of biological pathways, to
develop assays and biomarkers for molecular diagnostic solutions tailored to the needs of our commercial and government partners. For more information, visit www.paradigmgenetics.com.