RESEARCH TRIANGLE PARK and PITTSBURGH, Jan. 29 /PRNewswire-FirstCall/ --
Paradigm Genetics, Inc. (Nasdaq: PDGM), a biotechnology company, announced
today that it has entered into a definitive agreement with
TissueInformatics.Inc whereby Paradigm Genetics will acquire
TissueInformatics, a privately-held company based in Pittsburgh, Pa., which
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. The acquisition will occur
through an all-stock transaction in which approximately 3.4 million shares
will be issued immediately and approximately 2.7 million additional shares are
subject to performance milestones.
This acquisition provides Paradigm Genetics with TissueInformatics'
technology to obtain quantitative tissue feature information for use in
Paradigm Genetics' biomarker and target discovery efforts as well as a
proprietary portfolio of drug targets and diagnostics in diabetes, obesity and
aging through TissueInformatics' joint venture with DiAthegen, LLC. It also
brings to Paradigm enhanced expertise in pre-clinical development, clinical
medicine and pharmaceutical business development.
"The acquisition of TissueInformatics will accelerate the
commercialization of our technologies and the building of our own product
portfolio in biomarker-enabled drug discovery," said Heinrich Gugger, Ph.D.,
President and CEO of Paradigm Genetics. "I am also enthusiastic about the
opportunities to apply TissueInformatics expertise in quantitative tissue
analysis to our agricultural research programs. Most importantly, we believe
this acquisition provides Paradigm Genetics with a unique competitive
advantage as the first company to combine gene expression profiling,
biochemical profiling and quantitative tissue analysis in a systems biology
approach to life sciences discovery."
The acquisition of TissueInformatics is a key step in the growth strategy
of Paradigm Genetics, providing the Company with direct access to highly
quantitative information about tissue structure. The Company expects the
acquisition to:
* create a unique systems biology platform that enables the quantitative
analysis of disease and drug action using a Gene to Cell to System(TM)
approach;
* significantly strengthen the Company's scientific and commercial
position through scientific and commercial synergies in toxicology,
target and biomarker discovery as well as assay development;
* provide opportunities for an expanded services business that can
generate near-term revenue and leverage R&D activities supporting the
development of a proprietary pipeline of diagnostics, drug targets and
leads; and
* better position the Company for near-term and future growth by
expanding its offering and gaining access to new potential customers
and partners.
The combined Company will offer the following products and services: a
unique systems biology platform for life sciences discovery and safety
assessment through the combination of gene expression profiling, biochemical
profiling and quantitative tissue analysis; advanced research capabilities in
biomarker-enabled drug discovery, with an internal focus on diabetes and
obesity; Paradigm Array Labs(TM) microarray processing services;
commercialization of its TissueAnalytics(TM) automated pathology software for
use by pharmaceutical, biotechnology and tissue engineering companies for
application in drug discovery and toxicology; and, gene-based discovery of
novel herbicide and fungicide targets and plant genes important in crop
production, pathway engineering of fine chemicals in plants, and high
throughput screens for beneficial agricultural compounds.
Upon closing the transaction, Paradigm Genetics will employ 225 people, be
headquartered in Research Triangle Park, NC and maintain current operations in
Pittsburgh, Pa. The existing TissueInformatics management team will join
Paradigm Genetics. Peter Johnson, M.D., will become Executive Vice President
and Chief Medical Officer, and Mark Braughler, Ph.D., will become Vice
President, Business Development -- Healthcare. Both will become members of
Paradigm Genetics' executive management team and report to Dr. Gugger.
Additionally, Todd Joron, MBA, will become Head, TissueAnalytics(TM) Software
Business; and Max Fedor, MBA, will become Head, Product Development,
TissueAnalytics(TM) Software.
"Paradigm Genetics and TissueInformatics have been partners since March
2003 when we entered into a collaboration to discover biomarkers for chronic
liver disease," said Peter Johnson, M.D., Chairman and CEO of
TissueInformatics. "Our shared interest in toxicology and metabolic disorders,
our similar corporate cultures, our complementary technologies and our vision
for future growth make this decision a natural one. Our shareholders recognize
the significant opportunity this merger provides to leverage their investment
into this unique and exciting biotechnology company. I'm also pleased that
this deal recognizes the Pittsburgh region as an emerging player in
biotechnology."
Under the terms of the agreement, Paradigm Genetics, which currently has
32.6 million shares outstanding, will issue new shares of Paradigm Genetics
Common Stock to TissueInformatics shareholders in a stock-for-stock exchange.
Approximately 3.4 million Paradigm Genetics shares will be issued at closing
with an additional 2.7 million shares 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
also assume all outstanding TissueInformatics' options and warrants equivalent
to approximately 400,000 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. Upon
closing, Paradigm Genetics will receive approximately $2.7 million in cash and
assume approximately $150,000 in long-term debt and capital lease obligations.
The acquisition is subject to the approval of TissueInformatics'
stockholders and other customary closing conditions and is expected to close
in early March 2004. The principal stockholders of TissueInformatics,
including TVM V Life Science Ventures, The Manufacturers Life Insurance
Company and Aurora Ventures and others, have agreed to vote their shares in
favor of the transaction. Needham & Company, Inc. provided a fairness opinion
to the Board of Directors of Paradigm Genetics.
The shares of Paradigm Genetics Common Stock issuable in the transaction
with TissueInformatics have not been registered under the Securities Act of
1933, as amended, or any state securities laws. Unless so registered, the
common stock may not be offered or sold absent an exemption from or
transaction not subject to the registration requirement of the Securities Act
and any applicable state securities laws. Paradigm Genetics has agreed to
register the shares issued to TissueInformatics shareholders prior to the
expiration of the lock-up period. This press release shall not constitute an
offer to sell, or the solicitation of an offer to buy, nor shall there be any
sale of common stock in any state in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any such state.
Conference Call
Paradigm Genetics' and TissueInformatics' senior management will discuss
details concerning the proposed acquisition of TissueInformatics during a
special conference call scheduled for January 30, 2004 at 11 a.m. ET. To
listen to the call, participants may dial +1-800-289-0468 (US and Canadian
callers) or +1-913-981-5517 (International callers) and enter conference ID
#563207 or visit http://www.paradigmgenetics.com where the call will be
simultaneously webcast. A replay of the call will be available through
February 3, 2004 at midnight by dialing +1-888-203-1112 (US and Canadian
callers) or +1-719-457-0820 (International callers) and entering conference ID
#563207. The webcast will be archived and available for replay from the
Investor Relations page of Paradigm Genetics' website.
About TissueInformatics
TissueInformatics.Inc is the World's Automated Pathology Company. Staffed
with seasoned professionals and funded with over $25M in financing from
notable investors such as Motorola, TVM V Life Science Ventures, Aurora Funds,
The Manufacturers Life Insurance Company and other venture capital and private
financers, TissueInformatics has developed TissueAnalytics(TM) automated
pathology software and services for more precise identification and
quantification of tissue. Building upon TissueInformatics' expertise in
automated pathology software for the quantitative analysis of animal tissue
slides from drug safety studies, dermapathology, and correlative
bioinformatics, TissueInformatics seeks to accelerate the drug discovery
process by providing a broad range of tissue analysis software, tissue
analysis services, and drug target discovery solutions to the pharmaceutical,
biotechnology and CRO industries. For more information,
visit http://www.TissueInformatics.com .
About Paradigm Genetics
Paradigm Genetics is a biotechnology company that offers a unique systems
biology approach to life sciences discovery; advanced research capabilities in
biomarker-enabled drug discovery, with an internal focus on diabetes and
obesity; Paradigm Array Labs(TM) microarray processing services; and, gene-
based discovery of novel herbicide and fungicide targets and plant genes
important in crop production, pathway engineering of fine chemicals in plants,
and high throughput screens for beneficial agricultural compounds. Paradigm
Genetics has five major clients: 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. For more information, visit http://www.paradigmgenetics.com .
This press release contains forward-looking statements, including
statements regarding Paradigm Genetics' acquisition of TissueInformatics and
the future prospects of the combined company, including but not limited to,
the commercialization of TissueInformatics' and Paradigm Genetics' technology
and expertise, the competitive advantages and synergies of the combined
companies, the compatible technology platforms, the opportunities to generate
near-term revenue, and leverage research and development activities and expand
access to potential customers and partners. Such forward-looking statements
are based on management's current expectations and are subject to a number of
risks, factors and uncertainties that may cause actual results, events and
performance to differ materially from those referred to in the forward-looking
statements. These risks, factors and uncertainties include, but are not
limited to, TissueInformatics' early stage of development, the history of net
losses for both companies, technological and product development
uncertainties, reliance on research collaborations, uncertainty of additional
funding and ability to protect patents and proprietary rights. Certain of
these and other risks are identified in Paradigm Genetics' annual report on
Form 10-K for the year ended December 31, 2002 and in its quarterly report on
Form 10-Q for the quarter ended September 30, 2003, each filed with the
Securities and Exchange Commission. The Company does not intend to update any
of the forward-looking statements after the date of this release to conform
these statements to actual results or to changes in our expectations, except
as may be required by law.
SOURCE Paradigm Genetics, Inc.
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Related links:
http://www.paradigmgenetics.com
CONTACT:
Melissa Matson, Director, Corporate
Communications of Paradigm Genetics, Inc., +1-919-425-3000; or
Todd Joron, Senior Vice President of TissueInformatics.Inc,
+1-412-327-4354; or Brian Ritchie or Mark Vincent of Noonan Russo
Presence Euro RSCG, +1-212-845-4200
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