SmallCaps Online LLC Initiates Coverage of ARIAD Pharmaceuticals with a BUY Recommendation

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New York, NY, May 20, 1999 - SmallCaps Online LLC announced today that it has initiated coverage of ARIAD Pharmaceuticals (Nasdaq: ARIA) with a BUY recommendation. The full text of this report can be accessed at SmallCaps Online’s web site, at www.SmallCapsOnline.com.

Excerpts from the report follow:

ARIAD Pharmaceuticals has successfully created an integrated program of drug discovery focused on the identification of novel, orally delivered pharmaceuticals based on signal transduction (internal cell communication) technology. ARIA’s "gene-to-drug" platform encompasses its ability to identify and validate new molecular targets (functional genomics), to rationally design drugs that interact with these targets and then to optimize and evaluate the pharmaceutical properties of these drugs (medicinal chemistry and pharmacology). ARIA’s product programs are focused in two areas: 1) the development of small-molecule drugs that block signal transduction pathways that play a critical role in diseases such as osteoporosis, allergy/asthma and immune-related diseases, and 2) the development of orally administered drugs that control the production of therapeutic proteins such as EPO, Human Growth Hormone, Alpha Interferon or Beta Interferon.

Like many small-cap biotechnology companies, ARIA stock is currently trading near its 52-week low. Despite a multi-million dollar joint venture with Hoechst Marion Roussel (HMR), called the Hoechst-ARIAD Genomics Center, and innovative gene therapy technology called ARGENT, the stock has sold-off as investors have become impatient with small-cap healthcare technology companies in general. We believe ARIA has a unique collection of technology and product assets, and represents a unique investment opportunity at this time. We are initiating coverage with a BUY rating, and recommend purchase of ARIA shares for those investors tolerant of the risks associated with micro-cap and small-cap equity investments.

Broad, Proprietary Platform Technology; First Clinical Trial Underway

• ARIA has a broad intellectual property portfolio based on certain signal transduction pathways that it has leveraged into its partnership with HMR and into the development of a lead compound to treat osteoporosis.
• The advancement of ARIA’s ARGENT system, or the ability to turn "on and off" inserted genes by means of small molecule drugs, has already resulted in the successful completion of a Phase I clinical trial to treat Graft-versus-Host Disease (GvHD) in patients undergoing allogeneic bone marrow transplants. We believe ARGENT will be the driving force behind partnerships signed during 1999.
• In animal studies, ARGENT has demonstrated efficacy in successfully regulating a number of different protein genes, the most notable of which is erythropoietin (EPO). Due to these successes and following discussions with management, we believe ARIA will sign multiple partnerships over the next 12 months with biotechnology and pharmaceutical companies interested in specific therapeutic proteins.

Strong Corporate Partner in Hoechst Marion Roussel (HMR)

• Since 1995, HMR and ARIA have been collaborating to develop compounds to treat osteoporosis. ARIA has received several milestone payments from HMR from its osteoporosis program and we would expect to hear more from these programs in the coming years.
• In 1997, HMR and ARIA formed the Hoechst-ARIAD Genomics Center, a five-year, 50/50 joint venture to discover novel molecular targets and therapeutic proteins. Hoechst has already invested approximately $40 million in the joint venture and is committed to investing another $50 million over the next 3 years. ARIA has rights to 50% of the validated targets and proteins that emerge from the JV.

Coming Milestones — BUYing Opportunity

• Clinical: During 1999, we expect ARIA to commence a Phase II trial for its GvHD product and to hear of advancements in its osteoporosis and other product programs.
• Partnerships: We are expecting new partnerships during 1999 that should not only strengthen ARIA’s financial and strategic position but could also lead to significant stock appreciation.

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