"Today Clinical Data is a biotechnology company with a pipeline of late-stage candidates that are first-in-class or potentially best-in-category. This achievement is due to rapid and systematic execution of our strategy to focus operations on growing our asset base, divesting non-core assets and devoting the majority of our resources to the most promising drug candidates," commented Drew Fromkin, Clinical Data's President and Chief Executive Officer.

"Foremost, our internal drug development expertise has successfully driven the vilazodone clinical program through two consecutive, successful Phase III registration trials for depression and we intend to file a new drug application for submission to the FDA by the end of this calendar year. We believe that vilazodone's novel dual-acting serotonergic mechanism of action and its tolerability profile will offer strong differentiation in a largely unsatisfied, multi-billion dollar antidepressant market. Market research indicates that vilazodone will be well-received by doctors and their patients given its differentiation from other antidepressants, including a lack of impairment of sexual function when measured by validated, objective scales. Sexual dysfunction is a common and undesirable side effect associated with many antidepressants. Importantly, to continue the momentum in our clinical development pipeline, we are moving our next promising drug candidate, Stedivaze, a vasodilator used for cardiac stress testing, into a Phase III clinical program."

Fiscal 2009 Highlights

Acquired Adenosine Therapeutics, LLC. Significantly expanded the Company's therapeutics pipeline, adding drug candidates in cardiology, diabetes and inflammatory diseases, including Stedivaze (apadenoson), which is entering a Phase III clinical program as a potential best-in-category vasodilator used for cardiac stress testing.

Completed Financings. Company secured $50 million in convertible debt financing in March 2009 to fund a new drug application (NDA) filing for vilazodone and initiation of the Stedivaze Phase III clinical program. In September 2008, Clinical Data completed a private placement of 1,514,922 shares of newly issued common stock for proceeds of $25 million. Both of these transactions were funded by Randal J. Kirk, Chairman of Clinical Data's Board of Directors, and certain of his affiliates.

Launched New Genetic Tests. PGxHealth division launched two new genetic tests for inherited cardiac syndromes: (i) Hypertrophic Cardiomyopathy (HCM), and (ii) Arrhythmogenic Right Ventricular Cardiomyopathy (ARVC), an often fatal heart condition.

Additional Insurance Coverage. Signed a new in-network contract with Aetna and a contract with the Blue Cross and Blue Shield Association to provide individual Blue Cross and Blue Shield companies with access to the FAMILION Long QT Syndrome (LQTS) genetic test for inherited cardiac syndromes. To date, positive coverage policies offer access to FAMILION tests for over 200 million patients.

Journal Publications. Complete results from the first Phase III study of vilazodone were published in the Journal of Clinical Psychiatry.

Recent Highlights

Positive Results from Second Phase III Trial of Vilazodone. Vilazodone, a novel dual-acting serotonergic antidepressant, is a potent and selective serotonin reuptake inhibitor (SSRI), and a partial agonist of the 5-hydroxytryptamine 1a (5-HT1A) receptor, thereby combining first-line antidepressant therapy with an accepted adjunctive treatment for depression and first-line therapy for anxiety. In June 2009, the Company reported top-line results on its second Phase III trial for vilazodone. This study demonstrated statistically significant results on the primary endpoint and secondary efficacy endpoints related to depression. In addition, vilazodone was generally well tolerated, with safety data consistent with the findings from the previous trial. A statistically significant improvement in the symptoms of anxiety associated with depression was also observed. Effects of vilazodone on sexual function, as measured by a validated, objective scale, were comparable to placebo, which is an important finding as many antidepressants have been associated with causing or exacerbating sexual dysfunction. An NDA filing with the U.S. Food and Drug Administration (FDA) for vilazodone for the treatment of depression is expected by the end of 2009.

Acquisition of Avalon Pharmaceuticals. Expanded therapeutics pipeline with the closing of the acquisition of Avalon Pharmaceuticals in May 2009, gaining promising oncology biomarkers and compounds.

Announced Plan to Launch Enhanced LQTS Test. PGxHealth division will launch a newly enhanced FAMILION LQTS Test, which will double the number of genes analyzed to detect genetic mutations to help guide treatment and prevent possible sudden cardiac death.

Divestiture of Genomics Services Business to Beckman Coulter. To support the Company's focus on drug development, the Cogenics genomic services division was sold to Beckman Coulter.

Additional Research Collaborations. Research collaborations were established with the Dana-Farber Cancer Institute and the University of Pittsburgh to further examine the role of FCGR3A and potentially other variants for predicting response to monoclonal antibody therapies in cancer treatment.

Financial Results: Q4 2009

Fiscal 2009 fourth quarter revenue increased 103% or $1.6 million to $3.2 million compared to $1.6 million in fiscal 2008. This increase was driven primarily by the expansion of the PGxHealth sales and marketing force and increased payor coverage during the last 18 months.

Gross margin in the fourth quarter of fiscal 2009 was 49% compared with 51% in the same period in fiscal 2008. However, in fiscal 2009, gross margins increased from 28% in the first fiscal quarter to 49% in the fourth fiscal quarter. The overall decline from fiscal 2008 to 2009 was primarily due to the planned investments in infrastructure, equipment and a new laboratory information management system (LIMS), which were designed to increase productivity and lab efficiencies as sales of PGxHealth tests grow in future periods. Gross margins are expected to continue to improve as infrastructure investments drive efficiencies.

Research and development expenses increased by $7.5 million to $12.8 million in the fourth quarter of fiscal 2009, or 140%, from $5.3 million for the same period in fiscal 2008. The increase was due primarily to the vilazodone Phase III confirmatory clinical and safety trials, which were initiated in late fiscal 2008 and completed in June 2009.

Sales and marketing expenses increased $0.6 million, or 40%, from $1.5 million in the fourth quarter of 2008 to $2.1 million for the same period in fiscal 2009. The increase related to further development of the PGxHealth sales force, marketing to new territories and managed care contracting efforts.