Paradigm Genetics, Inc. (Nasdaq: PDGM), a functional genomics company, today reported financial results for the first quarter ended March 31, 2001.

For the three months ended March 31, 2001 total revenues increased 819% to $5.5 million, compared to approximately $593,000 for the same period in 2000. The increase in revenue was due to higher throughput from Paradigm’s Gene Function Factory™ relating to the company's commercial partnerships with Bayer AG and Monsanto Company.

Total operating expenses for the three months ended March 31, 2001, excluding non-cash compensation charges, increased 84% to $9.3 million compared, to $5.0 million for the same period in 2000. The majority of the increase in operating expenses resulted from variable costs associated with higher throughput in the GeneFunction Factory™, an acceleration of Paradigm's metabolic profiling research, and the company's continued investment in informatics-based technologies. Between March 31, 2000 and March 31, 2001 the company added 78 research scientists and 12 employees in business development and operations.

Including non-cash compensation charges, the company reported a first-quarter 2001 net loss attributable to common stockholders of $4.0 million, or $0.15 per common share, which was 2 cents better than the consensus earnings estimate reported by First Call. This compares to a net loss of $16.8 million, or $3.11 per common share for the same period in 2000. Excluding the non-cash compensation charges, the net loss for the three months ended March 31, 2001 would have been $3.7 million, or $0.14 per common share.

"We are off to a good start in 2001 and continue to meet the goals we have laid out for ourselves" said John A. Ryals, Ph.D., Chief Executive Officer of Paradigm Genetics. "We have started commercial production in our new third-generation, state-of-the-art GeneFunction Factory™. Our first quarter revenues and expenses were 21% and 6% higher, respectively, than during the last quarter of 2000, demonstrating the impact of higher throughput in our GeneFunction Factory™. Also, we are continuing to invest in technologies such as metabolomics and informatics that we believe will leverage the gene function data produced by our factory and help secure our long-term competitive position."

Highlights

• Paradigm met its scheduled milestone and delivered another herbicide assay to Bayer during the first-quarter of 2001.
• Paradigm exceeded the scheduled milestone deliverables in its commercial partnership with Monsanto by 20%, resulting in an accelerated milestone payment.
• Paradigm published its Transposon-Arrayed Gene Knock-Out (TAG-KO(TM)) technology, a functional genomics method that can be used to discover and mutate genes in organisms with large genomes in which the sequence is not necessarily known. These results, from research conducted in fungi, were published in the Proceedings of the National Academy of Sciences.

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