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--Financial Experts Say Management Practices Valuation Gap Is Larger than Expected--   

--But 95% of Biotech Companies Still Do Not Maximize Operational Excellence -- 

NEW YORK and SAN FRANCISCO, JUNE 7, 2004 . Mardis, Aibel and Associates, LLC, (European Agent Progenta Ltd) a biotechnology management consulting firm, today released study results demonstrating a 20 percentage point gap in the average annual growth rate in market value between public biotechnology companies that make greater use of best management practices and those that do not.  For a biotech firm with an initial market capitalization of approximately $200 million, over 10 years this difference translates into a projected value gap between the better and worse managed firms of over $2 billion.

Yet despite the impact that management practices have on company valuation, Mardis, Aibel research shows that only five percent of biotech companies have adopted the full range of practices defined by experts as constituting operational excellence. These findings are the result of a follow-up analysis of the industry, based on the landmark study, "Biotechnology Management Practices". released by Mardis, Aibel in December, 2003.  The new research is being discussed on June 8th at the BIO 2004 conference in San Francisco at a panel entitled, "The Management Premium".  These are compelling data that powerfully demonstrate the extent to which attention to management and operational issues impacts value creation for biotech firms,. said Dennis Purcell, long-time biotech industry expert and senior managing partner, Perseus-Soros Management, LLC. "I've always strongly believed that good management affects a company's success, but the magnitude of the difference in the rate of market cap growth documented by Mardis, Aibel should be a wake-up call to biotech CEOs to strengthen their management practices". 

Looking at total valuation over 10 years, the analysis found that on average, the firms in the top half of the sample in terms of their good management practices outperformed those in the bottom half by more than a four-to-one margin. Specifically, from IPO through the first quarter of 2004, firms ranking in the top half of the study grew in market value by an average 30.4% each year, while the market capitalization of companies in the bottom half grew at 10.7% per year.1.  The firms we studied that strive for excellence in their day-to-day activities are bringing their drugs to market more quickly, while facing fewer surprises and maintaining sustainable burn rates, with the end result that they are rewarding their investors with much better returns,. said Walter Mardis, a leading industry management consultant who co-founded Mardis, Aibel.  "Despite these tangible benefits, our research shows that 95 percent of the firms do not achieve high levels of performance on best management practices.  Yet instituting just a few key processes could make an enormous difference".  

What makes that difference?  Mardis, Aibel concluded that while most biotech firms emphasize science, fund raising and promotion, best-in-class managers also do the following:

! Structure the business around cross-functional processes and programs

! Use budgeting as a strategic tool, not a perfunctory exercise

! Reward managers and teams for setting and then achieving aggressive objectives

! Establish a well-understood process for shutting down ineffective programs

! Treat management as a professional discipline, not a part-time job.

"Biotechnology Management Practices" assessed the management, operational and organizational practices of North American biotechnology firms based on site visits, surveys and interviews of 200 executives in biotech companies, investment firms, executive recruiters and consultants.  

About Progenta:

Founded by life science business specialists Dr John Cassells and Dr Richard Philpott, Progenta LLP, Cambridge, UK focuses on making businesses out of technology and improving the performance of technology-based companies. They support investors and companies in life science, biotechnology and related sectors with all aspects of business strategy, execution, rationalisation, development and commercialisation. They specialise in giving pragmatic commercially founded advice combined with operational involvement.

About Mardis Aibel:

Mardis, Aibel & Associates, LLC are based in New York and provide consulting, information, advice and professional development to biotechnology executives, industry investors and affiliated companies. They provide industry insights, help you to arrive at a decision and drive your implementation plan.