SHAMAN SAYS IT IS EXITING DRUG BUSINESS

LOS ANGELES, Feb. 1 -- Shaman Pharmaceuticals Inc., a biotechnology
company that relied on tribal healers to provide leads for new drugs,
said today that it would cease its pharmaceutical operations and lay
off 60 people, or 65 percent of its work force.

The announcement came on the day that shareholders, at a special
meeting, authorized 1.5 million new stock options for Lisa A. Conte,
Shaman's president and chief executive. Ms. Conte said the
shareholders meeting, at which the reorganization suddenly became the
main topic, had been scheduled weeks earlier, when Shaman's prospects
looked brighter.

Ms. Conte said the company decided to cease drug development after the
Food and Drug Administration told Shaman that it would require long
additional clinical trials before approving the company's first drug,
to treat diarrhea in AIDS patients. She said the company had thought,
based on previous discussions with the agency, that it had already
completed sufficient testing.

" We were quite taken by surprise," Ms. Conte, who founded Shaman 10
years ago, said in an interview. "I almost use the word ambush." She
added, "Our whole premise to create return for our shareholders was
shattered."

The company, based in South San Francisco, Calif., will now try to
enter the herbal diet supplement business, which is growing rapidly
and is far less heavily regulated.

Shaman said it would move assets and operations into the privately
held Shaman Botanicals, a subsidiary that might be spun off someday.
The company said it would try to license or sell the drugs it had in
development to other companies.

Shaman's stock lost more than half its value today, falling 46.875
cents, to 40.625 cents, far below its 52week high of nearly $5.50.

Ms. Conte, 39, defended her stock options, saying the board had
decided on them as necessary to provide incentives for executives. The
options, which she can exercise staring in March, have an exercise
price of $1.281 a share, meaning that they will be worthless unless
Shaman's shares climb above that level.

Shaman is just one of many biotechnology companies that have virtually
collapsed after their first products hit setbacks. It is also one of
many that are running out of money and unable to raise new capital
because of depressed stock prices.

But Shaman attracted more attention than most because of its strategy
of consulting healers in the tropics, looking for plants that have
traditionally been used as medicines and isolating the key
ingredients.

Its first drug, isolated from a South American plant, was being tested
for use in other types of diarrhea in addition to the type connected
with AIDS. The company was also developing drugs for diabetes.

Jim McCamant, editor of the Medical Technology Stock Letter, said he
was surprised and puzzled by the company's decision to end its
pharmaceutical program. "They had taken it to the point where it had
significant value," said Mr. McCamant who had been recommending the
stock.