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Rodman & Renshaw Inc. Initiates Coverage of Ariad Pharmaceuticals, Inc. With a Market OutPerform.

NEW YORK -- Rodman & Renshaw's Senior Biotechnology Analyst, Elemer Piros, Ph.D. has initiated coverage of Ariad Pharmaceuticals, Inc. with a Market Outperform and an 18-month price target of $11. Following initiation on Cepheid in June, the Ariad recommendation signals Rodman & Renshaw's continuing commitment to small- and mid-cap quality growth companies.

Dr. Piros, formerly a buy-side analyst at Spear, Leeds & Kellogg (now a wholly-owned subsidiary of Goldman Sachs) stated, "We are initiating coverage of Ariad with a Market Outperform/Speculative Risk rating. Over the next 6-15 months, Ariad will enter human clinical testing with four additional programs addressing large unmet medical needs. The transition from a research-oriented biotech company to a developer of drugs with a focus on cancer and blood diseases represents an important milestone in Ariad's history. In our view, the transition should galvanize investor interest."

Among Ariad's most promising developments may be the licensing of NF-(kappa)B treatment method patents. According to Dr. Piros, "The company has licensed the patents describing one of the most fundamental signaling molecules in medicine, NF-(kappa)B. Ariad has filed a lawsuit against Eli Lilly claiming infringement by two marketed drugs. While it is difficult to handicap the outcome of the litigation, we believe success would mean hundreds of millions of dollars in royalty payments to Ariad providing the funds to fully develop Ariad's drug portfolio."

Dr. Piros believes Ariad's shares are undervalued, "We have evaluated the market potential of Ariad's programs, remaining R&D expense and probability of success. In our calculation, the sum of the net present value of the portfolio exceeds $300M (by YE03). Based on current market valuation of less than $100M, we believe that Ariad shares are undervalued."

Rodman & Renshaw's recommendation on Ariad takes into account the realization that commercial potential of any drugs entails risks of receiving FDA approval and substantial costs in bringing new drugs to market against much larger, entrenched competitors. Consequently, we assign a Speculative Risk rating to the stock.

For further information about Ariad or a copy of the entire research report, please contact Christine Viola at 212-356-0505 or at cviola@rodmanandrenshaw.com

Rodman and Renshaw is a privately owned, full-service investment banking and brokerage firm headquartered in New York City, serving the public and private small- and mid-cap company markets through underwriting, investment research and the trading of small-capitalization equities.

Rodman & Renshaw is a member of the National Association of Securities Dealers, CRD number 16415.

CONTACT: Christine Viola of Rodman & Renshaw Inc., +1-212-356-0505

or cviola@rodmanandrenshaw.com

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CONTACT: Christine Viola of Rodman & Renshaw Inc., +1-212-356-0505 or cviola@rodmanandrenshaw.com

Web site: http://www.rodmanandrenshaw.com/
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Geographic Code:1USA
Date:Sep 5, 2002
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