Research Triangle Park, North Carolina
August 6, 2003

Revenues up 27%, net loss reduced by 28%.
Company accelerates focus on growth opportunities.

Paradigm Genetics, Inc., a biotechnology company, today reported financial results for the quarter ended June 30, 2003. During the second quarter, the company continued its positive trend by announcing increased revenues over the first quarter and further reductions in its net loss and improved cash flow from operations.

Paradigm reported a second quarter 2003 net loss of $3.6 million, or $0.11 per common share, which is a 28% improvement over second quarter 2002 net loss of $5.0 million, or $0.16 per common share. The loss is in line with earlier guidance provided by the company of $0.10 to $0.12 loss per common share.

Total revenues for second quarter 2003 increased 27% to $5.6 million compared to $4.4 million in the second quarter 2002. This improvement was primarily due to increases in revenues recognized from the new National Institute of Environmental Health Sciences contract, a one-time service contract and the Advanced Technology Program grant -- compared to no revenues for these programs in the second quarter 2002. These increases were partially offset by anticipated decreases in revenues from Bayer CropSciences and The Monsanto Company. For the first six months of 2003, revenues decreased 4% to $9.7 million compared to $10.1 million for the same period in 2002. This decrease was primarily due to anticipated decreases in revenues from Bayer CropSciences and The Monsanto Company, partially offset by revenues from the new NIEHS contract, a one-time service contract and the Advanced Technology Program grant.

While making targeted investments in its R&D programs for human health and agriculture, Paradigm continued to reduce overall operating expenses. Total expenses for second quarter 2003 decreased 7% to $9.0 million compared to $9.6 million in second quarter 2002. For the first six months of 2003, operating expenses decreased 16% to $17.0 million compared to $20.2 million for the same period in 2002, due primarily to reduced payroll expenses and other cost control measures.

As further evidence of its improving financial health, the Company reported:

    * Paradigm used approximately $1.7 million of cash in second quarter 2003 

      compared to a use of $4.0 million in first quarter 2003 and $4.4 million

      in second quarter 2002.

    * Net cash used in operating activities decreased 81% to $0.6 million in

      second quarter 2003 compared to $2.9 million in first quarter 2003.

    * Capital expenditures in second quarter 2003 were held to $0.3 million.

      The company expects that the need for new capital expenditures will

      continue to remain at significantly lower levels than those experienced

      in prior years.

    * Debt payments in second quarter 2003 remained consistent with previous

      quarters at $1.1 million.  The $7.5 million refinancing with Silicon

      Valley Bank -- which closed in July 2003 and, therefore, is not included

      in second quarter 2003 results -- enabled Paradigm to pay off its

      approximately $3 million equipment loan with Transamerica Technology

      Finance, provided a $2.5 million revolving line of credit, and increased

      working capital by an additional $3.0 million.  The new financing is at

      substantially lower rates and will reduce scheduled debt payments by

      approximately $0.6 million for the remainder of the year.

    * While revenues were up $1.5 million, or 38%, to $5.6 million in second

      quarter 2003 from the first quarter 2003, total operating expenses only

      increased $0.9 million, or 11%, to $9.0 million for the same period.

      Further, approximately $0.5 million of the increase in expenses related

      to non-recurring charges.

    * As of June 30, 2003, the company reported unrestricted cash and

      investments in the amount of $15.5 million, in the form of cash, cash

      equivalents, short- and long-term investments, compared to $17.2 million

      at the end of the first quarter 2003.  On a pro forma basis, if the

      refinancing with Silicon Valley Bank had closed on June 30, 2003,

      unrestricted cash plus amounts available under the revolving line of

      credit would have totaled $19.6 million.  The company forecasts a year-

      end 2003 balance of unrestricted cash plus amounts available under the

      revolving line of credit of at least $13.0 to $15.0 million.

"Our improved cash flow is direct evidence of the financial and operational improvements we've made in the past 12 months. Proactive management of challenges such as delays in contract revenues or the Nasdaq listing situation is now paying a dividend," said Heinrich Gugger, Ph.D., President and CEO of Paradigm Genetics. "The recent refinancing with Silicon Valley Bank, along with rigorous cash controls and operations improvements, further solidifies our financial position and creates greater flexibility for us. Recent increases in work flow from the NIEHS contract and the opportunity for increased revenues from our ATP grant help partially offset the normal delays in closing new deals with large companies."

"Looking forward," Gugger said, "we are focused on building on our core competencies and providing results for our existing and future commercial partners. Additionally, to take Paradigm to the next level, we will leverage our technology platforms to create a portfolio of proprietary products for our human health business and novel product concepts for our agricultural business. By doing so, we can create the opportunity for long-term, sustainable growth and a sustainable competitive advantage for Paradigm."

About Paradigm Genetics

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 in agriculture and human health. 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 partners. Paradigm's proprietary Gene to Cell to System(TM) approach has three major components: gene expression profiling, biochemical profiling (also known as metabolomics) and data integration and coherence. For more information, visit www.paradigmgenetics.com.