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Clinical Data Reports Q3 Fiscal 2009 Results

Clinical Data, Inc. (Clinical Data) reported total revenues of $10.1 million for the third quarter of fiscal 2009, compared with the total revenues of $10.5 million in the year-ago quarter. It reported net loss of $23.6 million, or $1.04 per share, for the third quarter of fiscal 2009, compared with net loss of $4.3 million, or $0.21per share, in the year-ago quarter.

Revenue for the nine months ended December 31, 2008 increased $6.6 million, or 31%, to $28.2 million, when compared to the same period a year ago, excluding the impact associated with grant funded research projects of $4.7 million in this period.

Clinical Data’s PGxHealth genetic testing services continued to grow, with revenues increasing by 105%, to $2.6 million, and 117%, to $6.7 million, for the three and nine month periods ended December 31, 2008, respectively, when compared to the same periods a year ago. The increase in revenue for the three and nine month periods ended December 31, 2008 was driven primarily by sales of the company’s FAMILION® tests for inherited cardiac syndromes.

Compared to the same periods in fiscal 2008, and excluding Cogenics Icoria grant revenues, the company’s Cogenics genomic service business revenues grew by 1% and 16% for the three and nine month periods ended December 31, 2008, respectively.

Three months ended December 31, 2008 compared to the three months ended December 31, 2007

Excluding the impact associated with certain Cogenics Icoria grant funded research projects completed in December 2007, total revenue for the three months ended December 31, 2008 was $10.1 million, increasing 16%, or $1.4 million, from $8.7 million for the same period a year ago, despite an unfavorable impact of $0.5 million due to fluctuations in foreign currency during the quarter. Including the negative impact of the grant revenue which totaled $1.8 million for the quarter, revenues decreased by $0.4 million, or 4%, when compared to the same period a year ago.

PGxHealth test revenue for the three months ended December 31, 2008 increased $1.3 million, or 105%, to $2.6 million from $1.3 million for the same period a year ago. Revenues continue to increase with additional positive coverage policies including a new in-network contract signed this quarter with Aetna for PGxHealth’s FAMILION tests. In addition, PGxHealth is an approved Medicare provider for its genetic testing services, and a Medicaid provider in 38 states and the District of Columbia, up from just seven states in January 2008. Currently, PGxHealth reports approximately 189 million covered lives. To accelerate revenue growth, the company expanded its PGxHealth sales force and launched another genetic test this quarter for ARVC, which is the third new test introduced by PGxHealth in the past 12 months. Total PGxHealth revenue for the three months ended December 31, 2008 increased $1.4 million, or 95%, to $2.8 million from $1.4 million for the same period a year ago.

Excluding the impact associated with certain Cogenics Icoria grant funded research projects completed in December 2007, Cogenics revenue remained essentially flat at $7.3 million for the three months ended December 31, 2008 and for the same period in fiscal 2008. Including the Cogenics Icoria grant revenue of $1.8 million in fiscal year 2008, total Cogenics revenues decreased by $1.7 million, or 19%, to $7.3 million for the three months ended December 31, 2008, down from $9.1 million for the same period last year.

Gross profit margins increased to 31% for the three month period ended December 31, 2008, up from 30% for the same period a year ago, with 35% gross margins for the PGxHealth division. The slight increase in gross profit margins was driven by the increase in revenues during the period, offset by costs associated with increased headcount and infrastructure improvements required to manage the growing demand for FAMILION tests. The company anticipates that its gross margins will continue to improve as PGxHealth test volumes increase and the Cogenics division employs more cost-effective strategies while growing revenues.

Research and development expenses increased $7.7 million, or 99%, to $15.5 million from $7.8 million for the three months ended December 31, 2007. The increase was attributable primarily to the ongoing long-term safety and Phase III registration trials for vilazodone that began in December 2007 and March 2008, respectively, and to a lesser extent, costs associated with advancing the Adenosine Therapeutics’ pipeline during the three months ended December 31, 2008.

Sales and marketing expenses increased $0.5 million to $3.4 million, or 17%, for the three months ended December 31, 2008, up from $2.9 million for the same period a year ago. The increase was due to the continued expansion of the sales and marketing function within PGxHealth, as compared to a year ago.

General and administrative expenses for the third quarter of fiscal 2009 were $6.6 million, a decrease of 6%, or $0.4 million, from $7.0 million for the three months ended December 31, 2007.

During the three months ended December 31, 2008, the company also reported a non-cash charge for purchased in-process research and development (IPR&D) expense totaling $1.0 million related to the proposed acquisition of Avalon Pharmaceuticals.

Cash, cash equivalents and marketable securities were $28.4 million at December 31, 2008.

Nine Months Ended December 31, 2008 Compared to the Nine Months Ended December 31, 2007

Excluding the impact associated with the conclusion of Cogenics Icoria grant funded research projects of $4.7 million, revenue for the nine months ended December 31, 2008 increased $6.6 million, or 31%, from $21.5 million to $28.2 million compared to the same period a year ago.

PGxHealth test revenue for the nine months ended December 31, 2008 increased $3.6 million, or 117%, to $6.7 million from $3.1 million for the same period a year ago. This increase was primarily driven by the introduction of a new PGxHealth commercial sales and marketing team in September 2007 and increased coverage from third-party payers, such as Aetna, Medicare and Medicaid. PGxHealth revenue for the nine months ended December 31, 2008 increased $3.7 million, or 105%, to $7.2 million from $3.5 million for the same period a year ago.

Excluding the impact associated with Cogenics Icoria grants, Cogenics revenue increased $2.9 million, or 16%, to $20.9 million for the nine months ended December 31, 2008 compared to $18.0 million for the same period a year ago. The increase in revenue was due to the acquisition of Cogenics Germany with revenues of $3.8 million during the nine months of the fiscal year ended December 30, 2008, compared to $1.4 million for the same period a year ago. In addition, revenues from Cogenics’ core service lines increased $0.5 million, or 3%, from $16.7 million for the nine months ended December 30, 2007 to $17.2 million for the nine months ended December 31, 2008. Including the impact of Cogenics Icoria grants of $4.7 million, Cogenics revenue decreased $1.8 million, or 8%, to $20.9 million for the nine months ended December 31, 2008 from $22.7 million for the same period a year ago.

Gross profit margins increased from 24% for the nine months ended December 31, 2007 to 28% for this period. The increase was due to a combination of growing revenue and cost reduction activities within the Cogenics operations.

Research and development expenses increased $20.6 million, or 165%, from $12.5 million for the nine months ended December 31, 2007 to $33.1 million for this period. The increase was primarily related to the ongoing long-term safety and Phase III registration trials for vilazodone, which began in December 2007 and March 2008, respectively, and, to a lesser extent, costs associated with advancing the Adenosine Therapeutics’ pipeline since the acquisition.

Sales and marketing expenses increased $3.4 million, or 49%, from $7.0 million for the nine months ended December 31, 2007 to $10.4 million for this period.