Paradigm Genetics, Inc. (Nasdaq: PDGM), a biotechnology company, today announced the closing of its acquisition of TissueInformatics, Inc., a privately held company based in Pittsburgh, Pa., through an all-stock transaction. TissueInformatics specializes in the development and application of automated pathology software for the quantitative analysis of tissue changes in drug discovery, disease assessment, toxicology, and tissue engineering research. The combined organization, with 212 employees, will be headquartered in Research Triangle Park, NC while maintaining current operations in Pittsburgh, Pa.

“This acquisition puts Paradigm Genetics at the forefront of the systems biology field. We believe it will give us a powerful competitive advantage as the first company to integrate gene expression profiling, biochemical profiling and quantitative tissue analysis for life sciences discovery. Together, we can accelerate the commercialization of our technologies and build a proprietary product portfolio in biomarker-based drug discovery,” said Heinrich Gugger, Ph.D., President and CEO of Paradigm Genetics. “We are pleased to welcome TissueInformatics employees, shareholders, customers and partners to our Paradigm Genetics team.”

“When you look across the landscape of systems biology companies, the new Paradigm Genetics has emerged as a prominent leader in the industry,” said G. Steven Burrill, Chairman of the Paradigm Genetics Board of Directors and CEO of Burrill & Company, a San Francisco-based life sciences merchant bank.

Paradigm Genetics will issue 3,402,839 million shares of common stock to TissueInformatics shareholders immediately, with a value of approximately $4.5 million, based on Paradigm Genetics’ closing price as of today. An additional 2.7 million shares will be available on an "earn-out" basis for the successful achievement of performance milestones on or before December 31, 2004. These milestones are tied to the attainment of specified revenue levels and new research contracts with corporate customers. Paradigm Genetics will assume all outstanding TissueInformatics' options and warrants equivalent to approximately 385,000 shares of Paradigm Genetics common stock (assuming all performance milestones are met). All shares issued or to be issued are subject to a lock-up period of one year from the date of closing.

As previously announced, Peter Johnson, M.D., former Chairman and CEO of TissueInformatics, and Mark Braughler, former Senior Vice President, Business Development, join Paradigm Genetics’ senior executive team. Dr. Johnson becomes Executive Vice President and Chief Medical Officer and Dr. Braughler becomes Vice President, Business Development – Healthcare, both reporting to Dr. Gugger.

Dr. Johnson founded and became the first Executive Director of the Pittsburgh Tissue Engineering Initiative in 1994. In 1996, he became that organization’s first president. From 1989 to 1999, he served as Assistant Professor and then as a tenured Associate Professor of Surgery at the University of Pittsburgh School of Medicine, where he practiced reconstructive surgery. He was also the Research Director in Plastic Surgery during that interval and founded and led the Facial Nerve Center, a multidisciplinary center for the care of facial paralysis patients. He presently serves as Adjunct Professor of Surgery at the University of Pittsburgh. Dr. Johnson is the Past President of the Pennsylvania Biotechnology Association (where he continues as a Board member), the Plastic Surgery Research Council and the Tissue Engineering Society, International. He is the Co-Editor of the journal Tissue Engineering. He serves on the Board of Directors of the Carnegie Institute of Pittsburgh and the Carnegie Science Center, the Tissue Engineering Society, International and is a member of the Business Advisory Council of the Federal Reserve Bank, Cleveland Branch. Dr. Johnson received his BS degree from the University of Notre Dame and his MD degree from the State University of New York Upstate Medical Center. He took his General Surgery training at Case-Western Reserve University and his Plastic Surgery training at the University of Pittsburgh School of Medicine. He was a postdoctoral research fellow at Harvard University in the study of thrombosis. He is a named inventor on multiple patents related to digital tissue analysis and clinical morphometry.

Dr. Braughler was President & CEO of Argonex Inc., a biotechnology company based in Charlottesville, VA, from 1998 to 2000. From 1995 to 1998, he was Vice President, Business Development of Pharmacia & Upjohn, a global pharmaceutical company formed through the merger of Pharmacia Corporation and The Upjohn Company in 1995. From 1989 to 1995, he served as Director of Acquisition Review, Research Contracts, Competitive Intelligence and Intellectual Property for The Upjohn Company. Prior to beginning his career in business, Dr. Braughler was a Senior Research Scientist for The Upjohn Company from January 1982 to August 1989 where he jointly led global drug discovery and development efforts in central nervous system trauma. Prior to beginning his career in industry in 1983, he was Associate Professor of Pharmacology with tenure at the Northeastern Ohio Universities College of Medicine from June 1979 to December 1982. Dr. Braughler received his Ph.D. in pharmacology in 1976 from the University of Pittsburgh School of Medicine. He was an NIH post-doctoral fellow in Clinical Pharmacology at the University of Virginia School of Medicine from 1977 to 1979.

Paradigm Genetics is a biotechnology company applying a unique systems biology approach to life sciences discovery. Paradigm Genetics 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. Paradigm Genetics also provides value-added services in gene expression microarray processing (Paradigm Array Labs™), gene-based discovery (GeneFunctionFactory®), high throughput screening assay development and TissueInformatics™ automated pathology software. Paradigm Genetics has major customers including the National Institute of Environmental Health Sciences, Bayer CropScience, the Monsanto Company, Pioneer Hi-Bred International, the National Institute of Standards & Technology’s Advanced Technology Program, and L’Oréal Inc.