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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           --------------------------

                                   FORM 10-K

                       FOR ANNUAL AND TRANSITION REPORTS
                    PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

(MARK ONE)

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<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</Table>

                  FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2002
                                       OR

<Table>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</Table>

      FOR THE TRANSITION PERIOD FROM ________________ TO ________________

                         COMMISSION FILE NO. 000-30981

                           --------------------------

                       GENAISSANCE PHARMACEUTICALS, INC.

             (Exact name of registrant as specified in its charter)

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<S>                                             <C>
                DELAWARE                                     06-1338846
    (State or other jurisdiction of             (I.R.S. Employer Identification No.)
     incorporation or organization)

           FIVE SCIENCE PARK                                   06511
         NEW HAVEN, CONNECTICUT                              (Zip Code)
(Address of principal executive offices)
</Table>

       Registrant's telephone number, including area code: (203) 773-1450

                           --------------------------

Securities registered pursuant to Section 12(b) of the Act:  NONE

Securities registered pursuant to Section 12(g) of the Act:  COMMON STOCK, $.001
PAR VALUE
                                         (Title of each class)

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. / /

    Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes / /  No /X/

    The aggregate market value of voting Common Stock held by non-affiliates of
the registrant (without admitting that any person whose shares are not included
in such calculation is an affiliate) on June 30, 2002 was $26,843,669 based on
the last reported sale price of the Common Stock on the Nasdaq consolidated
transaction reporting system.

    Number of shares of the registrant's class of Common Stock outstanding as of
March 28, 2003: 22,846,897.

                      Documents Incorporated By Reference:

    Items 10, 11, 12, 13 and 15 of Part III (except for information required
with respect to our executive officers which is set forth under "Executive
Officers" in Item 1A of Part I of this report) have been omitted from this
report, since we expect to file with the Securities and Exchange Commission, not
later than 120 days after our fiscal year end, a definitive proxy statement. The
information required by Items 10, 11, 12, 13 and 15 of this report, which will
appear in the definitive proxy statement, is incorporated by reference into
Part III of this report.

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ITEM 1. BUSINESS

COMPANY OVERVIEW

    Our goal is to create personalized medicines through the integration of
pharmacogenomics into drug development and marketing. Pharmacogenomics is the
study of how an individual's genetic inheritance affects the body's response to
a drug. We discover inherited differences, or genomic markers, that exist in
human genes. We use our technological capabilities and methods and our clinical
genetics development skills to identify the genomic markers that appear to
define a patient population that responds best to a medication and has a
superior safety profile. We market our technology and our genomic markers to the
pharmaceutical and biotechnology industry as a means to improve the development,
marketing and prescribing of drugs.

    We were incorporated in Delaware on February 22, 1992 and changed our name
to Genaissance Pharmaceuticals, Inc. on March 18, 1997. Our principal executive
offices are located at Five Science Park, New Haven, Connecticut 06511. Our
telephone number is (203) 773-1450. Our website is located at
http://www.genaissance.com.

INDUSTRY OVERVIEW

    DEVELOPMENT AND MARKETING OF DRUGS

    The pharmaceutical, biotechnology and healthcare industries face intense
pressure to become more productive and deliver more cost effective healthcare.
Two of the pharmaceutical and biotechnology industry's most challenging issues
are the high cost and low success rate of developing drugs and the need to
differentiate approved drugs in highly competitive markets. At the same time,
healthcare providers and payers are spending a growing proportion of their
resources on prescription drugs.

    The drug development process is costly and subject to a high failure rate.
The average cost of developing a drug is estimated to be $500 million, including
the cost of unsuccessful drug candidates. Even with recent technological
advances, including advances in areas such as genomics, the failure rate of
clinical trials remains very high. In the United States, only one in five drug
candidates that enters clinical trials reaches the market. Seventy percent of
the drug candidates that enter clinical trials successfully complete phase I,
33% complete phase II, 25% complete phase III and only 20% achieve regulatory
approval. The decision to enter phase III, the most costly phase of clinical
trials, is generally based upon the results obtained from the limited number of
individuals, often fewer than 200, typically studied in phases I and II. The
typical patient population in phase III is between 1,000 and 5,000 individuals,
and the average amount of money spent in a single phase III clinical trial is
estimated to be greater than $40 million.

    Approved drugs often face intense competition. The period of market
exclusivity for the first drug in a new therapeutic class is typically much
shorter today than it was a few years ago. Consequently, marketing expenditures
have increased rapidly as companies attempt to maintain or increase market
share. For example, in 2001, U.S. based pharmaceutical companies spent over
$19 billion on promotional activities, including sales representatives, product
samples and journal advertising. Marketing departments are also under pressure
to maximize the revenue generated from approved products in order to meet
corporate-wide revenue and earnings goals. In addition, the major pharmaceutical
companies, which have reported an average increase in earnings of 14% over the
past five years, now face competition from generic drugs for several of their
blockbuster drugs that generated over $40 billion in sales in 2001. Thus, in
order to maintain revenue growth rates and profitability, pharmaceutical
companies must both improve the success rate of clinical trials and
differentiate their drugs in a crowded market place.

    According to the National Institute for Health Care Management, sales of
prescription drugs in the United States increased 18.2% in 2001 from
$148.2 billion in 2000 to $175.2 billion. Retail spending

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on outpatient prescription drugs has nearly doubled since 1997. In an attempt to
contain the rising cost of drug expenditures, healthcare providers and payers
face the difficult task of deciding which drugs should be prescribed to specific
patients and are suitable for reimbursement. Healthcare providers make these
decisions using medical outcome studies and economic benefit factors but they do
not have any knowledge of which individual patients are most likely to benefit
from a specific drug, if at all. Thus, healthcare providers and patients would
benefit from using drugs that are targeted for a patient population that would
have the best drug response and safety profile, and, thus, allow for more
appropriate and safer intervention.

    POPULATION GENOMICS

    The medical community generally acknowledges that most drugs work more
effectively for some patients than for other patients. The pharmaceutical and
biotechnology industry often poorly understands this variability in patient
response. Consequently, pharmaceutical and biotechnology companies may
unnecessarily discontinue further drug development, fail to obtain regulatory
approval for promising drug candidates, or, even if a drug obtains approval, be
unable to market an approved drug effectively or to obtain approval for third
party reimbursement.

    Scientists have known for a long time that genomic differences influence how
patients respond to drugs. However, pharmaceutical and biotechnology companies
generally have not considered genomic differences between patients in developing
and implementing clinical trials or in the marketing of approved drugs. If, in
clinical trials, pharmaceutical and biotechnology companies were able to use
genomic markers to identify patient populations that would have different drug
responses, they could improve the drug development and marketing process. For
example, pharmaceutical and biotechnology companies could use the genomic
markers, which are identified in phase I and phase II clinical trials as being
predictive of a clinical outcome, to determine the size of the patient
population that would likely benefit from the drug under development. They would
also know the size of the clinical group needed for a phase III clinical trial
to obtain statistically significant data to support the clinical development
program. In addition, if pharmaceutical and biotechnology companies could
identify the patients most likely to have a side effect, they could more closely
monitor these patients or eliminate them from participating in clinical trials
and receiving the drug and, hence, increase the safety profile of a drug. The
pharmaceutical and biotechnology companies would, therefore, have a better
understanding of the cost required to complete the development of a drug and the
likely economic return on their investment before proceeding to a phase III
clinical trial. In addition, if pharmaceutical and biotechnology companies could
use genomic markers to predict a drug response, they would be able to improve
the marketing of their drugs by identifying those patient populations for which
particular drugs are likely to be most effective with the least likelihood of
having an adverse reaction. Furthermore, healthcare providers and payers would
likely benefit economically from predictive information that would enable a
physician to prescribe the most appropriate and safest medication at the
earliest possible time.

    Population genomics is the analysis of genomic variation within groups of
people. The genomic blueprint each person inherits from his or her biological
parents determines differences, such as height, hair color and eye color. As
scientists better understand variation at the molecular or genomic level, they
are more certain that an individual's response to a drug is dependent upon that
individual's unique DNA sequence and that more than one gene is probably
involved in a drug response. Scientists know that every drug generally
interacts, directly and indirectly, with a variety of different proteins
produced by different genes. Therefore, in order to predict a specific drug
response, scientists must analyze genomic variation in multiple genes.

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    SINGLE NUCLEOTIDE POLYMORPHISMS AND HAPLOTYPES

    At the DNA level, genomic variation occurs mainly as a result of variation
at a single position in the DNA sequence, commonly referred to as a single
nucleotide polymorphism or SNP. Geneticists historically studied genetic
variation by analyzing the inheritance of traits within an extended family.
Classical population geneticists coined the term haplotype to describe the
physical organization of genetic variation as it occurs in an individual. The
haplotype is the standard for measuring genetic variation. At the molecular
level, a haplotype consists of multiple, individual SNPs that are organized into
one of the limited number of combinations that actually exists as units of
inheritance in humans. Each haplotype contains significantly more information
than individual, unorganized SNPs. As a result, clinicians need fewer patients
to define a patient population with a different drug response if they use
haplotypes rather than individual, unorganized SNPs.

    In October 2002, an international consortium, composed of non-profit
biomedical research groups and private companies in Japan, the United Kingdom,
Canada, China and the United States, initiated an effort to create a genome-wide
haplotype map. This new venture is aimed at speeding the discovery of genes that
are related to common illnesses, such as asthma, cancer, diabetes and heart
disease. The consortium expects that the International HapMap Project, which
will use as its starting material the more than 2.8 million SNPs that are
already in a public database, will take three years to complete at an estimated
cost of $100 million. The resulting haplotype map could contain anywhere from
300,000 to 600,000 SNPs. Using this genome-wide haplotype map, researchers may
only identify a genomic region that is involved in causing a disease or drug
response rather than the specific gene that is responsible. Researchers are,
thus, likely to need a database of gene haplotypes to determine which of the
genes that are contained within the identified genomic region is actually the
gene responsible for causing the disease or drug response.

    Through the use of gene haplotypes, together with sophisticated software
programs, drug developers could identify, with statistical accuracy in a small
population of the size commonly seen in phases I and II of clinical trials, the
genomic variation that defines different patient populations with different drug
responses and, therefore, make better informed decisions on whether or not to
enter phase III clinical trials. In addition, defining the patient population
with the desired clinical outcome would enable drug developers to improve the
marketing of their drugs by identifying those patients for whom particular drugs
are likely to have the best safety profile and be most effective. Furthermore,
healthcare providers and payers would likely benefit economically from
predictive information that would enable a physician to prescribe the
appropriate medication at the earliest possible time.

    REGULATORY ENVIRONMENT

    On January 31, 2003, the FDA announced a broad initiative, whose purpose is
to help make innovative medical technology available sooner and to reduce the
costs of developing safe and effective medical products while maintaining the
FDA's traditional high standards of consumer protection. The FDA included, in
its initiative, the use of pharmacogenomics during drug development. The FDA
indicated that within six months the agency would issue draft guidance on when
and how to submit pharmacogenomic information to the FDA during drug
development. The FDA said that this guidance would facilitate the exploratory
use of pharmacogenomic screening during drug development and would clarify when
such information would be considered part of the evaluation of drug safety. In
addition, the FDA stated that the agency would hold a workshop in 2003 on issues
that are involved in the co-development of a pharmacogenomic test and a drug and
that within 18 months the agency would issue guidance on the regulatory pathway
for such combinations through the agency's Center for Drug Evaluation and
Research and the Center for Devices and Radiological Health.

                                       4
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THE GENAISSANCE SOLUTION

    We have developed a combination of technologies and expertise, which we call
our HAP-TM- Technology, that allows population genomics to be integrated into
the development, marketing and prescribing of new and existing medicines.

    The key components of our HAP-TM- Technology are:

    - a database of highly informative, proprietary measures of genomic
      variation, or haplotypes, which we call HAP-TM- Markers, for
      pharmaceutically relevant genes;

    - a proprietary informatics system, which we call
      DECOGEN-Registered Trademark-, including unique algorithms, for defining
      patient populations with different drug responses;

    - a cost effective, efficient process for measuring genomic variation in
      clinical DNA samples, which we call HAP-TM- Typing; and

    - clinical genetics development skills.

    We designed our HAP-TM- Technology to permit pharmaceutical and
biotechnology companies to use population genomics in a variety of ways for drug
development and commercialization.

    DRUG DEVELOPMENT.  We designed our HAP-TM- Technology to improve the success
rate of drugs in clinical trials by:

    - assessing efficiently the genomic variation among the patients involved in
      a clinical trial, thereby permitting pharmaceutical and biotechnology
      companies to incorporate genomic variation information into all decisions
      required during the course of a clinical trial;

    - creating better informed, or "smarter," clinical trials through the design
      of protocols, which result in the inclusion of those patients most likely
      to benefit, with a superior safety profile, from the proposed therapeutic
      product;

    - facilitating earlier "go/no-go" decisions on whether to proceed to the
      next phase of clinical trial testing, which should result in a more
      efficient use of clinical resources; and

    - reducing the size and, hence, the cost of late-stage clinical trials by
      enrolling a group of patients, who are most likely to respond to a drug
      and are least likely to suffer an adverse reaction.

    DRUG MARKETING AND PRESCRIBING.  We also designed our HAP-TM- Technology to
help maximize the value of an approved drug by:

    - identifying which of our HAP-TM- Markers define the patient population
      with the best response and with a superior safety profile;

    - integrating genomic variation information into marketing strategies to
      sustain and enhance a market leading position or to address problems such
      as poor market penetration, competitive pricing issues, safety, risk of
      therapeutic substitution, and limited patent life; and

    - targeting new markets and obtaining approval for new indications.

    Our HAP-TM- Technology could also be useful for improving the drug discovery
process through the selection and validation of drug targets. In addition,
pharmaceutical and biotechnology companies could incorporate data obtained
during clinical trials into the drug discovery process to develop second-
generation drugs. If widely adopted, our HAP-TM- Technology could enable the
healthcare system to personalize treatment based upon an individual's unique
genome.

                                       5
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OUR STRATEGY

    Our strategy consists of the following:

    TO GENERATE CURRENT REVENUES FROM COMMERCIALIZING OUR HAP-TM- TECHNOLOGY IN
VARIOUS MARKETS.  The specific revenue sources would include:

    - license fees from granting access to our database of HAP-TM- Markers for
      pharmaceutically relevant genes;

    - HAP-TM- Typing fees for measuring the genomic variation present in DNA
      samples;

    - Study fees for identifying the genomic markers responsible for defining
      populations with different drug response or different traits; and

    - revenues from homebrew diagnostic tests, which we offer that define
      populations with different drug response or different traits.

    The different markets include:

    - pharmaceutical companies, including those in regional markets, such as
      Japan;

    - biotechnology companies;

    - diagnostic companies;

    - government and academic groups; and

    - consumer markets, such as nutraceuticals.

    TO ESTABLISH CONTRACTUAL RIGHTS FOR ROYALTIES FROM THE SALE OF DRUGS AND
DIAGNOSTIC TESTS.  The revenue sources would include developing, with partners,
drug response pharmacogenomic tests from the intellectual property created in
our HAP-TM- Partnership program or in our internal programs. Under our current
strategy, and for the foreseeable future, we do not expect to develop or market
pharmaceutical or diagnostic products on our own. However, we seek royalties
from the sale of drugs and diagnostics, which use our HAP-TM- Markers in a
diagnostic test that:

    - defines drug safety or efficacy or

    - is sold in combination with the use of a drug.

    Our commercialization programs include the following:

    COMMERCIALIZE OUR HAP-TM- TECHNOLOGY THROUGH OUR HAP-TM- PARTNERSHIP
PROGRAM.  We have developed a program intended to provide pharmaceutical and
biotechnology companies access to our HAP-TM- Technology and our clinical
genetics development expertise throughout each phase of drug development and
marketing. Potential partners are offered access to our proprietary HAP-TM-
Markers, our DECOGEN-REGISTERED TRADEMARK- Informatics System, our HAP-TM-
Typing facility, which we use to measure HAP-TM- Markers from individual patient
samples, and our clinical genetics development expertise. In return, we seek
annual subscription fees and payments for our collaborative contributions to
specific drug development or marketing projects and for our HAP-TM- Typing
services. In addition, we expect license fees, as well as milestone and royalty
payments, for the commercial use of our HAP-TM- Markers. While we expect to
retain all intellectual property rights in HAP-TM- Markers discovered during the
partnership, we offer our partners an option to obtain multiple exclusive
licenses for the use of particular HAP-TM- Markers for the development of
therapeutic and diagnostic products within specified drug classes and for
particular disease indications. We currently have a HAP-TM- Partnership program
with six pharmaceutical and biotechnology companies (AstraZeneca UK Limited;
Biogen, Inc.; Johnson & Johnson Pharmaceutical Research & Development, a
division within the Johnson & Johnson family of companies; Millennium
Pharmaceuticals, Inc.; Pfizer Inc.; and Pharmacia & Upjohn Company). We are in
discussions and

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negotiations with additional pharmaceutical and biotechnology companies to enter
into our HAP-TM- Partnership program, including pharmaceutical companies in such
regional markets as Japan, where we are using Intec Web and Genome Informatics
Corporation as our sales representative. We cannot, however, assure you that we
will be successful in these discussions and negotiations.

    COMMERCIALIZE WITH PARTNERS THE INTELLECTUAL PROPERTY THAT WE DEVELOP WITH
OUR HAP-TM- TECHNOLOGY.  We currently have two programs from which we expect to
have intellectual property to commercialize with our partners.

    STRENGTH TRIALS (STATIN RESPONSE EXAMINED BY GENETIC HAP-TM- MARKERS).  We
applied our HAP-TM- Technology and our clinical genetics development skills to
the statin class of drugs, which doctors use to treat patients with high
cholesterol and lipid levels and who are, therefore, at risk for cardiovascular
disease. This market is highly competitive with multiple approved products
seeking to gain increased market share. Currently, the market is approximately
$18 billion worldwide and experts estimate that the market is growing at the
rate of about 20% per year.

    We examined five statins in our two prospective STRENGTH clinical trials.
The goal of these two trials was to identify which of our HAP-TM- Markers define
a patient population that has the best therapeutic response to one or more of
these statins with a superior safety profile. In April 2001, we began enrollment
for the first of our two STRENGTH trials, in which patients were randomized and
then enrolled into one of four treatment arms, in which a patient was treated
with one of four statins. The four drugs used were atorvastatin (sold by
Pfizer Inc. as Lipitor-Registered Trademark-), cerivastatin (sold by Bayer AG as
Baycol-Registered Trademark-), pravastatin (sold by Bristol-Myers Squibb Company
as Pravacol-Registered Trademark-) and simvastatin (sold by Merck as
Zocor-Registered Trademark-). Following the withdrawal of cerivastatin from the
market in August 2001, we discontinued treating all of the patients who were
taking this product. In October 2001, we began enrollment in our second STRENGTH
trial, in which enrolled patients received lovastatin (sold by Merck as
Mevacor-Registered Trademark-). The trial protocol for both STRENGTH trials was
to treat each patient for eight weeks with the lowest dose recommended on the
drug label followed by then treating each patient for eight weeks with the
highest dose recommended on the drug label. At least 149 patients were enrolled
into each treatment arm. Enrollment was completed for STRENGTH I in July 2001
with the last patient receiving the last examination in November 2001.
Enrollment was completed for STRENGTH II in November 2001 with the last patient
receiving the last examination in March 2002.

    In January 2003, we signed an agreement with Bayer HealthCare LLC to
commercialize exclusively the diagnostic rights and non-exclusively the drug
product development rights from our STRENGTH trials. We are in discussions with
pharmaceutical companies to commercialize additional drug product development
and marketing rights from these trials, but we cannot assure you that we will be
successful in these discussions.

    CARING STUDY (CLOZAPINE HAP-TM- MARKER DISCOVERY STUDY).  In February 2002,
we initiated a study designed to identify which of our HAP-TM- Markers define
the patients who are most likely to develop agranulocytosis, a potentially
life-threatening depletion of white blood cells, if treated with clozapine.
Clozapine, which is no longer under patent protection, is a highly effective
therapeutic for treating certain patients with schizophrenia. During the first
six months of treatment with clozapine, a patient must undergo weekly blood
monitoring, a requirement that results in poor patient compliance. We believe
that clozapine's third-line therapy status and the requirement for repeated
blood testing are the primary reasons that the market share for all clozapine
products is only approximately $350 million in the United States. Sales of
antipsychotic drugs in the United States reached an estimated $5.2 billion in
2000 and are expected to exceed $8 billion by 2005. As of March 3, 2003, we have
obtained blood samples from 23 patients who took clozapine and developed
agranulocytosis. We have also obtained blood samples from 12 patients who took
clozapine and developed granulocytopenia (a significant reduction in the number
of white cells) as well as 21 matched control samples from patients who took
clozapine without experiencing any significant decrease in white blood cell
counts.

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    We plan to use these patient samples with our HAP-TM- Technology to identify
the HAP-TM- Markers that define the population most likely to develop this
adverse reaction. If we are successful in identifying these genomic markers, we
plan to seek a suitable partner to commercialize these HAP-TM- Markers either
through a diagnostic test or a diagnostic test associated with a drug.

    COMMERCIALIZE OUR HAP-TM- TECHNOLOGY IN NUMEROUS MARKETS.  We are now
offering our HAP-TM- Technology, including our sequencing and genotyping
services, to potential partners in additional markets, including research groups
in government and academia, and to companies involved in the sale of
nutraceuticals.

    PURSUE STRATEGIC ACQUISITIONS.  We continually evaluate opportunities that
may provide us with, among other things, intellectual property, key personnel,
capabilities that could augment our recurring revenues or technologies that will
enhance and complement our HAP-TM- Technology. From time to time, we intend to
pursue acquisitions, which we believe will meet these goals.

ASTHMA CLINICAL STUDY AS A PROOF OF PRINCIPLE

    To demonstrate how the pharmaceutical and biotechnology industry and
healthcare providers could use our HAP-TM- Technology, we conducted a clinical
study to determine whether we could use HAP-TM- Markers or SNPs to define an
asthma patient population that responded to the drug albuterol (sold by
GlaxoSmithKline as Ventolin-Registered Trademark-), a standard treatment for
persons with asthma. We conducted the study in collaboration with Dr. Stephen
Liggett, a member of our scientific advisory board and a professor of medicine
at the University of Cincinnati Medical Center. We examined genomic variation in
the target of the drug, the (BETA)(2)-adrenergic receptor ((BETA)(2)-AR).
Dr. Liggett recruited 121 asthmatic individuals for clinical treatment and made
a large number of standard pulmonary measurements, before and after he treated
the patients with albuterol. The response to the drug differed significantly
from patient to patient and the drug was clinically effective in only 40% of
these patients as measured by generally accepted clinical criteria. Dr. Liggett
and his staff drew blood samples and extracted the DNA. We did the HAP-TM-
Typing and, using our DECOGEN-REGISTERED TRADEMARK- Informatics System,
identified specific pairs of HAP-TM- Markers in the (BETA)(2)-AR receptor gene
that were carried by patients that exhibited a positive drug response and
specific pairs of HAP-TM- Markers that were carried by patients that exhibited a
poor drug response. By contrast, no individual SNP was found to have such
predictive power in this study. This study, which was similar in sample size
typically used for a phase II clinical trial, showed that a patient's response
to albuterol correlated, in a statistically significant manner, with specific
HAP-TM- Markers.

    We published a more detailed description of this study in a peer reviewed
scientific journal in September 2000. In February 2003, we received notice from
the U.S. Patent and Trademark Office of its allowance of a patent application
filed by us, which contains claims based on these findings. In addition, we
worked with a company that has a FDA approved, DNA-based diagnostic platform and
verified the SNP assays they developed for defining the predictive HAP-TM-
Markers. This proof of principle diagnostic assay and our clinical study
demonstrate that a pharmacogenomic test for drug response can be developed for
point of care use with technology currently available.

OUR TECHNOLOGY

    OVERVIEW

    Our process for discovering HAP-TM- Markers eliminates the need, which is
inherent in family-based approaches, to find and then test large numbers of
families or related individuals to determine genomic variation. Initially, we
discover individual SNPs by high-throughput sequencing of DNA samples of
unrelated and related individuals that are representative of the individuals who
constitute the major pharmaceutical markets of the world. We use our proprietary
algorithms to organize the SNPs into

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HAP-TM- Markers. Using these algorithms, we found that the number of actual
HAP-TM- Markers per gene is significantly less than the theoretically large
number of ways in which SNPs could be organized.

    Our DECOGEN-REGISTERED TRADEMARK- Informatics System contains a number of
components. Our HAP-TM- Database contains our HAP-TM- Markers, including
information about their sequence, frequency and distribution. Our
DECOGEN-REGISTERED TRADEMARK- Informatics System also contains a proprietary
collection of algorithms and a search engine that correlates a patient's HAP-TM-
Markers with a particular response to a drug. To handle large amounts of
information, we developed a proprietary tool, which we call RuleFinder-TM-, that
allows us to identify rapidly potential associations between clinical endpoints
and genetic variation. Then using standard analytical tools, we have been able
to determine with statistical accuracy the correlation between HAP-TM- Markers
and drug response in a small population of the size commonly seen in phase I and
phase II of a clinical trial.

    HAP-TM- Typing is our process for measuring which HAP-TM- Marker pairs are
present in a patient's DNA sample. Our HAP-TM- Typing facility uses proprietary
software, robotics and Sequenom's MassARRAY-TM- platform to determine, on a
high-throughput basis, which two HAP-TM- Markers for a gene are present in a
patient's DNA sample. We integrate the resulting data into our
DECOGEN-REGISTERED TRADEMARK- Informatics System to search for a correlation
with a patient's drug response. We have a customized 8,000 square foot facility,
dedicated to HAP-TM- Typing, which became licensed to do diagnostic testing in
April 2002 by the Connecticut Department of Public Health under the U.S.
Clinical Laboratory Improvement Amendments of 1988 (CLIA).

    The following outlines the components of our HAP-TM- Technology and how we
use our HAP-TM- Technology to define a patient population with a specific drug
response.

    GENE SELECTION

    Our goal is to discover HAP-TM- Markers for pharmaceutically relevant genes.
We prioritize these genes for HAP-TM- Marker discovery based upon the needs of
our HAP-TM- Partnership program partners. We obtain genomic information relevant
for gene selection from publicly available sources and from proprietary
databases. We have discovered HAP-TM- Markers for genes that are, or will likely
become, drug targets; are associated with drug target pathways; are involved in
how drugs modify cell communication or regulate other genes; and are involved in
the metabolic process by which the body absorbs a drug and breaks it down.

    INDEX REPOSITORY

    We constructed an Index Repository, a collection of diverse DNA samples, to
discover the SNPs that are present in genes. We designed our Index Repository to
contain genomic information that would be representative of the people who
constitute the major pharmaceutical markets of the world; to aid in the quality
control analysis of the SNPs we discover; and to facilitate the organization of
SNPs into HAP-TM- Markers.

    To build our Index Repository, we recruited over 650 individuals whose
parents and grandparents came from specified geographical regions. We obtained
personal information from each individual, including sex, date of birth, and
general medical information, as well as a detailed family history and drew blood
samples so that we could create continually multiplying cells from the white
cells present in the blood. The resulting cells, called permanent cell lines,
provide us with a supply of DNA from which to discover SNPs. We store frozen
samples of each cell line at multiple locations to ensure that all of these cell
lines are available in the future. To supply sufficient DNA for the production
process, we routinely grow the cell lines in our cell culture facility. We
employ quality control procedures that permit each DNA sample to be
unambiguously matched to its corresponding cell line. We store all of the
information about a cell line in our proprietary HAP-TM- Database that is a
component of our DECOGEN-REGISTERED TRADEMARK- Informatics System.

                                       9
<Page>
    DISCOVERING SNPS

    We use a subset of our Index Repository to discover SNPs. We employed
principles of population statistics to determine the minimum number of unrelated
individuals that we needed to have a 99% probability of detecting a SNP or
HAP-TM- Marker that occurs in at least 5% of the general population or in at
least 10% of a population from a specific geographical region.

    We sequence individual samples of DNA so that we can accurately determine
the frequency of a SNP in the population. Our procedure allows us to detect SNPs
that are present at lower frequencies than if we were to analyze a mixture of
DNA from different individuals, as is done by some companies. We sequence 93
individual, human DNA samples, or 186 individual genomes, from our Index
Repository in the following genomic regions for each selected gene: the region
responsible for controlling when a gene is active, the control region; the
regions containing coding information that is found in the protein product of
the gene, the coding regions; the boundaries between the genomic regions
containing coding information and those interspersed regions that do not contain
coding information, the non-coding regions; and the region at the end of a gene
immediately after the last region containing coding information.

    Our sequencing process is highly automated, from picking the regions to be
sequenced through loading the samples onto one of our sequencing machines. We
have also developed a proprietary laboratory information management system to
track genes as they progress through the production pipeline. We use this system
to monitor the overall quality of data we produce to ensure that the sequencing
process is operating according to our established standards. The sequence
information undergoes two forms of quality control analysis. We use electronic
procedures and established population genomic principles to identify and
validate that a SNP exists at a given position.

    HAP-TM- MARKERS AND HAP-TM- DATABASE

    Geneticists use the term haplotype to describe how SNPs are organized on a
chromosome. Typically, geneticists study the inheritance of genetic variability
in extended families in order to determine haplotypes. We do not need to conduct
family studies to discover haplotypes. Rather than relying on family studies, we
have developed an entirely computerized process for discovering haplotypes. Our
proprietary method works because we analyze a large number of individual samples
and we have members of extended families in our sample set. We have validated
the accuracy of our computerized process by conventional family studies and
molecular techniques. We use our proprietary computational methods and
algorithms to determine how the SNPs in a gene are organized on each of the two
chromosomes in each sample we sequence from our Index Repository. We use the
term HAP-TM- Marker, derived from haplotype, to describe the organization of
SNPs we find for a gene.

    Our computerized process assigns a confidence value to each HAP-TM- Marker
we discover. If the HAP-TM- Markers we discover for a gene fall below a defined
confidence level, we subdivide the gene into regions. We reexamine each region
until we identify HAP-TM- Markers that meet our acceptance level. We then enter
each HAP-TM- Marker into our proprietary HAP-TM- Database. We also enter other
relevant population information, such as the distribution and frequency of each
HAP-TM- Marker among people from different geographical regions. We also
include, in our HAP-TM- Database, other genomic markers that others have
identified and are available in public databases.

    As of March 3, 2003, we had processed in excess of 7,000 pharmaceutically
relevant genes through our production process and deposited their HAP-TM-
Markers and associated information into our HAP-TM- Database. All of the nearly
500 current drug targets, with identified genomic structure, have gone through
our production process. To date, we have found an average of approximately 18
SNPs per gene. There are generally two possible forms of a SNP that are found at
a site of genomic variation. Therefore, these 18 SNPs could theoretically be
organized into 2(18) or 262,144 potential HAP-TM- Markers.

                                       10
<Page>
Using our proprietary algorithms, we found that these SNPs are organized into an
average of only approximately 19 HAP-TM- Markers per gene.

    THE DECOGEN-REGISTERED TRADEMARK- INFORMATICS SYSTEM

    We have constructed a proprietary informatics system, called
DECOGEN-REGISTERED TRADEMARK-(), which contains the proprietary database of
population information for our Index Repository and our proprietary HAP-TM-
Database of HAP-TM- Markers. These databases can accommodate information from a
variety of populations, including individuals suffering from a specific disease
and patients in clinical trials, as well as associated data, such as detailed
medical histories, including responses to drugs. The portal to these databases
is the DECOGEN-REGISTERED TRADEMARK- Informatics System's search engine, which
we designed with an intuitive, graphical user interface so that drug development
clinicians can easily manage their data to find a correlation between HAP-TM-
Markers and a drug response.

    Our DECOGEN-REGISTERED TRADEMARK- Informatics System can use either
qualitative or quantitative clinical measurements as a clinical endpoint to
search for a correlation with our HAP-TM- Markers. The informatics system has
the ability to exchange information with standard software packages used in the
pharmaceutical industry and additional tools are also available within the
system to help in the design and operation of clinical trials.

    HAP-TM- TYPING

    We use the term HAP-TM- Typing to describe the process of determining which
HAP-TM- Marker is present for each of the two versions of each gene in a
patient's clinical sample. We designed our HAP-TM- Typing capabilities to
support our HAP-TM- Partnership program partners as well as to provide
pharmacogenomics support services to pharmaceutical, biotechnology and
diagnostic companies, to government and academic groups and to other entities.
The first step in searching for a clinical correlation is to do HAP-TM- Typing
on clinical samples. Our DECOGEN-REGISTERED TRADEMARK- Informatics System
contains a proprietary computational tool that determines the minimal number and
combination of variable sites, which we must analyze in order to identify, with
high confidence, the two HAP-TM- Markers that are present for each gene in a
clinical sample of DNA. This proprietary tool exploits an established genetic
principle. That is, the presence of a given form of genomic variation at one
position can be highly predictive of the form of genomic variation present at
another site in a gene. This predictability reduces the complexity of the
information needed to identify a HAP-TM- Marker in a genomic sample. We can
determine this predictability, however, only if we already know the haplotype or
the organization of SNPs in a gene. Our HAP-TM- Markers contain this needed
information.

OUR COLLABORATIONS

    Through December 31, 2002, we have entered into the following licenses and
collaborations:

    ASTRAZENECA UK LIMITED

    Effective November 29, 2001, we entered into a three-year agreement with
AstraZeneca UK Limited, in which AstraZeneca gained limited access to our
HAP-TM- Technology to investigate associations between our HAP-TM- Markers and
disease susceptibility, in exchange for a specified, onetime payment. We granted
AstraZeneca a perpetual exclusive license to use those HAP-TM- Markers that are
shown to have a predictive association with a certain disease, for discovering,
developing, manufacturing, marketing and selling of AstraZeneca drugs. We also
granted AstraZeneca a perpetual, co-exclusive license, with us, to use the
predictive HAP-TM- Markers for discovering, developing, manufacturing, marketing
and selling prognostic products used in connection with the sale or prescription
of AstraZeneca drugs. In exchange for these license grants, AstraZeneca granted
us

                                       11
<Page>
options, which expire in 2011, to obtain licenses under its intellectual
property for making, using, marketing and selling prognostic and diagnostic
products that detect these predictive HAP-TM- Markers.

    BD (BECTON, DICKINSON AND COMPANY)

    Effective December 18, 2002, we entered into a training and license
agreement with BD. Under the terms of the agreement, we acquired a
non-exclusive, non-transferable license to BD's proprietary BDProbeTec-TM- ET
platform and Strand Displacement Amplification Technology. The license is fully
paid up for our internal research and development activities, which are limited
to the United States, is royalty-bearing for selling products and services
world-wide for genotyping HAP-TM- Markers in certain fields of use. BD will
provide equipment, certain reagents and training on the development of tests.

    BIOGEN, INC.

    Effective December 21, 2001, we entered into an agreement with
Biogen, Inc., in which Biogen gained non-exclusive access to selected HAP-TM-
Markers from our HAP-TM- Database solely for research and development purposes.
We receive payments based upon the HAP-TM- Markers that Biogen selects.

    Effective January 31, 2002, we entered into a second agreement with
Biogen, Inc., in which we are applying our HAP-TM- Technology to a study of the
pharmacogenetic basis of variability in response to
Amevive-Registered Trademark- (alefacept), a biologic developed for the
treatment of adults with moderate-to-severe chronic plaque psoriasis who are
candidates for systemic therapy or phototherapy. We granted Biogen an exclusive,
fee-bearing license to use our HAP-TM- Markers, which are shown to be predictive
of response to this biologic, to develop diagnostic tests for use in connection
with marketing Amevive-Registered Trademark-. We also granted Biogen an
exclusive option, for a limited time, to acquire an exclusive license to use
particular HAP-TM- Markers for developing and commercializing other products.
Biogen agreed to pay us a non-refundable initial fee, research funding and
milestone payments based upon the achievement of predetermined goals, as well as
payments for the commercial use of our HAP-TM- Markers in conjunction with the
sale of Amevive-Registered Trademark-. The agreement will automatically
terminate after a defined number of years. Biogen received certain early
termination rights and either party may terminate the agreement early if the
other party breaches the agreement. In December 2002, we amended the agreement
to define additional work that we would perform as part of the original research
plan and for which Biogen agreed to pay us additional research funding.

    JOHNSON & JOHNSON PHARMACEUTICAL RESEARCH & DEVELOPMENT, A DIVISION OF
     JANSSEN PHARMACEUTICA, N.V.

    Effective November 22, 2000, we entered into a collaboration agreement with
Janssen Research Foundation, referred to as J&J PRD, under which we granted J&J
PRD a non-exclusive license to our HAP-TM- Technology in exchange for the
payment of annual subscription fees and other fees described below. We installed
our DECOGEN-REGISTERED TRADEMARK- Informatics System at one of their sites. We
are collaborating with J&J PRD in research projects to identify HAP-TM- Markers
associated with a patient's response to certain J&J PRD drugs. For each of the
first two years of the agreement, we received a minimum fee for providing
HAP-TM- Typing services and we continue to be paid for providing our HAP-TM-
Typing services as part of this collaboration. For the first three research
projects, we defined product license fees, milestone and royalty payments for
drug and diagnostic products that result from these research projects. The
agreement will automatically terminate after three years. Either party may
terminate the agreement early if the other party breaches the agreement. In
November 2002, we amended the agreement with Johnson & Johnson Pharmaceutical
Research & Development, the successor to the Janssen Research Foundation. Under
the terms of the amendment, we granted J&J PRD exclusive commercial licenses to
use HAP-TM- Marker associations with certain drugs in exchange for specified
fees.

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<Page>
    PHARMACIA & UPJOHN COMPANY

    Effective December 12, 2002, we entered into an agreement with Pharmacia &
Upjohn Company, in which Pharmacia received a non-exclusive license to selected
HAP-TM- Markers from our HAP-TM- Database solely for internal research purposes
and to specific components of our DECOGEN-REGISTERED TRADEMARK- Informatics
System, one of which is a proprietary algorithm to build haplotypes, and access
to our HAP-TM- Typing services for genotyping their clinical samples from a
specific project. We installed the DECOGEN-REGISTERED TRADEMARK- Informatics
System at one of their sites. We receive payments based upon the HAP-TM- Markers
that Pharmacia selects and for genotyping their clinical samples and annual fees
for access to our DECOGEN-REGISTERED TRADEMARK- Informatics System. We expect to
complete the genotyping in 2003.

    PFIZER INC

    Effective August 31, 2001, we entered into a one-year agreement with
Pfizer Inc., in which Pfizer gained non-exclusive access to selected data from
our HAP-TM- Database. We receive payments based upon the HAP-TM- Markers that
Pfizer selects. In May 2002 and February 2003, we amended the agreement to
extend the terms of the agreement first through February 2003 and now through
August 31, 2004, respectively.

    INTEC WEB & GENOME INFORMATICS CORPORATION

    Effective February 4, 2002, we entered into a two-year agreement with Intec
Web and Genome Informatics Corporation, referred to as Intec W&G, in which we
appointed Intec W&G as a non-exclusive, authorized sales representative with
responsibility for the Japanese market. We agreed to pay Intec W&G a fixed
commission on all payments, excluding royalties, we receive from agreements
concluded through Intec W&G with Japanese companies. To date, Intec W&G has not
brokered any agreements for us.

    VISIBLE GENETICS, A PART OF BAYER HEALTHCARE LLC

    Effective November 21, 1996, we granted to Visible Genetics, Inc. a
worldwide, exclusive license to our patented technology relating to the coupled
amplification and sequencing, or CAS, of DNA for diagnostic use. This technology
is not part of our HAP-TM- Technology. Under the terms of the agreement, Visible
Genetics paid us a one-time licensing fee and continues to pay us royalties
based on global sales of products using the licensed technology. Visible
Genetics incorporated the CAS technology in its TruGene-TM- HIV diagnostic kit,
which they designed to perform pharmacogenomic analysis of HIV and to customize
HIV and AIDS therapy for particular patient sub-groups. The FDA granted market
clearance for the TruGene-TM- HIV diagnostic kit on September 26, 2001. In
March 2000, we amended the agreement to, among other things, reduce the amount
of royalties payable under the agreement and expand the field of the license to
the research products market. In return for the reduction of royalties and
broadening of the field, Visible Genetics paid us an additional one-time fee of
$2 million. The term of the agreement extends until the last of the patents
covered by the agreement expires. Either party may terminate the agreement early
if the other party breaches the agreement, and we can terminate the agreement
early if Visible Genetics fails to make any payments. In October 2002,
Leverkusen Bayer through its Bayer Corporation completed the acquisition of
Visible Genetics, Inc., which is now part of the Diagnostics Division of Bayer
HealthCare LLC, and assumed the obligations and rights of Visible Genetics under
this agreement.

    SEQUENOM

    Effective May 28, 2000, we entered into a three-year collaboration agreement
with Sequenom, Inc., under which we committed to use Sequenom's MassARRAY-TM-
system as our exclusive equipment platform for high-throughput SNP analysis in
our HAP-TM- Typing facility. In return, Sequenom provided

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<Page>
equipment and supplies, as well as ongoing access to information about new
technology and products in development by Sequenom. In addition, we had the
option to be a test site for these new technologies and products. The agreement
required us to purchase a minimum number of MassARRAY-TM- systems and allowed
for predetermined pricing of consumables. The agreement would have automatically
terminated after three years. In November 2002, we terminated the collaboration
agreement and also received notice from Sequenom that we could use purchased
Sequenom products to provide commercial services, as part of our
pharmacogenomics support services, to third parties, which are not part of our
HAP-TM- Partnership program, without any additional payment or compensation due
to Sequenom for such use.

    Through March 11, 2003, we have entered into the following additional
licenses and collaborations:

    BAYER AG AND BAYER HEALTHCARE LLC

    Effective January 15, 2003, we entered into a research collaboration and an
exclusive license agreement with Bayer AG and with Bayer Healthcare LLC through
its Diagnostics Division to develop pharmacogenomic markers of drug safety and
efficacy for a defined drug category and for certain disease fields. Under the
terms of the agreement, each party has contributed portions of intellectual
property derived from its respective programs. We will receive funding to apply
our HAP-TM- Technology to Bayer's clinical samples. Bayer will receive exclusive
rights to develop and market diagnostic tests based on the results of the
collaboration. We are entitled to receive royalties and rights to perform these
diagnostic tests in our CLIA-licensed diagnostic laboratory. There are mutual
royalty provisions for any pharmaceutical drugs derived from the collaboration.
The collaboration will terminate at the end of defined safety and efficacy
studies. The agreement will terminate upon the expiration of all licenses and
other granted rights and of the obligation to pay royalties. Either party may
terminate the agreement early if the other party breaches the agreement.

    MILLENNIUM PHARMACEUTICALS, INC.

    Effective January 7, 2003, we entered into a multi-year agreement with
Millennium Pharmaceuticals, Inc., under which we granted Millennium a
non-exclusive license to our HAP-TM- Technology in exchange for the payment of
annual subscription fees. Millennium granted us certain rights to support their
DNA biomarkers and pharmacogenomic efforts. Millennium has an option to pay
specified annual fees to extend the agreement beyond the defined expiration
date. Either party may terminate the agreement early if the other party breaches
the agreement.

    WAYNE STATE UNIVERSITY

    Effective March 11, 2003, we entered into an agreement with Wayne State
University (WSU) to support WSU's research contract with the National Institute
of Child Health and Human Development's Perinatology Research Branch (PRB),
which is located at the WSU School of Medicine in Detroit, Michigan. Under the
agreement, WSU gained access to specific HAP-TM- Markers and obtained a limited
license to use our DECOGEN-Registered Trademark- Informatics System. We will
develop assays for the selected HAP-TM- Markers and provide high-throughput
genotyping on clinical samples provided by WSU and the PRB. We receive a license
fee and other payments from WSU. Either party may terminate the agreement early
if the other party breaches the agreement. We expect to complete the genotyping
in 2003.

INTELLECTUAL PROPERTY

    We rely on patents, trade secrets, non-disclosure agreements, copyrights and
trademarks to protect our proprietary technologies and information. In addition,
our goal is to license to third parties certain components of our intellectual
property that is peripheral to our core products and services.

                                       14
<Page>
    As of March 3, 2003, our patent portfolio included a total of eight issued
patents, which we own or for which we are the exclusive licensee. Our issued
patents and pending patent applications include those for:

    - HAP-TM- Markers for pharmaceutically important genes;

    - correlations between specific HAP-TM- Markers and response to albuterol
      and statins;

    - components of our DECOGEN-REGISTERED TRADEMARK- Informatics System,
      including the process for assembling HAP-TM- Markers and for determining
      clinical associations; and

    - processes for integrating personalized medicines into the healthcare
      system.

    We also rely upon unpatented trade secrets and improvements, unpatented
know-how and continuing technological innovation to develop and maintain our
competitive position. We generally protect this information with reasonable
security measures, including confidentiality agreements that provide that all
confidential information developed or made known to others during the course of
the employment, consulting or business relationship shall be kept confidential
except in specified circumstances. Agreements with employees provide that all
inventions conceived by the individual while employed by us are our exclusive
property.

COMPETITION

    There is significant competition among entities attempting to use genomic
variation data and informatics tools to develop and market new and existing
medicines. We expect the intensity of the competition to increase. We face, and
will continue to face, competition from pharmaceutical, biotechnology and
diagnostic companies, both in the United States and abroad. Several entities are
attempting to identify and assemble SNP and haplotype databases for use as a
measure of genomic variation. These databases are based on various technologies
and approaches, including the sequencing of either cDNA or genomic DNA and a
genome-wide approach or a candidate gene approach. In addition, some of these
entities are providing or intend to provide informatics tools for integrating
the use of SNPs and haplotypes into the drug development process. These entities
include, among others, Perlegen Sciences, Celera Genomics Group and the
International HapMap Project. In addition, numerous pharmaceutical companies are
developing internal capabilities for identifying and utilizing gene variation
data. In order to compete successfully against existing and future entities, we
must demonstrate the value of our HAP-TM- Technology and that our informatics
technologies and capabilities are superior to those of our competitors. Many of
our competitors have greater resources, gene variation discovery capabilities
and informatics development capabilities than we do. Therefore, our competitors
may succeed in identifying gene variation and applying for patent protection
more rapidly than we do.

    We expect that our ability to compete will be based on a number of factors,
including:

    - the ability of our partners to develop and commercialize therapeutic and
      diagnostic products based upon our HAP-TM- Technology;

    - our ability to attract and retain partners;

    - our ability to commercialize our intellectual property;

    - our ability to attract and retain qualified personnel;

    - our ability to protect against unauthorized use of our HAP-TM- Technology
      under various intellectual property laws and contractual obligations; and

    - our ability to secure sufficient resources to fund our HAP-TM- Technology
      commercialization programs.

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<Page>
GOVERNMENT REGULATION

    Regulation by governmental entities in the United States and other countries
will be a significant factor in the development, manufacturing and marketing of
any product that our partners or we develop. Various federal and, in some cases,
state statutes and regulations govern or influence the manufacturing, safety,
labeling, storage, record keeping and marketing of human therapeutic and
diagnostic products. The extent to which these regulations may apply to our
partners or us will vary depending on the nature of the product. Currently, the
FDA does not require companies seeking product approvals to provide data
regarding the correlation between therapeutic response and genomic variation.

    Virtually all of the pharmaceutical products developed by our partners will
require regulatory approval by governmental agencies prior to commercialization.
In particular, the FDA and similar health authorities in foreign countries will
impose on these products an extensive regulatory review process before they can
be marketed. This regulatory process typically involves, among other
requirements, preclinical studies, clinical trials, and often post-marketing
surveillance of each compound. This process can take many years and requires the
expenditure of substantial resources. Delays in obtaining marketing clearance
could delay the commercialization of any therapeutic or diagnostic products
developed by our partners, impose costly procedures on our partners' activities,
diminish any competitive advantages that our partners may attain and lessen our
potential royalties. Any products our partners develop may not receive
regulatory approval in a timely fashion or at all.

    The FDA regulates human therapeutic and diagnostic products in one of three
broad categories: drugs, biologics or medical devices. Products developed using
our technologies could potentially fall into any of these three categories.

    The FDA generally requires the following steps for pre-market approval of a
new drug or biologic product:

    - preclinical laboratory and animal tests;

    - submission to the FDA of an investigational new drug application, which
      must become effective before clinical trials may begin;

    - adequate and well-controlled human clinical trials to establish the safety
      and efficacy of the product for its intended indication;

    - submission to the FDA of a new drug application, or NDA, if the FDA
      classifies the product as a new drug, or a biologic license application,
      or BLA, if the FDA classifies the product as a biologic; and

    - FDA review of the NDA or BLA in order to determine, among other things,
      whether the product is safe and effective for its intended uses.

    The FDA classifies medical devices, which include diagnostic products, as
class I, class II or class III, depending on the nature of the medical device
and the existence in the market of any similar devices. Class I medical devices
are subject to general controls, including labeling, premarket notification and
good manufacturing practice requirements. Class II medical devices are subject
to general and special controls, including performance standards, postmarket
surveillance, patient registries and FDA guidelines. Class III medical devices
are those which must receive premarket approval, or PMA, by the FDA to ensure
their safety and effectiveness, typically including life-sustaining,
life-supporting, or implantable devices or new devices which have been found not
to be substantially equivalent to currently marketed medical devices. It is
impossible to say at this time, which of these categories, will apply to any
diagnostic product incorporating our technologies.

                                       16
<Page>
    Before a new device can be introduced into the U.S. market, it must, in most
cases, receive either premarket notification clearance under section 510(k) of
the Food, Drug, and Cosmetic Act or approval pursuant to the more costly and
time-consuming PMA process. A PMA application must be supported by valid
scientific evidence to demonstrate the safety and effectiveness of the device,
typically including the results of clinical trials, bench tests, laboratory and
animal studies. A 510(k) clearance will be granted if the submitted information
establishes that the proposed device is "substantially equivalent" to a legally
marketed class I or class II medical device or a class III medical device for
which the FDA has not called for PMAs. While less expensive and time-consuming
than obtaining PMA clearance, securing 510(k) clearance may involve the
submission of a substantial volume of data, including clinical data, and may
require a lengthy substantive review.

    Even if regulatory clearance is obtained, a marketed product and its
manufacturer are both subject to continuing review. Discovery of previously
unknown problems with a product may result in withdrawal of the product from the
market, which could reduce our revenue sources and hurt our financial results.
Violations of regulatory requirements at any stage during the process, including
preclinical studies and clinical trials, the review process, post-marketing
approval or in manufacturing practices or manufacturing requirements, may result
in various adverse consequences to us, including:

    - the FDA's delay in granting marketing clearance or refusal to grant
      marketing clearance of a product;

    - withdrawal of a product from the market; or

    - the imposition of civil or criminal penalties against the manufacturer and
      holder of the marketing clearance.

Generally, similar regulatory requirements apply to products intended for
marketing outside the United States.

    We use clinical samples of blood from individuals in developing our
intellectual property consisting of HAP-TM- Markers and HAP-TM- Marker
associations. In some cases, a clinical research organization, or CRO, with
which we have a contract, collects these blood samples, plus personal and
medical information about each individual. In other cases, we collect DNA plus
personal and medical information without the assistance of a CRO. Our CRO
prepares, subject to our approval, the sample collection protocol and the
patient informed consent form, as well as identifying the clinical sites, which
collect the samples. The individual clinical sites recruit the patients for each
clinical study and, following the study protocol, explain and obtain the signed
and witnessed informed consent documents from each patient. The informed consent
form includes the patient's authorization to use the patient's blood sample and
data derived from it for developing commercial products. Our contract with the
CRO requires an independent institutional review board to approve the study
protocol, the patient informed consent form, and the transmission of the samples
to us. Either we do not know the identity or we have in place procedures to
maintain the confidentiality of any of the individuals from whom we receive
clinical samples. We believe that these procedures comply with all applicable
federal, state and institutional regulations.

    While the FDA does not currently regulate our HAP-TM- Typing facility, CLIA
defines standards that constitute good clinical laboratory practice. Although
this is a federal law, each state is responsible for administering the statute.
In April 2002, the Connecticut Department of Public Health inspected our
laboratory and issued a CLIA license for our HAP-TM- Typing facility, which can
now provide diagnostic test results in support of therapeutic or medical
interventions. As a CLIA licensed diagnostic laboratory, inspectors from the
Connecticut Department of Public Health can inspect our laboratory at any time
to insure that we are in compliance with CLIA.

RESEARCH AND DEVELOPMENT

    For the years ended December 31, 2002, 2001 and 2000, we spent approximately
$23.9 million, $46.3 million and $27.4 million, respectively, on research and
development activities.

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HUMAN RESOURCES

    As of March 3, 2002, we had 104 full-time employees, 83 of whom were engaged
in research and development activities, 8 of whom were engaged in business
development and 13 of whom conducted general and administrative functions. Of
the 83 employees engaged in research and development activities, 36 were engaged
in industrial genomics, 33 were engaged in bioinformatics, software development
and information technology, 6 were engaged in medical affairs activities, 5 were
engaged in population genomics and 3 were engaged in intellectual property.
Thirty-one of our employees hold Ph.D. and/or M.D. degrees and 17 hold other
advanced degrees.

    None of our employees are covered by a collective bargaining agreement, and
we consider our relations with our employees to be good.

ITEM 1A. EXECUTIVE OFFICERS

    Set forth below is certain information regarding our current executive
officers, including their respective ages as of March 3, 2003:

<Table>
<Caption>
NAME                                          AGE                       POSITION
----                                        --------   ------------------------------------------
<S>                                         <C>        <C>
Kevin Rakin...............................     42      President, Chief Executive Officer and
                                                       Director
Gualberto Ruano, M.D., Ph.D...............     43      Vice Chairman, Chief Scientific Officer
                                                       and Director
Gerald F. Vovis, Ph.D.....................     60      Executive Vice President and Chief
                                                       Technology Officer
Richard S. Judson, Ph.D...................     44      Senior Vice President of Medical Affairs
                                                       and Informatics
Joseph Keyes..............................     45      Chief Financial Officer and Vice President
</Table>

    KEVIN RAKIN.  Mr. Rakin was appointed Chief Executive Officer, in addition
to President, in August 2002. He cofounded Genaissance and has served as a
Director since 1995. Mr. Rakin has served as the Company's President since
October 2000. From 1995 through 2002, Mr. Rakin also served as Chief Financial
Officer and, from January 1997 to October 2000, as our Executive Vice President.
Prior to 1998, Mr. Rakin was also a Principal at the Stevenson Group, a
consulting firm, where he provided financial and strategic planning services to
high-growth technology companies and venture capital firms. Prior to this,
Mr. Rakin was a manager with Ernst & Young's entrepreneurial services group.
Mr. Rakin holds a B.S. in business and a M.S. in finance from the University of
Cape Town and a M.B.A. from Columbia University.

    GUALBERTO RUANO, M.D., PH.D.  Dr. Ruano was appointed Vice Chairman and
Chief Scientific Officer in August 2002. From 1995 through August 2002, he
served as Chief Executive Officer. Dr. Ruano has served as a Director since
1995. Prior to cofounding Genaissance, he was involved in developing genetic
mapping products and services for BIOS Laboratories, Inc. and engaged in
research at Yale University, where he focused on haplotyping technologies for
profiling genome diversity stemming from population genetics. Dr. Ruano holds a
B.A. in biophysics from The Johns Hopkins University and a M.D. and a Ph.D. in
population genetics from Yale University, where he was a fellow of the Medical
Scientist Training Program and the Ford Foundation.

    GERALD F. VOVIS, PH.D.  Dr. Vovis was appointed Executive Vice President, in
addition to Chief Technology Officer, in April 2002. He has served as our Chief
Technology Officer since October 2000. From October 2000 to April 2002,
Dr. Vovis was a Senior Vice President and, from April 1999 to October 2000, was
our Senior Vice President of Genomics. From 1980 to 1999, he was affiliated with
Genome Therapeutics Corporation, a genomics company, most recently as Senior
Vice President of Scientific Affairs. Dr. Vovis has twenty-three years of
experience in the management of genetic research

                                       18
<Page>
and in the development and management of collaborative research programs with
pharmaceutical and biotechnology companies. Dr. Vovis holds a B.A. in chemistry
from Knox College and a Ph.D. in biology from Case Western Reserve University.

    RICHARD S. JUDSON, PH.D.  Dr. Judson has been our Senior Vice President of
Medical Affairs and Informatics since August 2002. From April 2000 to
August 2002, Dr. Judson was our Senior Vice President of Informatics and, from
November 1999 to April 2000, our Vice President of Informatics. He joined
Genaissance in February 1999 as Associate Director, Bioinformatics. From
January 1997 to February 1999, Dr. Judson served as Group Leader in the
Bioinformatics Department of CuraGen Corporation, a genomics company, where he
was responsible for developing software for protein-protein interactions and DNA
sequence analysis. From January 1990 to December 1996, he served as Senior
Member of the Technology Staff at Sandia National Laboratories, leading modeling
projects in several areas including computational drug design, protein modeling
and sequence analysis. He holds a B.A. in chemistry and physics from Rice
University and a M.A. and a Ph.D. in chemistry from Princeton University.

    JOSEPH KEYES.  Mr. Keyes was appointed Chief Financial Officer and Vice
President in July 2002. Previously, he served as Executive Director of Finance
since joining the Company in March 2001. From March 2000 until joining
Genaissance, Mr. Keyes served as Vice President of Finance at DSL.net. From
June 1999 to February 2000, he served as Vice President, Finance and Chief
Financial Officer at Heritage Consumer Products. Previous to that, Mr. Keyes was
the Group Controller for United States Surgical Corporation from 1992 to 1999.
He holds a B.S. in business administration from Bryant College. Mr. Keyes is a
certified public accountant.

ITEM 2. PROPERTIES

    Our executive offices and laboratories are located at Five Science Park, New
Haven, Connecticut. We lease nearly 72,000 square feet of space, under a lease
expiring on September 30, 2006, which we may extend for 10 years. We believe
that our current facilities and the space available to us under a lease
extension are suitable to meet our current requirements and that suitable
additional space will be available on commercially reasonable terms, if
required.

ITEM 3. LEGAL PROCEEDINGS

    We are not a party to any material legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    No matters were submitted to stockholders for a vote during the fourth
quarter of 2002.

                                    PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

    Our common stock is currently quoted on the Nasdaq National Market under the
symbol "GNSC."

                                       19
<Page>
    Our common stock began trading on August 1, 2000 and the high and low
closing sale prices, as reported on the Nasdaq National Market for the periods
indicated, were as follows:

<Table>
<Caption>
                                                                HIGH       LOW
                                                              --------   --------
<S>                                                           <C>        <C>
2001
  First Quarter.............................................   $17.50     $5.50
  Second Quarter............................................   $14.04     $7.69
  Third Quarter.............................................   $12.92     $3.89
  Fourth Quarter............................................   $ 5.99     $2.90
</Table>

<Table>
<Caption>
                                                                HIGH       LOW
                                                              --------   --------
<S>                                                           <C>        <C>
2002
  First Quarter.............................................   $ 4.58     $2.47
  Second Quarter............................................   $ 2.68     $1.32
  Third Quarter.............................................   $ 1.35     $0.46
  Fourth Quarter............................................   $ 1.40     $0.40
</Table>

    As of March 14, 2003, there were approximately 279 holders of record of our
common stock.

    We have never paid cash dividends on our common stock and we do not
anticipate paying any cash dividends in the foreseeable future. We currently
intend to retain future earnings, if any, for use in our business.

                                       20
<Page>
ITEM 6. SELECTED FINANCIAL DATA

    The following selected financial data should be read in conjunction with our
financial statements and related notes and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" appearing elsewhere in this
Annual Report on Form 10-K. The selected balance sheet data set forth below, as
of December 31, 2002, and the statements of operations data for the year ended
December 31, 2002, are derived from our financial statements, which have been
audited by PricewaterhouseCoopers LLP, independent public accountants, and are
included elsewhere in this Annual Report on Form 10-K. Financial statements for
fiscal years 1998 through 2001 were audited by Arthur Andersen LLP (Andersen)
which has ceased operations. A copy of the report previously issued by Andersen
on our financial statements as of December 31, 2000 and 2001 and for each of the
three years in the period ended December 31, 2001 is included elsewhere in this
Annual Report on Form 10-K. Such report has not been reissued by Andersen. The
historical results are not necessarily indicative of the results we expect for
future periods. This data is in thousands, except per share data.

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                   ----------------------------------------------------
                                                     2002       2001       2000       1999       1998
                                                   --------   --------   --------   --------   --------
<S>                                                <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues.........................................  $  8,111   $  5,345   $    753   $    680   $ 1,343
Operating expenses:
  Research and development.......................    23,940     46,333     27,374      6,758     3,444
  General and administrative.....................     8,799     11,933     12,399      2,981       940
  Impairment of fixed assets.....................     6,000         --         --         --        --
  Sublicense royalty fees........................        --         54        530         20        68
                                                   --------   --------   --------   --------   -------
Total operating expenses.........................    38,739     58,320     40,303      9,759     4,452
                                                   --------   --------   --------   --------   -------
Operating loss...................................   (30,628)   (52,975)   (39,550)    (9,079)   (3,109)
Interest income..................................     1,037      3,918      4,623        267        88
Interest expense.................................    (3,467)    (2,599)    (1,839)      (637)     (118)
State income tax benefit (expense)...............       (35)     4,074         --         --        --
Realized gains on investments....................        --         --         --         --       259
                                                   --------   --------   --------   --------   -------
Net loss.........................................   (33,093)   (47,582)   (36,766)    (9,449)   (2,880)
Preferred stock dividends and accretion..........        --         --     (6,327)    (2,082)     (741)
Beneficial conversion feature of Series B, KBH
  and C preferred stock..........................        --         --    (50,180)        --        --
                                                   --------   --------   --------   --------   -------
Net loss applicable to common stockholders.......  $(33,093)  $(47,582)  $(93,273)  $(11,531)  $(3,621)
                                                   ========   ========   ========   ========   =======
Net loss per common share, basic and diluted.....  $  (1.45)  $  (2.09)  $  (8.55)  $  (4.24)  $ (1.67)
                                                   ========   ========   ========   ========   =======
Shares used in computing net loss per common
  share, basic and diluted.......................    22,809     22,753     10,908      2,719     2,165
                                                   ========   ========   ========   ========   =======
</Table>

<Table>
<Caption>
                                                                        DECEMBER 31,
                                                    ----------------------------------------------------
                                                      2002       2001       2000       1999       1998
                                                    --------   --------   --------   --------   --------
<S>                                                 <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash, cash equivalents and investments............  $ 32,050   $ 59,673   $110,376   $ 3,666     $7,419
Restricted cash...................................     2,100         --         --        --         --
Total assets......................................    50,722     92,277    143,892    11,514      8,946
Long-term liabilities.............................     6,223     18,150     24,305    11,407      2,896
Redeemable convertible preferred stock............        --         --         --    11,247      9,945
Accumulated deficit...............................  (193,602)  (160,509)  (112,927)  (19,654)    (8,122)
Total stockholders' equity (deficit)..............    25,855     58,979    105,675   (14,832)    (4,624)
</Table>

                                       21
<Page>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

    THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND THE
RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE "SELECTED FINANCIAL
DATA" AND OUR FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS
ANNUAL REPORT ON FORM 10-K.

    THIS ANNUAL REPORT ON FORM 10-K CONTAINS FORWARD-LOOKING STATEMENTS WITHIN
THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
FOR THIS PURPOSE, STATEMENTS CONTAINED HEREIN THAT ARE NOT STATEMENTS OF
HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING
THE FOREGOING, THE WORDS "BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE
FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES AND ARE NOT
GUARANTEES OF FUTURE PERFORMANCE. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THOSE INDICATED IN SUCH FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH UNDER THE HEADING
"FACTORS AFFECTING FUTURE OPERATING RESULTS".

OVERVIEW

    Since our inception, we have incurred significant operating losses and, as
of December 31, 2002, we had an accumulated deficit of $193.8 million. The
majority of our operating losses have resulted from costs we incurred developing
our HAP-TM- Technology, in our clinical trials and administrative costs
associated with operations. We expect to dedicate a significant portion of our
resources for the foreseeable future to service our HAP-TM- Partnership program
and STRENGTH program partners, our pharmacogenomics support services customers,
our CARING program and to maintain our HAP-TM- Technology. To date, our revenue
has been primarily from licensing and service fees from our agreements with
AstraZeneca UK Limited, Biogen, Inc., Gene Logic, Inc., J&J PRD and
Pfizer, Inc., as well as a sublicensing agreement with Visible Genetics, Inc.
and, to a lesser extent, government grants.

    In August 2002, we announced a restructuring and cost reduction program to
revise our business focus and to better align our operating cost structure with
our current and projected partner needs and projected revenues from our current
and projected partners. The cost reduction program included a realignment of
management responsibilities, a reduction in our workforce and a decision to seek
partners for all internal product development programs. The workforce was
reduced by 20 percent to 110 employees in the third fiscal quarter, with the
majority of the workforce reductions occurring in the DNA sequencing facility
and related informatics support. We incurred a charge for severance and related
costs of approximately $200,000, which was recorded in operating results in the
third fiscal quarter of 2002. All severance obligations associated with this
workforce reduction had been paid by December 31, 2002.

    As a result of the restructuring and cost reduction program, we expect
future operating expenses to decrease from prior levels, primarily in research
and development expenses. In addition to reducing expenses, our plans and
projections reflect a measurable reduction in our negative operating cash flow.
These planned reductions in our negative operating cash flow assume significant
year over year increases in revenues. There can be no assurance that revenues
will continue to increase or that there will continue to be a decrease in the
level of cash used to fund operations. If we are not successful in increasing
revenues or reducing expenses, as planned, we may not be able to maintain our
operations at planned levels.

    During the second quarter of 2002, we recorded a $6.0 million charge for the
impairment of fixed assets. This charge relates to sequencing equipment,
computer hardware and software and leasehold improvements in our DNA sequencing
facility that we determined needed to be reviewed for potential impairment. As a
result of our review, we determined that the carrying value of the assets was in
excess of discounted future cash flows to be generated by the asset group and we
recorded a write-down of

                                       22
<Page>
$6.0 million. We continue to review our fixed assets for potential impairment
and, based upon our current cash flow projections, have determined that there
has not been an additional impairment of our fixed assets.

    In November 2002, we announced that we had amended our collaboration
agreement with a customer which accounted for 46% of our revenue for the year
ended December 31, 2002. The amendment clarifies the intellectual property
rights granted pursuant to the agreement. This agreement expires in the fourth
quarter of 2003 unless an extension is negotiated. A collaboration agreement
with a customer that accounted for 25% of our revenue for the year ended
December 31, 2002, expired in the fourth quarter of 2002.

    In December 2002, we announced that we received a notice from General
Electric Capital Corporation (GE), claiming that an event of default had
occurred under our lease agreement as a result of an alleged material adverse
change in our business. We also received a notice from Finova Capital
Corporation (Finova), stating that as a result of the default claim by GE, there
was a cross-default under our agreement with Finova. Both lessors declared that
all principal and future interest obligations were immediately due and payable.
In March 2003, we settled the claim with GE and simultaneously amended our lease
agreement (GE Amendment). In connection with the GE Amendment, and as additional
security for our payment obligations to GE, we delivered to GE a $2 million
irrevocable letter of credit and agreed to additional covenants. It is expected
that the letter of credit will be adjusted on a quarterly basis commencing
October 1, 2003 based on a decrease in outstanding amounts due to GE, as
defined. In connection with the amendment, GE retroactively rescinded their
default claim. The GE Amendment and letter of credit has been retroactively
reflected in the accompanying 2002 financial statements. We have not entered
into a settlement agreement with Finova. Accordingly, we have recorded an
additional charge to interest expense to reflect the remaining interest and
principal currently due and payable under the Finova capital lease agreement.

    We enter into discussions from time to time regarding the acquisition of or
strategic investment in other businesses or technologies. We are currently in
negotiations with respect to the acquisition of all or substantially all of the
assets of a company with technologies we believe are complementary to ours. We
cannot assure you if we will be successful in these negotiations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

    Our financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP). Our
significant accounting policies are described in Note 1 to the Financial
Statements. The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions that affect the amounts
reported in the Financial Statements and accompanying footnotes. We base our
estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances, the results of which form our
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
estimates under different conditions, sometimes materially. Critical accounting
policies and estimates are defined as those that are both most important to the
portrayal of our financial condition and results and require management's most
subjective judgments.

    Our critical accounting policies are as follows:

    - Revenue recognition

    - Valuation of long-lived assets

    - Research and development expenses

                                       23
<Page>
    REVENUE RECOGNITION.  We recognize license and service revenue from our
agreements with third parties. The revenue includes fees we receive for the
license of our HAP-TM- database and proprietary software, milestone payments
based on the achievement of certain goals and services fees for providing
specific data on genetic variation. Upfront, non-refundable fees received in
connection with a collaboration agreement are deferred and amortized into
revenue over the term of the agreement. License revenues are recognized ratably
over the access period of the agreement. Revenue derived from the achievement of
a milestone is recognized when the milestone is achieved, provided that the
milestone is substantive and a culmination of the earnings process has occurred.
Service fees are recorded as the services are performed. Revenues derived from
the achievement of milestones or recognition of related work when performed
under the terms of a contract, as well as the access period of the license
agreement, may cause our operating results to vary considerably from period to
period.

    VALUATION OF LONG-LIVED ASSETS.  We assess the impairment of long-lived
assets whenever events or changes in circumstances indicate that the carrying
value of the assets may not be recoverable. Factors which could trigger an
impairment review, include:

    - a significant adverse change in the extent or manner in which a long-lived
      asset is being used;

    - a significant adverse change in the business climate that could affect the
      value of a long-lived asset; and

    - a significant decrease in the market value of assets.

    When determining whether the carrying value of the long-lived assets is
recoverable we make certain estimates and assumptions regarding the undiscounted
cash flows and discounted cash flows expected to be generated by the assets. We
determine the discounted future cash flow using a discount rate determined by
our management to be commensurate with the risk inherent in our current
business. A change in our estimates or the manner in which we use the asset may
cause results to vary from period to period.

    RESEARCH AND DEVELOPMENT EXPENSES.  We record research and development
expenses when they are incurred or, in the case of clinical trial expenses,
based upon information we receive from third party CROs. Research and
development expenses include the following major types of costs: salaries and
benefits, material and reagent costs, research license fees, clinical trial
expenses, depreciation and amortization of lab equipment and leasehold
improvements and building and utility costs related to research space. Vendor
contractual costs consist primarily of consulting arrangements and certain
clinical trial expenses. We expense clinical trial costs as incurred based on
information we receive from third parties and estimates that we make. Our
estimates may change as additional information becomes available which could
cause results to vary from period to period.

RESULTS OF OPERATIONS

    YEARS ENDED DECEMBER 31, 2002 AND 2001

    Revenue consists primarily of proceeds received in connection with the
licensing of our HAP-TM- Technology, service revenue and sublicensing of
patents. Revenue increased to $8.1 million in 2002 from $5.3 million in 2001.
The increase in license revenues is attributable to the commercialization of our
HAP-TM- Technology, including agreements entered into with Biogen during 2002,
AstraZeneca during 2001 and J&J PRD during 2000. Revenue from Gene Logic, Inc.,
J&J PRD and Pfizer, Inc. accounted for 82% and 94% of our total revenue in
fiscal 2002 and 2001, respectively. Revenue from each of these customers
accounted for 10% or more of our total revenue for 2002 and 2001, respectively.
Revenue for fiscal 2002 includes a payment received from J&J PRD in the fourth
quarter for achieving a milestone. We are recognizing the annual license and
subscription fees over the term of the agreements and the service fees as the
services are performed. Future milestone and royalty payments, when and if
received, will be recognized when earned. Revenue also includes the

                                       24
<Page>
amortization, over the remaining life of the sublicensed patent, of upfront
payments received in connection with the sublicensing of a patent.

    Research and development expenses consist primarily of payroll and benefits
for research and development personnel, materials and reagent costs, costs
incurred in connection with clinical trials, depreciation and maintenance costs
for equipment used for HAP-TM- Marker discovery and HAP-TM- Typing, and
facility-related costs. We expense our research and development costs as
incurred. Research and development costs decreased to $23.9 million in 2002 from
$46.3 million in 2001. The decrease in research and development expenses in 2002
is primarily attributable to a decrease of approximately $9 million in
expenditures related to our clinical trials, a decrease of approximately
$5 million in material and reagent costs associated with the discovery of new
HAP-TM- Markers, a decrease of approximately $2 million in payroll and related
costs and a decrease of approximately $1 million in technology license fees. The
decrease in clinical trial expenses is primarily due to our STRENGTH Trials,
which were substantially completed by December 31, 2001. The decrease in
material and reagent costs is primarily due to a reduction in DNA sequencing
consistent with the removal of the majority of our ABI
Prism-Registered Trademark- 3700 DNA Analyzers from production in the quarter
ended June 30, 2002. The decrease in payroll and related costs is primarily due
to our work force reduction in connection with our restructuring program. We
expect to continue to devote substantial resources to research and development
expenses in the near future as we continue to service our HAP-TM- Partnership
program and STRENGTH program partners, our pharmacogenomic support services
customers, our CARING program and to maintain our HAP-TM- Technology. We expect
research and development expenses to decrease modestly in 2003 as a result of
the restructuring program that we initiated in August 2002.

    General and administrative expenses consist primarily of payroll and
benefits for executive, business development, finance, public affairs and other
administrative personnel, as well as facility related costs and outside
professional fees incurred in connection with corporate development, general
legal and financial matters. General and administrative expenses decreased to
approximately $8.8 million in 2002 from $11.9 million in 2001. The decrease in
general and administrative expenses in 2002 is primarily due to a $2 million
decrease in consulting and professional service fees and a general reduction in
expenses as part of our cost reduction program initiated during 2002.

    The $6.0 million impairment of fixed assets charge relates to sequencing
equipment, computer hardware and software and leasehold improvements in our DNA
sequencing facility. During the quarter ended June 30, 2002, our management
determined that certain conditions had arisen during the quarter that triggered
the need for a review of our long-lived assets for potential impairment. These
conditions included, but were not limited to, the overall business climate in
which we operate and a significant change in the manner in which we were
utilizing our DNA sequencing facility and related assets. In particular, during
the quarter ended June 30, 2002, we determined that our sequencing production
capacity significantly exceeded our forecasted demand for the foreseeable
future, which resulted in our decision to remove from production the majority of
our ABI Prism-Registered Trademark- 3700 DNA Analyzers, the primary assets of
the group. Accordingly, we performed an impairment review on our sequencing
long-lived assets. As a result of our review, we determined that the carrying
value of the assets was in excess of the projected undiscounted cash flows to be
generated by the asset group. To determine the amount of the impairment charge,
we compared the carrying value of the applicable fixed assets to their fair
value. We determined the fair value of the fixed assets by discounting expected
future cash flows using a discount rate determined by our management to be
commensurate with the risk inherent in our current business. As a result of our
analysis, we determined that the carrying value of the assets was in excess of
discounted future cash flows to be generated by the asset group and we recorded
a write-down of $6.0 million. The impairment charge has been allocated to the
individual assets on a pro-rata basis. The revised carrying value of the assets
is being depreciated over the average remaining life of the primary assets of
the group.

                                       25
<Page>
    Interest income decreased to approximately $1.0 million in 2002 from
$3.9 million in 2001. The decrease is the result of higher cash, cash equivalent
and short-term investment balances in 2001 and the much lower interest rates on
investments during 2002.

    Interest expense increased to approximately $3.5 million in 2002 from
$2.6 million in 2001. The increase is primarily due to recording additional
interest expense during the quarter ended December 31, 2002, in connection with
certain events of default. In December 2002, we received a notice from GE
claiming that an event of default had occurred under our lease agreement as a
result of an alleged material adverse change in our business. Because of the
alleged default, GE declared that all principal and future interest obligations
were immediately due and payable. GE also filed a complaint in the Superior
Court of the State of Connecticut, demanding payment of all amounts due under
the lease agreement. We also received a notice from Finova, stating that as a
result of the default claim by GE, there had been a cross-default under our
agreement with Finova. Finova declared that all principal and future interest
obligations were immediately due and payable. In March 2003, we settled the
claim with GE and simultaneously amended our lease agreement (GE Amendment). In
connection with the amendment, GE retroactively rescinded their default claim
and both parties have withdrawn from any legal action. As we have not entered
into a settlement agreement with Finova, we have recorded an additional charge
to interest expense to reflect the fact that all future interest and principal
is currently due and payable under the Finova capital lease agreement. If, in
the future, we enter into a settlement or amend our agreement with Finova it may
result in the reversal, in the period of amendment or settlement, of the
remaining interest expense recognized in the fourth quarter. The status of the
capital lease obligations is discussed further in "Liquidity and Capital
Resources".

    State income tax expense (benefit) decreased to an expense of $35,000 in
2002 from a benefit of $4.1 million in 2001. The benefit represents a net tax
benefit from the State of Connecticut as a result of legislation which allowed
companies to receive cash refunds from the State at a rate of 65% of their
incremental research and development tax credit, as defined, in exchange for
foregoing the carryforward of the research and development tax credit. The State
of Connecticut rescinded the legislation in 2002.

    YEARS ENDED DECEMBER 31, 2001 AND 2000

    Revenue consists primarily of proceeds received in connection with the
licensing of our HAP-TM- Technology, service revenue and sublicensing of
patents. Revenue increased to $5.3 million in 2001 from $753,000 in 2000. The
increase in license revenues is attributable to the commercialization of our
HAP-TM- Technology, including an agreement entered into with Pfizer during 2001,
as well as agreements entered into with J&J PRD and Gene Logic, Inc. during
2000. Revenue from each of J&J PRD, Gene Logic, Inc. and Pfizer, Inc. accounted
for 10% or more of our total revenue in fiscal 2001. J&J PRD, Gene Logic, Inc.
and Visible Genetics, Inc. each accounted for 10% or more of our total revenue
in 2000. We are recognizing the annual license and subscription fees over the
term of the agreements and the service fees as the services are performed.
Future milestone and royalty payments, when and if received, will be recognized
when earned. Revenue also includes the amortization, over the remaining life of
the sublicensed patent, of upfront payments received in connection with the
sublicensing of a patent.

    Research and development expenses consist primarily of payroll and benefits
for research and development personnel, materials and reagent costs, costs
incurred in connection with clinical trials, depreciation and maintenance costs
for equipment used for HAP-TM- Marker discovery and HAP-TM- Typing, and
facility-related costs. Research and development costs increased to
$46.0 million in 2001 from $25.7 million in 2000. Research and development
expenses include stock based and other non-cash compensation charges of $351,000
and $1.7 million for 2001 and 2000, respectively, for options granted to
employees, scientific advisory board members and consultants. The overall
increase in research and development expenses in 2001 is primarily attributable
to an increase in expenditures

                                       26
<Page>
related to our clinical trials, the expansion of our HAP-TM- Typing process, and
the increase in resources dedicated to supporting and improving our proprietary
DECOGEN-Registered Trademark- Informatics System. The increase in expenses
includes a $7.9 million increase in costs related to our clinical trials, a
$2.7 million increase in payroll and related costs, a $2.3 million increase in
technology licenses and a $4.6 million increase in depreciation expense. The
decrease in stock based compensation is primarily due to our decision to vest
fully all unvested options previously granted to scientific advisory board
members in March 2000, which resulted in a one-time expense of approximately
$1.4 million.

    General and administrative expenses consist primarily of salary and related
costs for executive, business development, finance, public affairs and other
administrative personnel, as well as facility related costs and outside
professional fees incurred in connection with corporate development, general
legal and financial matters. General and administrative expenses increased to
approximately $11.8 million in 2001 from $8.8 million in 2000. General and
administrative expenses include stock based and other non-cash compensation
charges of $147,000 and $3.6 million for 2001 and 2000, respectively for options
granted to employees, directors and consultants. The increase in general and
administrative expenses in 2001 is primarily due to increased salary and related
costs as a result of the expansion of our business development activities and
the additional costs of operating as a public company for a full fiscal year.
The increase in general and administrative expenses is partially offset by a
decrease in stock based compensation due to the recording of approximately
$2.9 million of expense during 2000 which related to a stock purchase agreement
between two officers and a former executive officer which we recognized as
compensatory and accordingly recognized non-cash compensation based on the
increase in the fair value of the stock through the date of our initial public
offering.

    Sublicensing royalty expense represents royalty obligations incurred by us
on sublicensing fees that we receive. Sublicensing royalty expense decreased to
$54,000 in 2001 from $530,000 in 2000. This decrease relates primarily to a
nonrefundable cash payment received in 2000 in connection with an amendment to a
patent sublicensing agreement. We elected to recognize this expense in 2000 as
paid.

    Interest income (expense), net decreased to approximately $1.3 million in
2001 from $2.8 million in 2000. The decrease is the result of higher cash, cash
equivalent and short-term investment balances in 2000 as a result of proceeds
received from our sale of Series B and Series C preferred stock in February and
March 2000, respectively, and our initial public offering in August 2000. The
decrease is also the result of an increase in interest expense as a result of
higher capital lease and other debt obligations to fund the acquisition of
equipment and partially fund the expansion of our facilities.

    State income tax benefit of $4.1 million represents a net tax benefit from
the State of Connecticut as a result of recent legislation which allows
companies to receive cash refunds from the State at a rate of 65% of their
incremental research and development tax credit, as defined, in exchange for
foregoing the carryforward of the research and development tax credit.

LIQUIDITY AND CAPITAL RESOURCES

    We have financed our operations primarily through the private and public
sale of common and preferred stock, government research grants, payments under
licensing agreements, loans and capital leases. From inception through
December 31, 2002, we have received aggregate gross proceeds of approximately
$163.1 million from issuance of common and preferred stock. In addition, through
December 31, 2002, we have received $4.5 million of government grant funding and
$17.8 million from license and service fees, royalties and research contracts.
We also have received $26.2 million from capital lease financing arrangements
and $8.2 million from other loans. Through December 31, 2002, we have acquired
$41.8 million of property and equipment. These assets were largely financed
through capital lease financing arrangements and other loans.

    We expect to continue to finance our operations in the short-term from cash
we received in 2000 from the sale of our common and preferred stock and revenue
from our HAP-TM- Partnership program

                                       27
<Page>
partners and our pharmacogenomics support services customers. Our business
strategy depends on, among other things, entering into partnership agreements
with pharmaceutical and biotechnology companies. If we are unsuccessful in
marketing our partnership programs and pharmacogenomic support services, we may
not generate sufficient revenues to sustain our operations at planned levels.

    Cash used in operations for the year ended December 31, 2002 was
$18.5 million compared with $40.1 million for the same period in 2001. The cash
used in operations for the year ended December 31, 2002 resulted primarily from
a net loss of $33.1 million and a $4.9 million decrease in accounts payable and
accrued liabilities, partially offset by $14.2 million of non-cash charges for
depreciation and amortization expense and impairment of fixed assets, a
$2.6 million increase in deferred revenue and a $2.0 million decrease in other
current assets including the receipt, in September 2002, of $1 million from the
State of Connecticut for the sale of research and development tax credits.

    Cash provided by investing activities was $18.8 million in 2002 compared
with $2.5 million in 2001. In 2002, we used cash to purchase $70,000 of property
and equipment and received proceeds of $28.5 million from the liquidation of
investments in marketable securities and used cash to purchase $9.6 million of
marketable securities.

    Cash used in financing activities was $9.0 million in 2002 compared to
$6.4 million in 2001. During 2002, we repaid debt of approximately $6.9 million
and were required to provide cash collateral of $2.1 million in connection with
the letter of credit issued as part of the GE Amendment.

    Our contractual cash obligations as of December 31, 2002, are as follows:

<Table>
<Caption>
                                                             PAYMENTS DUE BY PERIOD
                                                                 (IN THOUSANDS)
                                     -----------------------------------------------------------------------
                                                              FISCAL YEARS    FISCAL YEARS     FISCAL YEAR
CONTRACTUAL OBLIGATIONS               TOTAL     FISCAL 2003   2004 AND 2005   2006 AND 2007   2008 AND LATER
-----------------------              --------   -----------   -------------   -------------   --------------
<S>                                  <C>        <C>           <C>             <C>             <C>
Long-Term Debt, including
  interest.........................  $ 6,472      $   704        $1,408          $1,408           $2,952
Capital Lease Obligations..........   11,187       11,187*           --              --               --
Operating Leases...................    9,230        1,178         2,235           2,025            3,792
Minimum License Obligations........      500           88           206             206               --
                                     -------      -------        ------          ------           ------
Total Contractual Cash
  Obligations......................  $27,389      $13,157        $3,849          $3,639           $6,744
                                     =======      =======        ======          ======           ======
</Table>

------------------------

*   Reflects all lease obligations as being current. However, as a result of the
    March 2003 GE Amendment, we anticipate paying the outstanding GE lease
    obligation under the original maturity schedule through February, 2005.

    Long-term debt consists primarily of three financing agreements with
Connecticut Innovations, Inc. (CII), a stockholder of the Company, used to
finance certain leasehold improvements and other costs associated with our
facility expansion. Each agreement provides for interest only for a certain
period with principal payments, based on a 120 month amortization, beginning in
April 2001 through October 2002, and with final balloon payments due in
March 2009 through June 2011. Borrowings under the agreements bear interest at
6.5% and are secured by the related leasehold improvements. The Company was in
compliance with all debt covenants as of December 31, 2002 and no cross default
provisions exist in the agreements.

    Capital lease obligations, related to equipment, consist principally of
arrangements with four equipment leasing companies. The leases have terms
ranging from two to four years with installments originally scheduled to end
between August 2003 and October 2004 and which bear interest at rates ranging
from 8.15% to 12.46%. The majority of the capital lease arrangements allow for
the purchase of the related equipment at the completion of the lease term, as
defined in the agreements, and certain of the agreements require the purchase of
the equipment at the completion of the lease term. In

                                       28
<Page>
December 2002, the Company announced it received a notice from GE claiming that
an event of default had occurred under the lease agreement as a result of an
alleged material adverse change in the Company's business. Because of the
alleged default, GE declared that all principal and future interest obligations
were due and payable immediately. GE also filed a complaint in the Superior
Court of the State of Connecticut, demanding payment of all amounts due under
the lease agreements. The Company also received a notice from Finova, stating
that as a result of the alleged default claim by GE, there was a cross-default
under the Company's agreement with Finova. In connection with a cross-default,
Finova declared that all principal and future interest obligations were due and
payable immediately. In March 2003, the Company and GE agreed to an amendment to
their existing lease agreement. In connection with this amendment, GE has
rescinded and withdrawn its default claim and both parties have withdrawn from
any legal action. The lease amendment requires certain additional covenants as
well as a $2 million letter of credit, which is collateralized by cash. Because
of the outstanding claim of default by Finova, the Company recorded an
additional charge to interest expense during 2002. This charge represents all
future interest payments due under the terms of the agreement with Finova. As of
December 31, 2002, the Company has classified as current the GE and Finova lease
obligations, as a result of continuing material adverse change provisions within
the GE agreement and as a result of the Finova default claim.

    We lease our operating facilities located in New Haven, Connecticut. The
lease agreements require annual lease payments of $816,000 per year increasing
to $1.1 million per year over the original term which expires in 2006. We have
two five-year renewal options to extend the lease agreements beyond the initial
term. We are recording the expense associated with the lease on a straight-line
basis over the expected term of the lease. In addition to the operating lease
agreements for our current facility, we also have operating leases for various
office equipment.

    In addition, we periodically enter into agreements with third parties to
obtain exclusive or non-exclusive licenses for certain technologies. The terms
of certain of these agreements require us to pay future royalty payments and
certain milestone payments based on product sales or sublicense income generated
from applicable technologies, if any. The amount of such payments will depend
upon successful commercialization of applicable technologies, if any. The future
minimum payments (assuming non-termination of these leases) are included in the
minimum license obligations above.

    Capital expenditures are not expected to exceed $500,000 to $1 million for
each of fiscal 2003 and 2004.

    Our cash requirements will vary depending upon a number of factors, many of
which are beyond our control, including:

    - the demand for our HAP-TM- Technology;

    - the efforts and success of our HAP-TM- Partnership program;

    - the commercialization of intellectual property derived from our
      associations;

    - the level of competition we face;

    - our ability to maintain our HAP-TM- Technology; and

    - our ability to manage effectively our operating expenses.

    On December 31, 2002, cash, cash equivalents and short-term investments
totaled $34.2 million, which includes $2.1 million of restricted cash, compared
to approximately $59.7 million at December 31, 2001. Our cash reserves are held
in interest-bearing, high-grade corporate bonds and money market accounts. We
believe that our existing cash reserves will be sufficient to fund our expected
net losses, debt obligations and capital expenditures for at least 12 months. To
execute our business plan, we will need to grow our revenues significantly each
year and we may need to seek

                                       29
<Page>
additional funding through public or private equity offerings, debt financings
or commercial partners. We cannot assure you that we will obtain additional
partners or capital funding on acceptable terms, if at all.

INCOME TAXES

    We have not generated any taxable income to date and, therefore, have not
paid any federal income taxes since inception. On December 31, 2002, we had
available unused net operating loss carryforwards of approximately
$121.1 million and $120.1 million, which may be available to offset future
federal and state taxable income, respectively. Use of our federal and state net
operating loss carryforwards, which will begin to expire in 2007 and 2003,
respectively, may be subject to limitations. The future utilization of these
carryforwards may be limited due to changes within our current and future
ownership structure as defined within the income tax code. We have recorded a
full valuation allowance against our deferred tax asset, which consists
primarily of net operating loss carryforwards, because of uncertainty regarding
its recoverability, as required by Statement of Financial Accounting Standards
No. 109 ACCOUNTING FOR INCOME TAXES.

RECENT ACCOUNTING PRONOUNCEMENTS

    In June 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 148, ACCOUNTING FOR STOCK-BASED
COMPENSATION--TRANSITION AND DISCLOSURE, AN AMENDMENT OF FASB STATEMENT
NO. 123. SFAS No. 148 amends SFAS No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, to provide alternative methods of transition for a voluntary
change to the fair value-based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. SFAS
No. 148 is effective for fiscal years ending after December 15, 2002 for annual
statements and for interim periods ending after December 15, 2002 for interim
financial reports. The Company has adopted the disclosure requirements of SFAS
No. 148 in its financial statements for the year ended December 31, 2002, but
has not determined whether or not it will voluntarily adopt SFAS No. 123 and the
related transition alternatives pursuant to SFAS No. 148.

    In June 2002, the FASB issued Statement of Financial Accounting Standards
No. 146 (SFAS No. 146), ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR DISPOSAL
ACTIVITIES (SFAS 146). This Statement addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3, LIABILITY RECOGNITION FOR
CERTAIN EMPLOYEE TERMINATION BENEFITS AND OTHER COSTS TO EXIT AN ACTIVITY
(INCLUDING CERTAIN COSTS INCURRED IN A RESTRUCTURING). The provisions of SFAS
No. 146 are effective for exit or disposal activities that are initiated after
December 31, 2002, with early application encouraged. We believe the adoption of
this new standard will not have a material impact on either our operating
results or financial position.

    In November 2002 the FASB issued FASB Interpretation No. 45 (FIN 45),
GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING
INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS (AN INTERPRETATION OF FASB
STATEMENTS NO. 5, 57, AND 107 AND RESCISSION OF FASB INTERPRETATION NO. 34). FIN
45 clarifies the requirements of FASB Statement No. 5 (FAS 5) ACCOUNTING FOR
CONTINGENCIES, relating to a guarantor's accounting for, and disclosure of, the
issuance of certain types of guarantees. FIN 45 requires that upon issuance of a
guarantee, the guarantor must recognize a liability for the fair value of the
obligation it assumes under that guarantee. The initial recognition and
measurement provisions are effective for guarantees issued or modified after
December 31, 2002. The disclosure requirements under FIN 45 are effective for
the Company's fiscal 2002 year-end.

                                       30
<Page>
    In November 2002, the Emerging Issues Task Force (EITF) issued EITF Issue
No. 00-21, REVENUE ARRANGEMENTS WITH MULTIPLE DELIVERABLES. This issue addresses
revenue recognition for arrangements with multiple deliverables which should be
considered as separate units of accounting if the deliverables meet certain
criteria as described in EITF 00-21. This issue is effective for revenue
arrangements entered into in fiscal periods beginning after June 15, 2003. Early
application is permitted.

FACTORS AFFECTING FUTURE OPERATING RESULTS

    THIS ANNUAL REPORT ON FORM 10-K CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
THESE STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES AND ARE BASED ON THE
BELIEFS AND ASSUMPTIONS OF OUR MANAGEMENT BASED ON INFORMATION CURRENTLY
AVAILABLE TO OUR MANAGEMENT. USE OF WORDS, SUCH AS "BELIEVES," "EXPECTS,"
"ANTICIPATES," "INTENDS," "PLANS," "ESTIMATES," "SHOULD," "LIKELY" OR SIMILAR
EXPRESSIONS, INDICATE A FORWARD-LOOKING STATEMENT. FORWARD-LOOKING STATEMENTS
INVOLVE RISKS, UNCERTAINTIES AND ASSUMPTIONS. CERTAIN OF THE INFORMATION
CONTAINED IN THIS ANNUAL REPORT ON FORM 10-K CONSISTS OF FORWARD-LOOKING
STATEMENTS. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS INCLUDE THE FOLLOWING:

WE ARE AN EARLY STAGE COMPANY WITH A HISTORY OF LOSSES AND WE EXPECT TO INCUR
NET LOSSES FOR THE FORESEEABLE FUTURE SUCH THAT WE MAY NEVER BE PROFITABLE.

    We have incurred substantial operating losses since our inception. As of
December 31, 2002, we have generated only minimal revenue from our HAP-TM-
Partnership program and our pharmacogenomics support services, and we do not
expect to generate significant revenues for several years, if ever. From
inception through December 31, 2002, we had an accumulated deficit of
approximately $193.6 million. Our losses to date have resulted principally from
costs we incurred in the development of our HAP-TM- Technology, in our clinical
trials and from general and administrative costs associated with operations. We
expect to devote our resources to service our HAP-TM- Partnership program and
STRENGTH program partners, our pharmacogenomics support services customers, our
CARING program and to maintain our HAP-TM- Technology.

    We expect to incur additional losses this year and in future years, and we
may never achieve profitability. In addition, pharmaceutical and biotechnology
companies are only now beginning to use products such as ours in their drug and
diagnostic development or marketing efforts and, accordingly, they may not
choose to use our HAP-TM- Technology. We do not expect our losses to be
substantially mitigated by revenues from our HAP-TM- Partnership and STRENGTH
programs and our CARING program, if any, or from our pharmacogenomics support
services for a number of years, if ever.

WE CURRENTLY RELY ON A LIMITED NUMBER OF LICENSING AND SERVICE ARRANGEMENTS FOR
SUBSTANTIALLY ALL OF OUR REVENUES. AS A RESULT, THE LOSS OF ONE MAJOR CUSTOMER
OR OUR INABILITY TO SECURE ADDITIONAL SIGNIFICANT CUSTOMERS DURING A GIVEN
PERIOD WOULD HAVE AN ADVERSE AFFECT ON OUR BUSINESS AND OPERATING RESULTS.

    We are dependent upon a limited number of licensing and service arrangements
that represent substantially all of our revenues. In the year ended
December 31, 2002, three of our customers accounted for 82% of our total
revenues. The agreement with the first customer expired by its terms in the
fourth quarter of 2002. The agreements with the second and third customers
terminate by their terms in the third quarter of 2004 and the fourth quarter of
2003, respectively. If we are unable to replace, upon substantially similar
terms, the agreement that expired in 2002 or if we lose either of the remaining
significant customers, it would have a material adverse affect on our revenues
and on our business in general and could cause volatility or a decline in our
stock price.

                                       31
<Page>
TO GENERATE SIGNIFICANT REVENUES, WE MUST OBTAIN ADDITIONAL CUSTOMERS FOR OUR
HAP-TM- PARTNERSHIP PROGRAM AND OUR STRENGTH AND CARING PROGRAMS.

    Our strategy depends on entering into agreements with pharmaceutical and
biotechnology companies for our HAP-TM- Partnership program and our STRENGTH and
CARING programs. We currently have a HAP-TM- Partnership program with six
pharmaceutical and biotechnology companies as well as an agreement with a major
diagnostic company to commercialize exclusively the diagnostic rights and
non-exclusively the product development rights from our STRENGTH program. We may
not obtain additional partners for our HAP-TM- Partnership program and our
STRENGTH program or obtain any partners for our CARING program. If we are
unsuccessful in finding additional partners for our HAP-TM- Partnership program
and our STRENGTH program or in finding any partners for our CARING program, we
may never generate sufficient revenues to sustain our operations. In addition,
we expect that some of our future HAP-TM- Partnership program collaborations,
like some of our current HAP-TM- Partnership program collaborations, will be
limited to specific, limited-term projects or that some of these collaborations
may not be renewed. Accordingly, we must continually obtain new customers to be
successful. To date, the integration of pharmacogenomics into drug development
and marketing has not achieved widespread market acceptance.

IF THE ESTIMATES WE MAKE, AND THE ASSUMPTIONS ON WHICH WE RELY, IN PREPARING OUR
FINANCIAL STATEMENTS PROVE INACCURATE, OUR ACTUAL RESULTS MAY VARY FROM THESE
REFLECTED IN OUR PROJECTIONS AND ACCRUALS.

    Our financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of our assets, liabilities, revenues and expenses,
the amounts of charges accrued by us and related disclosure of contingent assets
and liabilities. We base our estimates on historical experience and on various
other assumptions that we believe to be reasonable under the circumstances.
There can be no assurance, however, that our estimates or the assumptions
underlying our estimates will be correct.

WE MAY REQUIRE ADDITIONAL FUNDING TO FUND OPERATIONS AND REPAY DEBT AND WE MAY
NOT BE ABLE TO OBTAIN ANY.

    We have used substantial amounts of cash to fund our research and
development activities. We will continue to spend funds to service our HAP-TM-
Partnership program and SRENGTH program partners, our pharmacogenomics support
services customers, our CARING program and to maintain our HAP-TM- Technology.
We plan to pay for these activities with funds from:

    - our existing cash and investment securities and

    - income that we may receive from our HAP-TM- Partnership program and
      STRENGTH program partners and pharmacogenomics support services customers.

    We intend to rely on our current HAP-TM- Partnership program and STRENGTH
program partners and future partners, if any, and our current pharmacogenomics
support services customers and future customers, if any, for significant funding
in the future to support our development efforts. To execute our business plans,
we will need to grow our revenues significantly each year. We cannot be certain
when we will begin to receive additional income, if at all, from our HAP-TM-
Partnership and STRENGTH programs and our pharmacogenomics support services and
income, if any, from our CARING program. If we do not receive this income or do
not receive it as rapidly as we expect, we would spend our existing cash and
investment securities more rapidly than we currently plan.

    We believe that our existing cash reserves will be sufficient to support our
expected net losses, debt obligations and capital expenditures for at least 12
months. We cannot assure you that we will be able to obtain new partners or to
generate the increased revenues required to meet our business plan

                                       32
<Page>
objectives. In addition, to execute our business plans, we may need to seek
additional funding through public or private equity offerings, debt financings
or commercial partners. We cannot assure you that we will obtain additional
partners or capital funding on acceptable terms, if at all. If we are unable to
generate sufficient revenues or access capital on acceptable terms, we may be
required to (a) obtain funds on unfavorable terms that may require us to
relinquish rights to certain of our technologies or that would significantly
dilute our stockholders and/or (b) significantly scale back current operations.
Either of these two possibilities would have a material adverse effect on our
business.

OUR HAP-TM- TECHNOLOGY MAY NOT ALLOW OUR PARTNERS TO DEVELOP COMMERCIAL PRODUCTS
OR TO INCREASE SALES OF THEIR MARKETED PRODUCTS.

    We developed our HAP-TM- Technology on the assumption that information about
gene variation and gene variation associated with drug response may help drug
development professionals better understand the drug response of particular
populations and complex disease processes. Although the pharmaceutical and
biotechnology industries are increasing their use of genomics in analyzing drug
response and diseases, we are unaware of any successful drug development program
applying population genomics.

    We discover HAP-TM- Markers for pharmaceutically relevant genes. If we are
unable to find HAP-TM- Markers for pharmaceutically relevant genes in a timely
manner, our potential partners may lose confidence in our HAP-TM- Technology and
our company, and this loss in confidence could decrease our ability to generate
revenues. Even if we are able to discover the HAP-TM- Markers for
pharmaceutically relevant genes, this information may not prove to be superior
to genomic variation information discovered by our competitors. Furthermore,
pharmaceutical and biotechnology companies may not choose our HAP-TM- Technology
over competing technologies.

    Our DECOGEN-Registered Trademark- Informatics System may also be less
effective than we expect or may not allow our partners or us to determine a
correlation between drug response and genomic variation. Furthermore, even if
our partners or we are successful in identifying a specific correlation between
drug response and genomic variation based on our HAP-TM- Technology, our
partners may not be able to develop or sell commercially viable products nor may
our partners be able to increase the sales of their marketed products using this
correlation. Accordingly, our HAP-TM- Markers and HAP-TM- Technology may not
improve the development, marketing and prescribing of drugs or the development
and marketing of diagnostics developed by our HAP-TM- Partnership program and
STRENGTH program partners.

IF WE ARE UNABLE TO OBTAIN INTELLECTUAL PROPERTY PROTECTION FOR OUR HAP-TM-
TECHNOLOGY, TRADE SECRETS OR KNOW HOW, WE MAY NOT BE ABLE TO OPERATE OUR
BUSINESS PROFITABLY.

    Our success depends, in part, on our ability to protect our HAP-TM-
Technology, any associations that we find between clinical outcomes and genetic
variation and any other proprietary software, methods and technologies that we
develop, either as a trade secret or under the patent and other intellectual
property laws of the United States and other countries, so that we can prevent
unauthorized entities from using our inventions and proprietary information.
Because patent applications that were filed prior to November 29, 2000 in the
United States are confidential until patents issue, third parties may have filed
patent applications for technology covered by our pending patent applications
without our being aware of those applications, and our patent applications may
not have priority over any patent applications of others. We are aware that
there are other firms or individuals who have discovered, or are currently
discovering, information similar to the information we are discovering, who may
have filed, and in the future are likely to file, patent applications that are
similar or identical to our patent applications.

    Our pending patent applications may not result in issued patents. The patent
positions of pharmaceutical and biotechnology companies, including ours, are
generally uncertain as a result of the

                                       33
<Page>
uncertain state of the patent law in the biotechnology field. There is no
uniform, worldwide policy regarding the subject matter and scope of claims
granted or allowable in biotechnology patents, particularly those involving
genomics. In addition, some interest groups are lobbying for restrictions on
patenting of genetic tests.

IF WE CANNOT ESTABLISH ADDITIONAL COLLABORATIVE RELATIONSHIPS, WE MAY BE UNABLE
TO DEVELOP OR COMMERCIALIZE OUR HAP-TM- TECHNOLOGY AND WE WILL DEPEND ON OUR
PARTNERS TO DEVELOP OR TO CO-DEVELOP PRODUCTS.

    We currently have a HAP-TM- Partnership program with six pharmaceutical and
biotechnology companies as well as an agreement with a major diagnostic company
to commercialize exclusively the diagnostic rights and non-exclusively the
product development rights from our STRENGTH program. We do not currently have
any partners for our CARING program. Under our current strategy, and for the
foreseeable future, we do not expect to develop or market pharmaceutical or
diagnostic products on our own. As a result, our current and future revenues, in
part, will depend on payments from our current HAP-TM- Partnership program and
STRENGTH program partners and our future HAP-TM- Partnership, STRENGTH and
CARING program partners, if any, for either the new products they may develop,
or for increased sales of their existing products, made possible through the use
of our HAP-TM- Technology. If we are unable to attract new HAP-TM- Partnership
program and STRENGTH program partners or any partners for our CARING program, we
may never generate sufficient revenues to sustain our operations.

    Our partners for our HAP-TM- Partnership program and STRENGTH program and
our partners, if any, for our CARING program, will be responsible for
pre-clinical study and clinical development of therapeutic and diagnostic
products and for regulatory approval, manufacturing and marketing of any
products or enhanced marketing claims that result from the application of our
HAP-TM- Technology. Our current agreements and we anticipate that our future
agreements with partners for our HAP-TM- Partnership and STRENGTH programs and
with partners, if any, for our CARING program will allow them significant
discretion in pursuing these activities. We cannot control the amount and timing
of resources that any such current or potential partners will devote to our
programs or potential products. Our HAP-TM- Partnership program and STRENGTH
program arrangements and our CARING program arrangements, if any, may also have
the effect of limiting the areas of research that we may pursue either alone or
with others. Because part of our revenues will be dependent on the successful
commercialization or development of our partners' products, if, for any reason,
a HAP-TM- Partnership program partner or our STRENGTH program partner delays or
abandons its development or commercialization of a product developed using our
HAP-TM- Technology, we may receive reduced royalty or other payments or no
royalty or other payments at all. In addition, because part of our future
revenues will be dependent on the successful commercialization of additional
aspects of our HAP-TM- Partnership and STRENGTH programs with partners and the
successful commercialization of our CARING program with partners, if, for any
reason, a partner delays or abandons its development or commercialization of
these additional aspects of our HAP-TM- Partnership program or STRENGTH program
or its development or commercialization of our CARING program, we may receive
reduced royalty or other payments or no royalty or other payments at all.

    Although we intend to retain the rights to all HAP-TM- Markers, which we
discover as well as to HAP-TM- Markers discovered jointly with our HAP-TM-
Partnership and STRENGTH program partners and with our CARING program partners,
if any, we may not always be able to negotiate the retention of these rights.
Furthermore, disputes may arise in the future over the ownership of rights to
HAP-TM- Markers as well as any other technology we develop with our HAP-TM-
Partnership and STRENGTH program partners or with our CARING program partners,
if any. These and other possible disagreements between our HAP-TM- Partnership
and STRENGTH program partners and us or between our CARING program partners, if
any, and us could lead to delays in the research, development or

                                       34
<Page>
commercialization of their products. These disagreements could also result in
litigation or require arbitration to resolve. Any of these events could prevent
us from effectively marketing our HAP-TM- Technology.

WE INVEST CONSIDERABLE AMOUNTS OF TIME, EFFORT, AND MONEY TO LICENSE OUR HAP-TM-
TECHNOLOGY; AND IF WE ARE UNABLE TO LICENSE OUR TECHNOLOGY, WE MAY NOT GENERATE
SUFFICIENT REVENUE TO SUSTAIN OUR OPERATIONS.

    Our ability to obtain partners for our HAP-TM- Partnership, STRENGTH and
CARING programs will depend in significant part upon the pharmaceutical and
biotechnology industries' acceptance that our HAP-TM- Technology can help
accelerate or improve their drug and diagnostic development and marketing
efforts. To achieve market acceptance, we must continue to educate the
pharmaceutical and biotechnology industries and the public in general as to the
potential benefits of our HAP-TM- Partnership, STRENGTH and CARING programs.
Most importantly, we must convince the research and development, clinical and
marketing departments of pharmaceutical and biotechnology companies that our
HAP-TM- Technology can accelerate and improve the processes for developing,
marketing and prescribing drugs and for developing and marketing diagnostics and
that our HAP-TM- Partnership, STRENGTH and CARING programs will be commercially
viable. If we fail to gain this acceptance, we may never generate sufficient
revenues to sustain our operations. We may expend substantial funds and
management effort to market our HAP-TM- Partnership, STRENGTH and CARING
programs, without any resulting revenues.

OUR ABILITY TO MAKE ANY ACQUISITIONS IS DEPENDENT ON THE AVAILABILITY OF
ADEQUATE CASH AND THE ATTRACTIVENESS OF OUR STOCK PRICE.

    We anticipate that any future acquisitions of businesses or technologies
will be financed through cash from operations, the issuance of shares of our
common stock and/or seller financing. We cannot assure you that we will have
sufficient existing capital resources or that we will be able to raise
sufficient additional capital resources on terms satisfactory to us, if at all,
in order to meet our capital requirements for such acquisitions.

    We also believe that a significant factor in our ability to close
acquisitions will be the attractiveness of our common stock for potential
acquisition candidates. This attractiveness may, in large part, be dependent
upon the relative market price and capital appreciation prospects of our common
stock compared to the equity securities of our competitors. The trading price of
our common stock on the Nasdaq National Market has affected and, could in the
future materially adversely affect, our acquisition program.

INTEGRATION OF ACQUISITIONS OR STRATEGIC INVESTMENTS COULD INTERRUPT OUR
BUSINESS AND OUR FINANCIAL CONDITION COULD BE HARMED.

    From time to time, we may acquire or make strategic investments in other
businesses or technologies. Any acquisitions or strategic investments we may
make in the future may entail numerous risks that include the following:

    - difficulties integrating acquired operations, personnel, technologies or
      products, if any;

    - diversion of management's focus from our core business concerns;

    - entering markets in which we have no or limited prior experience or
      knowledge;

    - exposure to litigation from stockholders or creditors of, or other parties
      affiliated with, the target company or companies;

    - dilution to existing stockholders and earnings per share; and

    - incurrence of substantial debt.

                                       35
<Page>
    Any such difficulties encountered as a result of any mergers, acquisitions
or strategic investments could adversely affect our business, operating results
and financial condition.

IF WE ARE UNABLE TO PREVENT OTHERS FROM UNAUTHORIZED USE OF, OR ARE UNABLE TO
DEFEND OUR USE OF, OUR HAP-TM- TECHNOLOGY, TRADE SECRETS OR KNOW HOW, WE MAY NOT
BE ABLE TO OPERATE OUR BUSINESS PROFITABLY.

    Despite our efforts to protect our proprietary rights, unauthorized parties
may be able to obtain and use information that we regard as proprietary. The
mere issuance of a patent does not guarantee that it is valid or enforceable;
thus, even if we obtain patents, they may not be valid or enforceable against
third parties.

    We also rely upon unpatented trade secrets and improvements, unpatented
know-how and continuing technological innovation to develop and maintain our
competitive position. We generally protect this information with reasonable
security measures, including confidentiality agreements signed by our employees,
academic collaborators and consultants that provide that all confidential
information developed or made known to others during the course of the
employment, consulting or business relationship will be kept confidential except
in specified circumstances. Agreements with employees, consultants and
collaborators generally provide that all inventions conceived by the individual
while employed by us are our exclusive property. If employees, consultants or
collaborators do not honor these agreements, we may not have adequate remedies
for breach. Furthermore, our trade secrets may otherwise become known or be
independently discovered by competitors.

    Further, a patent does not provide the patent holder with freedom to operate
in a way that infringes the patent rights of others. A third party may sue us
for infringing on its patent rights. Likewise, we may need to resort to
litigation to enforce a patent issued to us or to determine the scope and
validity of third party proprietary rights. The cost to us of any litigation or
other proceeding relating to intellectual property rights, even if resolved in
our favor, could be substantial, and the litigation would divert our
management's efforts. Some of our competitors may be able to sustain the costs
of complex patent litigation more effectively than we can because they have
substantially greater resources. Uncertainties resulting from the initiation and
continuation of any litigation could limit our ability to continue our
operations.

    If any party should successfully claim that the creation or use of our
HAP-TM- Technology or HAP-TM- Marker association data infringe upon their
intellectual property rights, in addition to any damages we might have to pay, a
court could require us to stop the infringing activity or obtain a license on
unfavorable terms. Moreover, any legal action against us or our HAP-TM-
Partnership and STRENGTH program partners or any CARING program partners
claiming damages or seeking to enjoin commercial activities relating to the
affected products and processes could, in addition to subjecting us to potential
liability for damages, require us or our HAP-TM- Partnership and STRENGTH
program partners or any CARING program partners to obtain a license in order to
continue to manufacture or market the affected products and processes. Any
license required under any patent may not be made available on commercially
acceptable terms, if at all. In addition, some licenses may be non-exclusive,
and, therefore, our competitors may have access to the same technology licensed
to us. If we fail to obtain a required license or are unable to design around a
patent, we may be unable to market effectively some of our HAP-TM- Technology,
which could limit our profitability and possibly prevent us from generating
revenue sufficient to sustain our operations.

REGULATORY OVERSIGHT OF OUR HAP-TM- TECHNOLOGY AND PUBLIC OPINION REGARDING
ETHICAL ISSUES SURROUNDING THE USE OF GENETIC INFORMATION MAY ADVERSELY AFFECT
OUR ABILITY TO MARKET OUR HAP-TM- TECHNOLOGY.

    Currently, there is limited FDA regulation of genetic tests. The Secretary's
Advisory Committee on Genetic Testing, an advisory panel to the Secretary of the
U.S. Department of Health and Human Services, has recommended that the FDA
expand its regulation of genetic testing to require FDA

                                       36
<Page>
approval for all new genetic tests and labeling of genetic tests. If the FDA
adopts this recommendation, it may require that we, or our partners, apply for
FDA approval as a prerequisite to marketing genetic tests that incorporate our
HAP-TM- Technology. If the FDA were to deny any application of this kind, it
could adversely affect our business and we may be unable to generate sufficient
revenues to sustain our operations.

    To date, the FDA has not required, in connection with approving any drug,
that a physician must have genomic variation information determined about a
patient before the doctor prescribes a drug. However, the FDA, in one instance,
has required that a physician must have gene expression information about a
patient before the doctor prescribes the drug. On January 31, 2003, the FDA
announced an initiative to help make innovative medical technology available
sooner, including the use of pharmacogenomics during drug development. The FDA
indicated that within six months the agency would issue guidance on when and how
to submit pharmacogenomic information to the FDA during the drug development
process. The FDA said that this guidance would facilitate the exploratory use of
pharmacogenomic screening during drug development and would clarify when such
information would be considered part of the evaluation of drug safety. In
addition, the FDA stated that the agency would hold a workshop in 2003 on issues
that are involved in the co-development of a pharmacogenomic test and a drug and
that within 18 months the agency would issue guidance on the regulatory pathway
for such combinations through the agency's Center for Drug Evaluation and
Research and the Center for Devices and Radiological Health. Our success will
depend in part on what guidance the FDA issues with regard to the use of genomic
variation analysis as part of the drug approval process and, more specifically,
the validity of our HAP-TM- Technology as a basis for identifying genomic
variation and for correlating drug response with genomic variation. Without this
acceptance by the FDA and the pharmaceutical and biotechnology industry, we may
be unable to market effectively our HAP-TM- Technology and we may not generate
sufficient revenues to sustain our operations.

    Within the field of personalized health and medicine, governmental and other
entities may enact patient privacy and healthcare laws and regulations that may
limit the use of genomic variation data. To the extent that these laws and
regulations limit the use of our HAP-TM- Technology or impose additional costs
on our partners, we may be unable to market effectively our HAP-TM- Partnership,
STRENGTH and CARING programs and we may not generate sufficient revenues to
sustain our operations.

    Additionally, public opinion on ethical issues related to the
confidentiality and appropriate use of genetic testing results may influence
governmental authorities to call for limits on, or regulation of the use of,
genetic testing. In addition, governmental authorities or other entities may
call for limits on, or regulation of the use of, genetic testing or prohibit
testing for genetic predisposition to certain conditions, particularly for those
that have no known cure. The occurrence of any of these events could reduce the
potential markets for our HAP-TM- Technology, which could prevent us from
generating sufficient revenues to sustain our operations.

    Furthermore, we may be directly subject to regulations as a provider of
diagnostic information. To the extent that these regulations restrict the sale
of our HAP-TM- Technology or impose other costs, we may be unable to provide our
HAP-TM- Technology to our customers on terms sufficient to recover our expenses.

IF OUR PARTNERS DO NOT SEEK, OR DO NOT RECEIVE, MARKETING APPROVAL FOR PRODUCTS
DEVELOPED, IF ANY, USING OUR HAP-TM- TECHNOLOGY, WE MAY RECEIVE DELAYED ROYALTY
OR OTHER PAYMENTS OR NO ROYALTY OR OTHER PAYMENTS AT ALL.

    Any new drug, biologic, or new drug or biologic indication our partners
develop using our HAP-TM- Technology must undergo an extensive regulatory review
process in the United States and other countries before a new product or
indication of this kind could be marketed. This regulatory process can take many
years and require substantial expense. Changes in FDA policies and the policies
of

                                       37
<Page>
similar foreign regulatory bodies can prolong the regulatory review of each new
drug or biologic license application or prevent approval of the application. We
expect similar delays and risks in the regulatory review process for any
diagnostic product, whenever this regulatory review is required. Even if a
product obtains marketing clearance, a marketed product and its manufacturer are
subject to continuing review. A manufacturer may be forced to withdraw a product
from the market if a previously unknown problem with a product becomes apparent.
Because our future revenues will be largely dependent on the successful
commercialization or development of products using our HAP-TM- Technology, any
delay in obtaining, failing to obtain, or failing to maintain regulatory
approval for a product developed using our HAP-TM- Technology may delay our
receipt of royalty or other payments or prevent us from receiving royalty or
other payments sufficient to recover our expenses.

IF OUR PARTNERS ARE UNABLE TO OBTAIN FDA APPROVAL FOR THERAPEUTIC OR DIAGNOSTIC
PRODUCTS DEVELOPED USING OUR HAP-TM- TECHNOLOGY, THE LACK OF REGULATORY APPROVAL
WILL DIMINISH THE VALUE OF OUR HAP-TM- TECHNOLOGY.

    To date, no one has developed or commercialized any therapeutic product or
commercialized any diagnostic product using our HAP-TM- Technology. We expect to
rely on our partners for our HAP-TM- Partnership and STRENGTH programs and our
partners, if any, for our CARING program to file applications for regulatory
approval and generally direct the regulatory review process and obtain FDA
acceptance of our HAP-TM- Partnership and STRENGTH programs and our CARING
programs, if any. Our partners for our HAP-TM- Partnership and STRENGTH programs
or our partners, if any, for our CARING program, may not submit an application
for regulatory review. Even if they do submit applications, they may not be able
to obtain marketing clearance for any products on a timely basis, if at all. If
our partners fail to obtain required governmental clearances for therapeutic or
diagnostic products, they will not be able to market these products unless and
until they obtain these clearances. As a result, we may not receive royalty or
other payments from our customers. The occurrence of any of these events may
prevent us from generating revenues sufficient to sustain our operations.

IF WE DO NOT SUCCESSFULLY DISTINGUISH AND COMMERCIALIZE OUR HAP-TM- TECHNOLOGY,
WE MAY BE UNABLE TO COMPETE SUCCESSFULLY WITH OUR COMPETITORS OR TO GENERATE
REVENUE SIGNIFICANT TO SUSTAIN OUR OPERATIONS.

    Numerous entities are attempting to identify genomic variation predictive of
specific diseases and drug response and to develop products and services based
on these discoveries. We face competition in these areas from pharmaceutical,
biotechnology and diagnostic companies, academic and research institutions and
government or other publicly-funded agencies, both in the United States and
abroad, most of which have substantially greater capital resources, research and
development staffs, facilities, manufacturing and marketing experience,
distribution channels and human resources than we do.

    These competitors may discover, characterize or develop important
technologies applying population genomics before us or our partners for our
HAP-TM- Partnership and STRENGTH programs that are more effective than those
technologies which we develop or which our partners for our HAP-TM- Partnership
and STRENGTH programs develop, or these competitors may obtain regulatory
approvals of their drugs and diagnostics more rapidly than our partners for our
HAP-TM- Partnership and STRENGTH programs do, any of which could limit our
ability to market effectively our HAP-TM- Technology.

    Some companies and governments are marketing or developing a number of
databases and informatics tools to assist participants in the healthcare
industry and academic researchers in the management and analysis of genomic
data. Entities such as Perlegen Sciences, Celera Genomics Group and the
International HapMap Project have developed or plan to develop databases
containing gene sequence, genomic variation or other genomic information and are
marketing or plan to market their data to pharmaceutical and biotechnology
companies or plan to make freely available their databases. In addition,
numerous pharmaceutical and biotechnology companies, such as GlaxoSmithKline
plc,

                                       38
<Page>
either alone or in partnership with our competitors, are developing genomic
research programs that involve the use of information that can be found in these
databases.

    In order to compete against existing and future technologies, we will need
to demonstrate to potential HAP-TM- Partnership, STRENGTH and CARING program
partners the value of our HAP-TM- Technology and that our HAP-TM- Technology and
capabilities are superior to competing technologies. Although we believe that
our focus on gene-based HAP-TM- Markers, rather than random genomic SNPs or
genome-wide haplotypes, differentiates our HAP-TM- Technology from other
technologies that our competitors are developing, any HAP-TM- Technology
improvements we create may fail to achieve greater market acceptance than the
technologies developed by our competitors.

    Genomic technologies have undergone, and are expected to continue to
undergo, rapid and significant change. Our future success will depend in large
part on maintaining a competitive position in the genomics field. Others may
rapidly develop new technologies that may result in our products or technologies
becoming obsolete before we recover the expenses that we incur in connection
with the development of these products. Our HAP-TM- Technology could become
obsolete if our competitors offer less expensive or more effective drug
discovery and development technologies, including technologies that may be
unrelated to genomics.

IF WE FAIL TO MAINTAIN OUR COMPUTER HARDWARE, SOFTWARE AND RELATED
INFRASTRUCTURE, WE COULD EXPERIENCE LOSS OF, OR DELAY IN, REVENUES AND MARKET
ACCEPTANCE.

    Because our business requires manipulating and analyzing large amounts of
data, we depend on the continuous, effective, reliable and secure operation of
our computer hardware, software and related infrastructure. To the extent that
our hardware or software malfunctions, we will experience reduced productivity.
We protect our computer hardware through physical and software safeguards.
However, our computer hardware is still vulnerable to fire, weather, earthquake,
or other natural disaster and power loss, telecommunications failures, physical
or software break-ins and similar events. In addition, the software and
algorithmic components of our DECOGEN-Registered Trademark- Informatics System
are complex and sophisticated, and as such, could contain data, design or
software errors that could be difficult to detect and correct. Users of our
system may find software defects in current or future products. If we fail to
maintain the necessary computer capacity and data to support our computational
needs and our customers' drug and diagnostic discovery and development efforts,
we could experience a loss in revenues, or a delay in receiving revenues and a
delay in obtaining market acceptance for our technology.

OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY AND ANY FAILURE TO MEET
FINANCIAL EXPECTATIONS MAY DISAPPOINT SECURITIES ANALYSTS OR INVESTORS AND
RESULT IN A DECLINE IN OUR COMMON STOCK PRICE.

    Our operating results have fluctuated in the past and we expect they will
fluctuate in the future. These fluctuations could cause our common stock price
to decline. Some of the factors that could cause our operating results to
fluctuate include:

    - recognition of non-recurring revenues due to receipt of license fees,
      achievement of milestones, completion of contracts or other revenues;

    - demand for and market acceptance of our HAP-TM- Partnership, STRENGTH and
      CARING programs;

    - timing of the execution of agreements on our HAP-TM- Partnership, STRENGTH
      and CARING programs and other material contracts;

    - our competitors' announcements or introduction of new products, services
      or technological innovations;

                                       39
<Page>
    - disputes regarding patents or other intellectual property rights;

    - securities class actions or other litigation;

    - adverse changes in the level of economic activity in the United States and
      other major regions in which we do business; and

    - general and industry-specific economic conditions, which may affect our
      partners' use of our HAP-TM- Technology.

    Due to volatile and unpredictable revenues and operating expenses, we
believe that period-to-period comparisons of our results of operations may not
be a good indication of our future performance. It is possible that, in some
future periods, our operating results may be below the expectations of
securities analysts or investors. In this event, the market price of our common
stock could fluctuate significantly or decline.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    Our exposure to market risk is principally confined to our cash equivalents
and investments, all of which have maturities of less than 12 months. We
maintain a non-trading investment portfolio of investment grade, liquid debt
securities that limit the amount of credit exposure to any one issue, issuer or
type of instrument. The weighted average interest rate on marketable securities
at December 31, 2002, was approximately 2.06%. In view of the nature and mix of
our total portfolio, a 10% movement in market interest rates would not have a
significant impact on the total value of our investment portfolio as of
December 31, 2002.

    On December 31, 2002, we had aggregate fixed rate debt of approximately
$16.1 million, including borrowings outstanding under term loans and capital
lease obligations. The weighted average interest rate on this debt at
December 31, 2002, was approximately 9.74%. A 10% change in this interest rate
would cause a corresponding increase in our annual expense of approximately
$157,000.

                                       40
<Page>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<Table>
<Caption>
                                                                PAGE
                                                              --------
<S>                                                           <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS....................     42

FINANCIAL STATEMENTS

  Balance Sheets as of December 31, 2002 and 2001...........     44

  Statements of Operations for the Years Ended December 31,
    2002, 2001 and 2000.....................................     45

  Statements of Stockholders' Equity and Comprehensive Loss
    for the Years Ended
    December 31, 2002, 2001 and 2000........................     46

  Statements of Cash Flows for the Years Ended December 31,
    2002, 2001 and 2000.....................................     47

NOTES TO FINANCIAL STATEMENTS...............................     48
</Table>

                                       41
<Page>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of Genaissance
Pharmaceuticals, Inc.:

In our opinion, the accompanying balance sheet as of December 31, 2002 and the
related statements of operations, of stockholders' equity and comprehensive loss
and of cash flows present fairly, in all material respects, the financial
position of Genaissance Pharmaceuticals, Inc. at December 31, 2002, and the
results of their operations and their cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on the financial
statements based on our audit. We conducted our audit of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statements presentation. We believe that our
audit provides a reasonable basis for our opinion. The financial statements of
the Company as of December 31, 2001, and for each of the two years in the period
ended December 31, 2001, were audited by other independent accountants who have
ceased operations. Those independent accountants expressed an unqualified
opinion on those financial statements in their report dated January 25, 2002.

/s/ PricewaterhouseCoopers LLP

Hartford, Connecticut
February 1, 2003, except for the item noted
  in Footnote 8 for which the date is
  March 12, 2003

                                       42
<Page>
THE FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN
LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP. THE COMPANY IS UNABLE TO
OBTAIN A REISSUE REPORT OR CONSENT TO INCORPORATION BY REFERENCE OF ARTHUR
ANDERSEN LLP'S REPORT FROM ARTHUR ANDERSEN LLP BECAUSE ARTHUR ANDERSEN LLP HAS
CEASED OPERATIONS.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of Genaissance
Pharmaceuticals, Inc.:

We have audited the accompanying balance sheets of Genaissance
Pharmaceuticals, Inc. (a Delaware corporation) as of December 31, 2001 and 2000,
and the related statements of operations, stockholders' equity and comprehensive
loss and cash flows for each of the three years in the period ended
December 31, 2001. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Genaissance
Pharmaceuticals, Inc. as of December 31, 2001 and 2000, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United States.

/s/ Arthur Andersen LLP

Hartford, Connecticut
January 25, 2002

                                       43
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                                 BALANCE SHEETS

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<Table>
<Caption>
                                                                  DECEMBER 31,
                                                              ---------------------
                                                                2002        2001
                                                              ---------   ---------
<S>                                                           <C>         <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................  $  16,578   $  25,204
  Restricted cash...........................................      2,100          --
  Marketable securities.....................................     15,472      34,469
  Accounts receivable.......................................        448         359
  State income tax receivable...............................         --       1,500
  Other current assets......................................        407       1,391
                                                              ---------   ---------
    Total current assets....................................     35,005      62,923
                                                              ---------   ---------
PROPERTY AND EQUIPMENT, net.................................     14,554      28,508
                                                              ---------   ---------
DEFERRED FINANCING COSTS, net of accumulated amortization of
  $586 and $433 at December 31, 2002 and 2001,
  respectively..............................................        220         374
                                                              ---------   ---------
OTHER ASSETS................................................        943         472
                                                              ---------   ---------
    Total assets............................................  $  50,722   $  92,277
                                                              =========   =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current portion of long-term debt, including amounts due
    to related parties of $397 and $187 at December 31, 2002
    and 2001, respectively..................................  $     397   $     672
  Current portion of capital lease obligations..............     11,187       6,759
  Accounts payable..........................................        838       2,607
  Accrued expenses..........................................      2,037       4,899
  Accrued dividends.........................................      1,159          --
  Current portion of deferred revenue.......................      3,026         211
                                                              ---------   ---------
    Total current liabilities...............................     18,644      15,148
                                                              ---------   ---------
LONG-TERM LIABILITIES:
  Long-term debt due to related party, less current
    portion.................................................      4,501       4,929
  Capital lease obligations, less current portion...........         --       9,834
  Deferred revenue, less current portion....................      1,722       1,928
  Accrued dividends.........................................         --       1,159
  Other.....................................................         --         300
                                                              ---------   ---------
    Total long-term liabilities.............................      6,223      18,150
                                                              ---------   ---------
COMMITMENTS AND CONTINGENCIES (Note 12)
STOCKHOLDERS' EQUITY:
  Common stock, 58,000 authorized shares at December 31,
    2002 and 2001; $.001 par value; 22,847, and 22,783
    shares issued and outstanding at December 31, 2002 and
    2001....................................................         23          23
  Preferred stock, 1,000 authorized shares at December 31,
    2002 and 2001; no shares issued or outstanding..........         --          --
Additional paid-in capital..................................    219,413     219,348
Accumulated deficit.........................................   (193,602)   (160,509)
Accumulated other comprehensive income......................         21         117
                                                              ---------   ---------
    Total stockholders' equity..............................     25,855      58,979
                                                              ---------   ---------
    Total liabilities and stockholders' equity..............  $  50,722   $  92,277
                                                              =========   =========
</Table>

   The accompanying notes are an integral part of these financial statements.

                                       44
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                            STATEMENTS OF OPERATIONS

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
REVENUES:
  License and service revenue...............................  $  8,111   $  5,345   $    678
  Grant revenue.............................................        --         --         75
                                                              --------   --------   --------
                                                                 8,111      5,345        753
                                                              --------   --------   --------
OPERATING EXPENSES:
  Research and development..................................    23,940     46,333     27,374
  General and administrative................................     8,799     11,933     12,399
  Impairment of fixed assets................................     6,000         --         --
  Sublicense royalty fees...................................        --         54        530
                                                              --------   --------   --------
                                                                38,739     58,320     40,303
                                                              --------   --------   --------
  Operating loss............................................   (30,628)   (52,975)   (39,550)
OTHER INCOME (EXPENSE):
  Interest expense..........................................    (3,467)    (2,599)    (1,839)
  Interest income...........................................     1,037      3,918      4,623
                                                              --------   --------   --------
  Loss before income taxes..................................   (33,058)   (51,656)   (36,766)
  State income tax (expense) benefit........................       (35)     4,074         --
                                                              --------   --------   --------
  Net loss..................................................   (33,093)   (47,582)   (36,766)
PREFERRED STOCK DIVIDENDS AND ACCRETION.....................        --         --     (6,327)
BENEFICIAL CONVERSION FEATURE OF SERIES B, KBH AND C
  PREFERRED STOCK:..........................................        --         --    (50,180)
                                                              --------   --------   --------
  Net loss applicable to common shareholders................  $(33,093)  $(47,582)  $(93,273)
                                                              ========   ========   ========
  Net loss per common share, basic and diluted (Note 2).....  $  (1.45)  $  (2.09)  $  (8.55)
                                                              ========   ========   ========
  Shares used in computing basic and diluted net loss per
    common share (Note 2)...................................    22,809     22,753     10,908
                                                              ========   ========   ========
</Table>

   The accompanying notes are an integral part of these financial statements.

                                       45
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.
           STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE LOSS
                             (AMOUNTS IN THOUSANDS)

<Table>
<Caption>
                                                                                    ACCUMULATED
                                                                                       OTHER           TOTAL
                                    COMMON STOCK       ADDITIONAL                  COMPREHENSIVE      COMMON           OTHER
                                 -------------------    PAID-IN     ACCUMULATED       INCOME       STOCKHOLDERS'   COMPREHENSIVE
                                  SHARES    AMOUNTS     CAPITAL       DEFICIT         (LOSS)          EQUITY            LOSS
                                 --------   --------   ----------   ------------   -------------   -------------   --------------
<S>                              <C>        <C>        <C>          <C>            <C>             <C>             <C>
Balance at December 31, 1999...    2,810      $ 3       $  4,819     $ (19,654)        $ --          $(14,832)
  Issuance of common stock from
    exercise of stock
    options....................      113       --            452            --           --               452
  Issuance of common stock from
    exercise of warrants.......       98       --            230            --           --               230
  Compensation related to
    issuance of options to
    purchase common stock......       --       --          4,936            --           --             4,936
  Warrants issued in connection
    with debt financing and
    preferred stock offering...       --       --          3,320            --           --             3,320
  Accretion in carrying value
    of redeemable preferred
    stock......................       --       --             --        (6,327)          --            (6,327)
  Beneficial conversion feature
    of Series B, KBH and C
    preferred stock............       --       --         50,180       (50,180)          --                --
  Conversion of preferred stock
    in connection with initial
    public offering............   12,704       13         72,054            --           --            72,067
  Cashless exercise of warrants
    in connection with initial
    public offering............       62       --            501            --           --               501
  Sale of common stock in
    connection with initial
    public offering, net of
    offering costs.............    6,900        7         82,033            --           --            82,040
  Net change in unrealized
    investment gain............       --       --             --            --           54                54         $     54
  Net loss.....................       --       --             --       (36,766)          --           (36,766)         (36,766)
                                                                                                                      --------
    Total comprehensive loss...                                                                                       $(36,712)
                                  ------      ---       --------     ---------         ----          --------         ========
Balance at December 31, 2000...   22,687      $23       $218,525     $(112,927)        $ 54          $105,675
  Issuance of common stock from
    exercise of stock
    options....................       76       --            157            --           --               157
  Issuance of common stock from
    Employee Stock Purchase
    Plan.......................       20       --            168            --           --               168
  Compensation related to
    issuance of options to
    purchase common stock......       --       --            498            --           --               498
  Net change in unrealized
    investment gain............       --       --             --            --           63                63         $     63
  Net loss.....................       --       --             --       (47,582)          --           (47,582)         (47,582)
                                                                                                                      --------
    Total comprehensive loss...                                                                                       $(47,519)
                                  ------      ---       --------     ---------         ----          --------         ========
Balance at December 31, 2001...   22,783      $23       $219,348     $(160,509)        $117          $ 58,979
  Issuance of common stock from
    exercise of stock
    options....................       10       --             --            --           --                --
  Issuance of common stock from
    Employee Stock Purchase
    Plan.......................       54       --             53            --           --                53
  Compensation related to
    issuance of options to
    purchase common stock......       --       --             12            --           --                12
  Net change in unrealized
    investment gain............       --       --             --            --          (96)              (96)        $    (96)
  Net loss.....................       --       --             --       (33,093)          --           (33,093)         (33,093)
                                                                                                                      --------
Total comprehensive loss.......                                                                                       $(33,189)
                                  ------      ---       --------     ---------         ----          --------         ========
Balance at December 31, 2002...   22,847      $23       $219,413     $(193,602)        $ 21          $ 25,855
                                  ======      ===       ========     =========         ====          ========
</Table>

   The accompanying notes are an integral part of these financial statements.

                                       46
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                            STATEMENTS OF CASH FLOWS

                             (AMOUNTS IN THOUSANDS)

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................  $(33,093)  $(47,582)  $(36,766)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
    Depreciation and amortization...........................     8,178      8,559      4,052
    Impairment of fixed assets..............................     6,000         --         --
    Loss on disposal of equipment...........................        --         --         55
    Stock-based compensation................................        12        498      4,936
    Accretion of interest...................................       811         --         --
    Non-cash interest expense...............................        --         --        376
    Warrants issued in exchange for services................        --         --         14
    Changes in assets and liabilities:
      Accounts receivable...................................       (89)      (121)    (1,453)
      State income tax receivable...........................     1,000     (1,500)        --
      Other assets..........................................     1,013        132       (407)
      Accounts payable......................................    (1,769)    (2,644)     4,431
      Accrued expenses......................................    (3,162)     2,788      1,623
      Deferred revenue......................................     2,609       (200)     1,878
                                                              --------   --------   --------
        Net cash used in operating activities...............   (18,490)   (40,070)   (21,261)
                                                              --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment.......................       (70)    (4,304)    (8,702)
  Investments in marketable securities......................    (9,629)   (42,697)   (45,118)
  Proceeds from marketable securities.......................    28,530     49,463      4,000
                                                              --------   --------   --------
        Net cash provided by (used in) investing
          activities........................................    18,831      2,462    (49,820)
                                                              --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from issuance of preferred stock.............        --         --     53,925
  Net proceeds from issuance of common stock and from the
    exercise of options and warrants........................        53        325        682
  Proceeds from initial public offering, net of issuance
    costs...................................................        --         --     82,040
  Repayment of long-term debt, net..........................      (703)      (863)    (1,061)
  Proceeds from long-term debt due to related parties.......        --        364      3,854
  Repayment of capital leases (net).........................    (6,217)    (6,218)    (2,821)
  Increase in restricted cash...............................    (2,100)        --         --
                                                              --------   --------   --------
        Net cash (used in) provided by financing
          activities........................................    (8,967)    (6,392)   136,619
                                                              --------   --------   --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........    (8,626)   (44,000)    65,538
CASH AND CASH EQUIVALENTS, beginning of period..............    25,204     69,204      3,666
                                                              --------   --------   --------
CASH AND CASH EQUIVALENTS, end of period....................  $ 16,578   $ 25,204   $ 69,204
                                                              ========   ========   ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW ACTIVITIES:
  Cash paid for interest....................................  $  1,777   $  2,630   $  1,308
                                                              ========   ========   ========
  Cash paid for income taxes................................  $     35   $     --   $     --
                                                              ========   ========   ========
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
  Conversion of liabilities into common or preferred
    stock...................................................  $     --   $     --   $  3,561
  Acquisition of equipment pursuant to capital lease
    obligations.............................................        --      1,754     18,735
  Issuance of warrants in connection with financing
    agreements..............................................        --         --      3,320
  Conversion of preferred stock into common stock...........        --         --     72,067
  Cashless exercise of warrants.............................        --         --        501
</Table>

   The accompanying notes are an integral part of these financial statements.

                                       47
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                         NOTES TO FINANCIAL STATEMENTS

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(1) ORGANIZATION AND OPERATIONS

    Genaissance Pharmaceuticals, Inc. (the Company) is seeking to create
personalized medicines through the integration of pharmacogenomics into drug
development and marketing. The Company discovers inherited differences, or
genomic markers, that exist in human genes. The Company uses its technological
capabilities and methods as well as its clinical genetic development skills to
identify the genomic markers that appear to define a patient population that
responds best to a medication and has a superior safety profile. The Company
markets its technology and its predictive genomic markers to the pharmaceutical
and biotechnology industries as a means to improve the development, marketing
and prescribing of drugs.

    In addition to the normal risks associated with a business venture, there
can be no assurance that the Company's technologies will be successfully used,
that the Company will obtain adequate patent protection for its technologies,
and that any products will be commercially viable. In addition, the Company
operates in an environment of rapid change in technology and has substantial
competition from companies developing genomic related technologies. The Company
expects to incur substantial expenditures in the foreseeable future for its
research and development and commercialization of its products. The Company's
management believes, based upon its current business plan and existing financial
resources that it will have the ability to fund its expected net losses, debt
obligations and capital expenditures for at least 12 months.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

    The Company earns its revenues primarily through the licensing of its
HAP-TM- Technology and by HAP-TM- Typing services. The Company has also entered
into agreements which provide for future milestones and royalty payments. The
Company recognizes revenue in accordance with Staff Accounting Bulletin
No. 101, REVENUE RECOGNITION IN FINANCIAL STATEMENTS (SAB 101), and in
accordance with Statement of Position 97-2 (SOP 97-2), SOFTWARE REVENUE
RECOGNITION, as amended by Statement of Position 98-9 (SOP 98-9). In accordance
therewith, the Company recognizes annual license and subscription fees over the
term of the agreement and service fees as the services are performed. Future
milestones and royalty payments, if any, will be recognized when received,
provided that the milestone is substantive and a culmination of the earnings
process has occurred. Amounts received in advance of revenue recognition are
recorded as deferred revenue.

    Revenue from Gene Logic, Inc., J&J PRD and Pfizer, Inc. accounted for 82%
and 94% of the Company's total revenue in fiscal 2002 and 2001, respectively.
Revenue from Gene Logic, J&J PRD and Visible Genetics accounted for 90% of the
Company's total revenue in fiscal 2000. Revenue from each of these customers
accounted for 10% or more of the Company's total revenue for 2002 and 2001,
respectively.

STOCK-BASED COMPENSATION

    At December 31, 2002, the Company had one stock-based compensation plan,
which is more fully described in Note 10 to the Financial Statements. The
Company accounts for the plan under the recognition and measurement principles
of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock
Issued to Employees," and related Interpretations. The Company has not issued

                                       48
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
stock options or made modifications to existing stock options where the exercise
price is less than the market value of the Company's common stock on the date of
grant or modification.

    The following table illustrates the effect on net income and earnings per
share if the Company had applied the fair value recognition provisions of FASB
Statement No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, to stock-based
employee compensation. For the years ended December 31, 2002, 2001 and 2000:

<Table>
<Caption>
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA        2002       2001       2000
-------------------------------------------      --------   --------   --------
<S>                                              <C>        <C>        <C>
Net Loss, as reported..........................  $(33,093)  $(47,582)  $(93,273)
Add: Stock-Based Employee Compensation Expense
  Included in Reported Net Loss................        12        498      5,256
Deduct: Total Stock-Based Employee Compensation
  Expense Determined under Fair Value Based
  Method for All Awards........................      (880)    (3,664)    (7,140)
                                                 --------   --------   --------
Pro Forma Net Loss.............................  $(33,961)  $(50,748)  $(95,157)
                                                 ========   ========   ========

Net Income (Loss) Per Share:
Basic and diluted--As Reported.................  $  (1.45)  $  (2.09)  $  (8.55)
                                                 ========   ========   ========
Basic and diluted--Pro Forma...................  $  (1.49)  $  (2.23)  $  (8.72)
                                                 ========   ========   ========
</Table>

    Other disclosures required by SFAS No. 123 have been included in Note 10.

RESEARCH AND DEVELOPMENT

    Expenditures for research and development are charged to expense as
incurred.

PATENT AND LICENSED TECHNOLOGY COSTS

    The Company expenses the costs of obtaining patents and licensed technology
until such point that the realization of the carrying value of these costs is
reasonably assured.

NET LOSS PER COMMON SHARE

    The Company computes and presents net loss per common share in accordance
with SFAS No. 128, EARNINGS PER SHARE. There is no difference in basic and
diluted net loss per common share as the effect of convertible preferred stock,
stock options and warrants would be anti-dilutive for all periods presented. The
outstanding convertible preferred stock, stock options and warrants (prior to
application of the treasury stock method) would entitle holders to acquire
3,990, 3,611 and 3,039 shares of common stock at December 31, 2002, 2001, and
2000, respectively.

SEGMENT REPORTING

    SFAS No. 131, DISCLOSURE ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION establishes annual and interim reporting standards for an
enterprise's operating segments and related disclosures

                                       49
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
about its products, services, geographic areas, and major customers. The Company
has determined that it operates in only one segment. In addition, all revenues
are generated from U.S. and Canadian entities, and all long-lived assets are
maintained in the United States.

VALUATION OF LONG-LIVED ASSETS

    The Company accounts for its investments in long-lived assets in accordance
with Statement of Financial Accounting Standards No. 144 (SFAS No. 144),
ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS AND LONG-LIVED
ASSETS. SFAS No. 144 requires a company to review its long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Factors the Company
considers important, which could trigger an impairment review, include, among
others, the following:

    - a significant adverse change in the extent or manner in which a long-lived
      asset is being used;

    - a significant adverse change in the business climate that could affect the
      value of a long-lived asset; and

    - a significant decrease in the market value of assets.

    If the Company determines that the carrying value of long-lived assets may
not be recoverable, based upon the existence of one or more of the above
indicators of impairment, the Company compares the carrying value of the asset
group to the undiscounted cash flows expected to be generated by the group. If
the carrying value exceeds the undiscounted cash flows, an impairment charge may
be needed. To determine the amount of the impairment charge, the Company
compares the carrying value of the applicable fixed asset group to its fair
value. If the fair value is less than the carrying value, such amount is
recognized as an impairment charge. (See Note 4)

CASH AND CASH EQUIVALENTS

    The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.

SOFTWARE DEVELOPMENT COSTS

    The Company enters into agreements to license its HAP Technology, including
its DECOGEN-REGISTERED TRADEMARK- Information System, to third parties. The
Company evaluates the establishment of technological feasibility of its products
in accordance with Statement of Financial Accounting Standards (SFAS) No. 86,
ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE TO BE SOLD, LICENSED OR OTHERWISE
MARKETED. The Company has developed a product for a market that is subject to
rapid technological change, new product development, and changing customer
needs. In addition, the ability to continue to market the product is contingent
upon the Company's ability to successfully populate the database. The Company
has concluded that technological feasibility is established when a product
design and working model of the software product has been completed and the
completeness of the working model and its consistency with the product design
has been confirmed by testing. The time period during which costs could be
capitalized from the point of reaching technological feasibility until the time
of general product release is very short and, consequently, the amounts that
could be capitalized are not material

                                       50
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
to the Company's financial position or results of operations. Therefore, the
Company has charged all such costs to research and development in the period
incurred.

FAIR VALUE OF FINANCIAL INSTRUMENTS

    Financial instruments include cash and cash equivalents, receivables,
marketable securities and long-term debt. Cash and cash equivalents and
receivables approximate fair value and marketable securities are carried at fair
value. Long-term debt is carried at cost, which management believes approximates
fair value based upon recent borrowing rates obtained over the past twelve
months.

OTHER COMPREHENSIVE INCOME (LOSS)

    The Company presents its financial statements in accordance with SFAS
No. 130, REPORTING COMPREHENSIVE INCOME, which establishes standards for the
reporting and displaying of comprehensive income and its components in a full
set of general purpose financial statements. Accordingly, the Company has
included this presentation as a component of the statements of stockholders'
equity and comprehensive loss. The objective of the statement is to report a
measure of all changes in equity of an enterprise that result from transactions
and other economic events of the period other than transactions with owners
("comprehensive income"). The Company's other comprehensive income (loss) arises
from net unrealized gains (losses) on marketable securities. The Company has
elected to display comprehensive income (loss) as a component of the statement
of stockholders' equity and comprehensive loss.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. (See
Note 6)

RECENTLY ISSUED ACCOUNTING STANDARDS

    In June 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 148, ACCOUNTING FOR STOCK-BASED
COMPENSATION--TRANSITION AND DISCLOSURE, AN AMENDMENT OF FASB STATEMENT
NO. 123. SFAS No. 148 amends SFAS No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, to provide alternative methods of transition for a voluntary
change to the fair value-based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. SFAS
No. 148 is effective for fiscal years ending after December 15, 2002 for annual
statements and for interim periods beginning after December 15, 2002 for interim
financial reports. The Company has adopted the disclosure requirements of SFAS
No. 148 in these financial statements, but has not determined whether or not it
will voluntarily adopt SFAS No. 123 and the related transition alternatives
pursuant to SFAS No. 148.

                                       51
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    In June 2002, the FASB issued Statement of Financial Accounting Standards
No. 146 (SFAS No. 146), ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR DISPOSAL
ACTIVITIES. This Statement addresses financial accounting and reporting for
costs associated with exit or disposal activities and nullifies Emerging Issues
Task Force (EITF) Issue No. 94-3, LIABILITY RECOGNITION FOR CERTAIN EMPLOYEE
TERMINATION BENEFITS AND OTHER COSTS TO EXIT AN ACTIVITY (INCLUDING CERTAIN
COSTS INCURRED IN A RESTRUCTURING). The provisions of SFAS No. 146 are effective
for exit or disposal activities that are initiated after December 31, 2002, with
early application encouraged. We believe the adoption of this new standard will
not have a material impact on either the Company's operating results or
financial position.

    In November 2002 the FASB issued FASB Interpretation No. 45 (FIN 45),
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others (an Interpretation of FASB
Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34). FIN
45 clarifies the requirements of FASB Statement No. 5 (FAS 5) Accounting for
Contingencies, relating to a guarantor's accounting for, and disclosure o, the
issuance of certain types of guarantees. FIN 45 requires that upon issuance of a
guarantee, the guarantor must recognize a liability for the fair value of the
obligation it assumes under that guarantee. The initial recognition and
measurement provisions are effective for guarantees issued or modified after
December 31, 2002. The disclosure requirements under FIN 45 are effective for
the Company's fiscal 2002 year-end.

    In November 2002, the Emerging Issues Task Force (EITF) issued EITF Issue
No. 00-21, REVENUE ARRANGEMENTS WITH MULTIPLE DELIVERABLES. This issue addresses
revenue recognition for arrangements with multiple deliverables which should be
considered as separate units of accounting if the deliverables meet certain
criteria as described in EITF 00-21. This issue is effective for revenue
arrangements entered into in fiscal periods beginning after June 15, 2003. Early
application is permitted.

(3) MARKETABLE SECURITIES

    The Company classifies its marketable securities as "available for sale"
and, accordingly, carries these investments at their aggregate fair value.
Unrealized gains or losses on these investments are included as a separate
component of stockholders' equity (deficit) and comprehensive loss (See
Note 2). The Company's marketable securities as of December 31, 2002 and 2001
consisted principally of corporate bonds. As of December 31, 2002, these
securities had a maximum maturity of less than twelve months and carried a
weighted average interest rate of approximately 2.06%. The amortized cost of
these securities differed from their fair values by $21 and $117 as of
December 31, 2002 and 2001, respectively.

(4) IMPAIRMENT OF FIXED ASSETS

    During the year ended December 31, 2002, we determined that certain
conditions had arisen which triggered the need to review our long-lived assets
for potential impairment. The conditions included, but were not limited to, the
overall business climate in which we operate and a significant change in the
manner in which we were utilizing our DNA sequencing facility and related
assets. Our review concluded that the carrying value of the long-lived assets
exceeded their fair value by approximately $6,000. The impairment charge
includes the write-down of sequencing equipment, computer hardware

                                       52
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(4) IMPAIRMENT OF FIXED ASSETS (CONTINUED)
and software and leasehold improvements and has been allocated to the individual
assets on a pro-rata basis. (See Note 2)

(5) PROPERTY AND EQUIPMENT

    Property and equipment consists of the following:

<Table>
<Caption>
                                                               DECEMBER 31,
                                                            -------------------
                                                              2002       2001
                                                            --------   --------
<S>                                                         <C>        <C>
Equipment, computers and software.........................  $ 5,541    $ 6,684
Equipment under capital leases............................   11,296     25,988
Leasehold improvements and office equipment...............    8,559      9,080
                                                            -------    -------
                                                             25,396     41,752
Less--accumulated depreciation and amortization...........  (10,842)   (13,244)
                                                            -------    -------
  Total property and equipment, net.......................  $14,554    $28,508
                                                            =======    =======
</Table>

    These assets are stated at cost and are being depreciated and amortized over
the shorter of their lease term or their estimated useful lives on a
straight-line basis as follows:

<Table>
<S>                                                   <C>
Equipment, computers and software...................                3-4 years
Office equipment....................................                  5 years
Leasehold improvements..............................  remaining term of lease
Equipment under capital lease.......................                3-5 years
</Table>

    Accumulated depreciation related to equipment under capital leases was
$5,168 and $9,618 at December 31, 2002 and 2001, respectively.

    Expenditures for maintenance and repairs, which do not improve or extend the
useful lives of the respective assets, are expensed as incurred.

(6) ACCRUED CLINICAL TRIAL EXPENSES

    Included in accrued expenses in the accompanying balance sheets is accrued
clinical trial expenses which are comprised of amounts owed to third party
Clinical Research Organizations (CRO) for research and development work
performed on behalf of the Company. At each period end the Company evaluates the
accrued clinical trial expense balance and, based upon information received from
each CRO, ensures that the balance is appropriately stated. During the year
ended December 31, 2002, the Company reversed previously accrued clinical trial
expenses of $1,400 and credited Research and Development expense. This resulted
in a net credit of $717 for clinical trial expenses for the year ended
December 31, 2002. As of December 31, 2002, based on the information available,
the Company does not believe that there is any additional liability to each CRO.

                                       53
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(7) FINANCING ARRANGEMENTS

    Long-term debt consists of the following:

<Table>
<Caption>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                2002       2001
                                                              --------   --------
<S>                                                           <C>        <C>
Notes payable to Connecticut Innovations, Inc. (CII) bearing
  interest at 6.5%, payments of interest only for a defined
  period and monthly payments of principal and interest
  thereafter................................................   $4,898     $5,116
Note payable to TransAmerica Business Corp. (TBCC) bearing
  interest at 12.98%, monthly payments of principal and
  interest of $72 are payable through August 2002...........       --        485
                                                               ------     ------
  Total long-term debt......................................    4,898      5,601
  Less--current portion.....................................     (397)      (672)
                                                               ------     ------
  Total long-term debt, less current portion................   $4,501     $4,929
                                                               ======     ======
</Table>

    The Company has entered into financing agreements (the Agreements) with
Connecticut Innovations, Inc. (CII), a stockholder of the Company, to finance
certain leasehold improvements and other costs associated with the Company's
facility expansion. The Agreements provide for interest only for a certain
period with principal payments based on a 120 month amortization beginning
April 2001 through October 2002, with final balloon payments due in March 2009
through June 2011. Borrowings under the Agreements are secured by the related
leasehold improvements.

    Aggregate future maturities of the notes payable are as follows:

<Table>
<Caption>
YEAR ENDED DECEMBER 31
----------------------
<S>                                                           <C>
2003........................................................   $  397
2004........................................................      425
2005........................................................      453
2006........................................................      483
2007........................................................      515
Thereafter..................................................    2,625
                                                               ------
                                                               $4,898
                                                               ======
</Table>

                                       54
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(8) CAPITAL LEASES

    Capital lease obligations related to equipment consist of the following:

<Table>
<Caption>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                2002       2001
                                                              --------   --------
<S>                                                           <C>        <C>
Capital lease obligations to Finova Capital Credit Corp.
  originally payable in varying installments through August
  2004, bearing interest from 8.15% to 10.07%, secured by
  the related equipment.....................................  $ 7,207    $ 9,725
Capital lease obligations to Newcourt Financial USA, Inc.
  payable in varying installments through November 2003,
  bearing interest from 10.5% to 11.8%, secured by the
  related equipment.........................................      517      1,052
Capital lease obligations to General Electric Capital
  Corporation (Oxford Venture Finance LLC) originally
  payable in varying installments through February 2005,
  bearing interest from 10.85% to 12.46%, secured by the
  related equipment.........................................    3,177      5,112
Capital lease obligation to IBM Credit Corp., payable in
  varying installments through October 2003 bearing interest
  at 11.77%, secured by the related equipment...............      286        661
Other.......................................................       --         43
                                                              -------    -------
  Total capital lease obligations...........................  $11,187    $16,593
                                                              =======    =======
</Table>

    In December 2002, the Company announced it received a notice from GE
claiming that an event of default had occurred under the lease agreement as a
result of an alleged material adverse change in the Company's business. Because
of the alleged default, GE declared that all principal and future interest
obligations were due and payable immediately. GE also filed a complaint in the
Superior Court of the State of Connecticut, demanding payment of all amounts due
under the lease agreements. The Company also received a notice from Finova,
stating that as a result of the alleged default claim by GE, there had been a
cross-default under the Company's agreement with Finova. To remedy the cross-
default, Finova declared that all principal and future interest obligations were
due and payable immediately. On March 12, 2003, the Company settled the claim
with GE and simultaneously amended its lease agreement (GE Amendment). In
connection with the GE Amendment, and as additional security for its payment
obligations to GE, the Company delivered to GE a $2,000 irrevocable letter of
credit and agreed to additional covenants. The Company may cause the letter of
credit to be adjusted on a quarterly basis commencing October 1, 2003 based on a
decrease in outstanding amounts due GE, as defined. The letter of credit is
collateralized by cash at 105% of the outstanding letter of credit balance. In
connection with the amendment, GE retroactively rescinded their default claim
and both parties have withdrawn from any legal action. The GE Amendment and
letter of credit have been retroactively reflected in the accompanying financial
statements as of December 31, 2002. The Company has not entered into a
settlement agreement with Finova. The Company has recorded an additional charge
to interest expense for future interest due under the capital lease agreement
with Finova to reflect the fact that all future interest and principal is
currently due and payable under the Finova capital lease agreement as a result
of the default claim. The amounts due to GE and Finova have been classified as
current obligations as in the accompanying balance sheet as of December 31,
2002, as a result of continuing material adverse change provisions within the GE
lease agreement and as a result of the Finova default claim.

                                       55
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(8) CAPITAL LEASES (CONTINUED)
    In addition to the principal payments due under the capital lease
agreements, the Company is obligated to make interest payments over the term of
the lease. As of December 31, 2002, the Company is obligated to pay $342 in
interest over the remaining term of the lease agreements with GE, Newcourt and
IBM.

    The majority of the Company's capital lease arrangements allow for the
purchase of the related equipment at the completion of the lease term as defined
in the agreement. Certain of the capital lease agreements require the purchase
of the equipment at the completion of the lease term. The required purchase
obligations are included in the capital lease obligations above.

(9) PREFERRED STOCK

    In March 2000, the Company sold 1,539 shares of Series C Redeemable
Convertible Preferred Stock (Series C) at $8.25 per share resulting in proceeds
of $11,883, net of issuance expenses of $817.

    In February and March 2000, the Company sold 8,728 shares of Series B and
Series KBH Redeemable Convertible Preferred Stock (collectively, Series B) for
$5.50 per share resulting in proceeds of $42,042, net of cash issuance costs of
$2,375 and net of the conversion of $3,500 of convertible promissory notes, and
related interest, which were issued in 1999 (Note 9) and which were converted
into 636 shares of Series B based upon a per share conversion price of $5.50 per
share. In connection with this offering, the investment banker was issued a
warrant (which is exercisable through February 2005) to purchase 400 shares of
common stock at $6.05 per share (See Note 10). The Company recorded additional
issuance costs of $2,892, which approximated the fair value of the warrant at
the date of issuance.

    Upon the completion of the Company's initial public offering in
August 2000, all preferred stock was automatically converted into 12,704 shares
of common stock.

    While outstanding, the Company's Series A, B and C shares (collectively, the
Preferred) earned dividends at 8% per annum. In addition, the holders of the
Preferred had certain rights which could have required that the Company
repurchase such shares, commencing in 2005, at the greater of the original
purchase price plus accrued but unpaid dividends or fair value, as defined. As a
result of such dividend and redemption rights, during 2000, the Company
recognized $6,327 of accretion in the carrying value of the redeemable preferred
stock which is reflected in the accompanying 2000 statements of stockholders'
equity (deficit) and comprehensive loss.

    As a result of the Company's initial public offering, dividends earned
subsequent to the Series B and C issuance dates were no longer required to be
paid. Included in the accompanying balance sheets is $1,159 of accrued dividends
earned on the Series A prior to the issuance of the Series B and C, which
continue to be payable. The Company has classified accrued dividends as a
current liability in the financial statements for the year ended December 31,
2002, as the Company may be contractually obligated to pay such dividends within
the next 12 months.

    In connection with the sale of Series B and C, the Company also recorded a
charge to accumulated deficit of $50,180, which represented the beneficial
conversion feature of this stock. This amount was accounted for in 2000 as a
dividend to these preferred stockholders and as a result,

                                       56
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(9) PREFERRED STOCK (CONTINUED)
increased the Company's paid in capital, net loss applicable to common
shareholders and the related net loss per common share.

(10) COMMON STOCK, STOCK OPTIONS AND WARRANTS

COMMON STOCK

    At December 31, 2002, the Company has authorized 58,000 shares of common
stock. As of December 31, 2002, 4,787 shares have been reserved for issuance
under warrants and the Company's stock options and employee stock purchase
plans.

    In August 2000, the Company issued 6,900 shares of common stock in
connection with its initial public offering.

STOCK OPTION PLAN

    In 1993, the Board of Directors and stockholders approved the Stock Option
Plan (as amended, the Plan) which provides for both incentive and nonqualified
stock options. As of December 31, 2002, under the terms of the Plan, stock
options may be granted for up to a maximum of 4,287 shares. Options granted
under the Plan are exercisable for a period determined by the Company, but in no
event longer than ten years from date of grant. In the event of certain capital
stock changes, the options are subject to adjustment in accordance with
anti-dilution provisions.

    The Company has adopted the provisions of SFAS No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION. This pronouncement requires the measurement of the
fair value of stock options to be included in the statement of operations or
disclosed in the notes to financial statements. The Company accounts for
stock-based compensation for employees under Accounting Principles Board Opinion
No. 25 and has elected the disclosure-only alternative under SFAS No. 123.

    A summary of the status of the Company's stock option plan at December 31,
2002, 2001 and 2000 and changes during the periods then ended is presented
below:

<Table>
<Caption>
                                                          2002                  2001                  2000
                                                   -------------------   -------------------   -------------------
                                                              WEIGHTED              WEIGHTED              WEIGHTED
                                                              AVERAGE               AVERAGE               AVERAGE
                                                              EXERCISE              EXERCISE              EXERCISE
                                                   OPTIONS     PRICE     OPTIONS     PRICE     OPTIONS     PRICE
                                                   --------   --------   --------   --------   --------   --------
<S>                                                <C>        <C>        <C>        <C>        <C>        <C>
Outstanding, January 1...........................   3,084      $8.06      2,512      $8.58        990      $2.37
Granted..........................................     939       2.09        788       6.24      1,691      11.82
Cancelled or expired.............................    (550)      9.02       (140)     10.32        (56)      5.03
Exercised........................................     (10)       .01        (76)      2.05       (113)      4.02
                                                    -----                 -----                 -----
Outstanding, December 31.........................   3,463      $6.31      3,084      $8.06      2,512      $8.58
                                                    =====                 =====                 =====
Options exercisable at December 31...............   1,643      $6.55      1,385      $7.11        836      $4.83
                                                    =====                 =====                 =====
Weighted average fair value of options granted
  during the year................................              $1.77                 $5.58                 $6.26
</Table>

                                       57
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(10) COMMON STOCK, STOCK OPTIONS AND WARRANTS (CONTINUED)
    The following table summarizes information about stock options at
December 31, 2002:

<Table>
<Caption>
                                   OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                          -------------------------------------   ----------------------
                                          WEIGHTED
                                          AVERAGE      WEIGHTED                 WEIGHTED
        RANGE OF                         REMAINING     AVERAGE                  AVERAGE
        EXERCISE            NUMBER      CONTRACTUAL    EXERCISE     NUMBER      EXERCISE
         PRICES           OUTSTANDING   LIFE (YEARS)    PRICE     EXERCISABLE    PRICE
------------------------  -----------   ------------   --------   -----------   --------
<S>                       <C>           <C>            <C>        <C>           <C>
      $0.01-$1.50              729          8.27        $ 1.02         285       $ 1.25
      $1.51-$3.00              734          6.94        $ 2.75         499       $ 2.82
      $3.01-$8.25              799          8.58        $ 5.08         265       $ 5.29
      $8.26-$12.51           1,072          7.36        $11.82         532       $11.79
     $12.52-$32.20             129          7.80        $18.26          72       $18.70
                             -----         -----        ------       -----       ------
                             3,463          7.76        $ 6.31       1,653       $ 6.51
                             =====         =====        ======       =====       ======
</Table>

    During 2002, 2001 and 2000, options to purchase 826, 703 and 1,362 shares,
respectively, of common stock were granted at an exercise price equal to the
fair value of the common stock on the date of grant at weighted average exercise
prices of $1.65, $6.00 and $12.80, respectively, per share. The weighted average
fair value of these options at the date of grant, as prescribed by SFAS No. 123
was $1.36, $4.86 and $7.77 during 2002, 2001 and 2000, respectively. In
addition, during 2002, options to purchase 113 shares of common stock were
granted at an exercise price greater than the fair value of the common stock on
the date of grant at a weighted average exercise price of $5.31 per share.
During 2001 and 2000, options to purchase 85 and 329 shares, respectively, of
common stock were granted at an exercise price less than the fair value of the
common stock on the date of grant at weighted average exercise prices of $8.25
and $7.77, respectively, per share. The weighted average fair values of these
options at the date of grant, as prescribed by SFAS No. 123 was $2.67, $11.42
and $5.78 during 2002, 2001 and 2000, respectively.

    Total compensation (benefit) expense recorded in the accompanying statements
of operations associated with employee stock options is $(104), $391 and $381
for the years ended December 31, 2002, 2001 and 2000, respectively. Unamortized
compensation expense associated with outstanding stock options at December 31,
2002 is approximately $329.

    The Company accounts for options granted to consultants, which include
scientific advisory board members, using the Black-Scholes method prescribed by
SFAS No. 123 and in accordance with Emerging Issues Task Force Consensus
No. 96-18. During the year ended December 31, 2000, the Company elected to fully
vest all unvested options previously granted to scientific advisory board
members. Accordingly, the Company recorded a compensation charge in the quarter
ended March 31, 2000 based upon the incremental fair value and previously
recognized compensation expense associated with these options at the time of
vesting. Total compensation expense recorded in the accompanying statements of
operations associated with these consultant options is $116, $107 and $1,675 for
the years ended December 31, 2002, 2001 and 2000, respectively.

    In 1996, in connection with a change in management of the Company, the
Company's current Vice Chairman and Chief Executive Officer (the Officers)
entered into a stock purchase agreement (Officer Stock Purchase Agreement) with
a then officer and major shareholder of the Company (Former CEO).

                                       58
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(10) COMMON STOCK, STOCK OPTIONS AND WARRANTS (CONTINUED)
The Officer Stock Purchase Agreement permitted the Officers to purchase shares
of common stock from the Former CEO in exchange for notes payable aggregating
$320 (Officer Stock Notes). The notes were collateralized by the stock and were
payable at the earlier of August 31, 2001 or an initial public offering or
change in control, as defined. The Company recognized this transaction as a
compensatory arrangement between the Company and the Officers and accordingly
recognized a non-cash compensation expense of $2,880 in 2000.

    In 2000, upon successful completion of the initial public offering, the
Company's board of directors elected to assume the $320 of Officer Stock Notes.
The Company recognized compensation expense of $320 during 2000 as a result of
the assumption of such Officer Stock Notes. Such forgiveness is included in
stock based compensation in the accompanying statement of operations.

    The Company has computed the pro forma disclosures required under SFAS
No. 123 for options granted to employees using the Black-Scholes option pricing
model. The weighted average assumptions used are as follows:

<Table>
<Caption>
                                                2002       2001         2000
                                              --------   --------   -------------
<S>                                           <C>        <C>        <C>
Risk-free interest rate.....................   3.81%      4.24%         6.1%
Expected dividend yield.....................    None       None         None
Expected lives..............................  5 years    5 years       7 years
Expected volatility.........................    116%       117%      0% and 145%
</Table>

    Had compensation cost for the Company's stock option plan been determined
consistent with SFAS No. 123, the Company's pro forma net loss would have been
as follows:

<Table>
<Caption>
                                                 FOR THE YEARS ENDED DECEMBER 31,
                                                 ---------------------------------
                                                   2002        2001        2000
                                                 ---------   ---------   ---------
<S>                                              <C>         <C>         <C>
Net (loss) applicable to common stockholders:
  As reported..................................  $(33,093)   $(47,582)   $(93,273)
  Pro forma....................................   (33,961)    (50,748)    (95,157)
Net (loss) per common share, basic and diluted:
  As reported..................................     (1.45)      (2.09)      (8.55)
  Pro forma....................................     (1.49)      (2.23)      (8.72)
</Table>

EMPLOYEE STOCK PURCHASE PLAN

    During fiscal 2000, the board of directors adopted the Employee Stock
Purchase Plan 2000 (ESPP). Under the ESPP, eligible employees may purchase
common stock at not less than 85% of fair value, as defined. Under the ESPP, the
Company's compensation committee grants rights to purchase the shares under the
ESPP. The Company has reserved 250 shares of common stock for issuance under the
ESPP. As of December 31, 2002, 74 shares have been issued under the ESPP.

STOCK WARRANTS

    The Company has historically issued warrants in connection with certain of
its financing and capital raising activities.

                                       59
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(10) COMMON STOCK, STOCK OPTIONS AND WARRANTS (CONTINUED)
    As of December 31, 2002, the Company had warrants outstanding to purchase
527 shares of common stock of the Company at a weighted average exercise price
of $6.08. The warrants expire from November 2003 through April 2006. Certain
warrants include anti-dilutive provisions, as defined.

(11) INCOME TAXES

    The Company accounts for income taxes under the provisions of SFAS No. 109,
ACCOUNTING FOR INCOME TAXES. This statement requires the Company to recognize
deferred tax assets and liabilities for the expected future tax consequences of
events that have been previously recognized in the Company's financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statement
carrying amounts and the tax bases of the assets and liabilities and the net
operating loss carryforwards available for tax reporting purposes, using
applicable tax rates for the years in which the differences are expected to
reverse.

    The reconciliation of the statutory Federal income tax rate to the Company's
effective income tax rate for the years ended December 31, 2002, 2001 and 2000,
is as follows:

<Table>
<Caption>
                                                               FOR THE YEARS ENDED
                                                                   DECEMBER 31,
                                                          ------------------------------
                                                            2002       2001       2000
                                                          --------   --------   --------
<S>                                                       <C>        <C>        <C>
Statutory rate..........................................    34.0%      34.0%      34.0%
State tax benefit, net of Federal taxes.................     5.9       12.6        4.9
Other...................................................     2.1       (1.0)       2.0
Increase in deferred tax valuation allowance............   (42.0)     (37.7)     (40.9)
                                                           -----      -----      -----
                                                              --%       7.9%        --%
                                                           =====      =====      =====
</Table>

    The Company has available, at December 31, 2002, unused net operating loss
carryforwards of approximately $121.1 and $120.1 which may be available to
offset future Federal and state taxable income, respectively, if any. The future
utilization of these carryforwards may be limited on a permanent basis due to
changes within the Company's current and future ownership structure as defined
within the internal revenue code. Federal carryforwards are scheduled to expire
beginning in 2007. State carryforwards are scheduled to expire from 2003 through
2021.

    As a result of legislation passed in the State of Connecticut which provided
companies with the opportunity to exchange certain research and development tax
credit carryforwards for a cash payment in exchange for foregoing the
carryforward of the research and development credits at a rate of 65% of the
annual incremental research and development tax credit, as defined. During 2001,
the Company filed a claim to exchange its 2000 incremental research and
development credit and, as a result, recognized a state income tax benefit of
approximately $2,600. In addition, during 2001, the Company recorded an income
tax receivable of $1,500 for the estimated proceeds from the 2001 research and
development tax credit. The State of Connecticut rescinded the legislation
during 2002.

                                       60
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(11) INCOME TAXES (CONTINUED)
    The components of deferred income tax assets as of December 31, 2002 and
2001 are as follows:

<Table>
<Caption>
                                                           FOR THE YEARS ENDED
                                                              DECEMBER 31,
                                                           -------------------
                                                             2002       2001
                                                           --------   --------
<S>                                                        <C>        <C>
Deferred tax assets:
  Net operating loss carryforwards and tax credits.......  $52,606    $ 40,816
  Other..................................................    4,882       2,256
                                                           -------    --------
Total deferred tax assets................................   57,488      43,072
Less--valuation allowance for deferred tax assets          (57,488)    (43,072)
                                                           -------    --------
Net deferred tax assets..................................  $    --    $     --
                                                           =======    ========
</Table>

    The Company has not yet achieved profitable operations. Accordingly,
management believes the tax benefits as of December 31, 2002 do not satisfy the
realization criteria set forth in SFAS No. 109 and has recorded a valuation
allowance for the entire deferred tax asset.

(12) COMMITMENTS AND CONTINGENCIES

401(K) RETIREMENT PLAN

    The Company has a 401(k) defined contribution retirement plan covering
substantially all full-time employees. The Company provides a matching cash
contribution of 25% of employee contributions, up to 8% of employee
compensation. The Company contributed $120, $122 and $60 to the plan during
2002, 2001 and 2000, respectively.

ROYALTY AND OTHER COMMITMENTS

    The Company periodically enters into agreements with third parties to obtain
exclusive or non-exclusive licenses for certain technologies management believes
important to the Company's overall business strategy. The terms of certain of
these agreements provide for the Company to pay future royalty payments based on
product sales or sublicense income generated from the applicable technologies,
if any. Additionally, certain agreements call for future payments upon
achievement of certain milestones. The aggregate future annual minimum payments
(assuming non-termination of these agreements) for fiscal 2003, 2004, 2005, 2006
and 2007 are $88, $103, $103, $103 and $103, respectively. The Company recorded
expenses of $3,205, $4,728 and $2,417 during 2002, 2001 and 2000, respectively.

    In connection with the Company's initial license of a patent from a
University, the Company is obligated to pay both the University and the inventor
of the technology a sublicense royalty fee. The inventor of the technology
subsequently joined the Company and is currently the Vice Chairman of the
Company. The Company receives royalty revenue under this patent from a third
party (Licensor). Future royalty revenue from the Licensor, if any, will be
subject to a sublicense royalty fee. The Company has elected to recognize this
expense as incurred. Included in the accompanying statements of operations for
the years ended December 31, 2002, 2001 and 2000, are $42, $54 and $530,
respectively, of related sublicensing fees.

                                       61
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(12) COMMITMENTS AND CONTINGENCIES (CONTINUED)
OPERATING LEASES

    The Company leases its operating facilities located in New Haven,
Connecticut. The lease agreements require annual lease payments of $816 per year
increasing to $1,100 per year over five years terminating in 2006. The Company
has two five-year renewal options to extend the lease beyond its initial term.
The Company is recording the expense associated with the lease on a
straight-line basis over the expected ten-year minimum term of the lease.

    In addition to the five-year operating lease for the Company's current
facility, the Company also has operating leases for various office equipment.

    Rental expense for all operating leases for the years ended December 31,
2002, 2001 and 2000 was $1,168, $1,055 and $549, respectively.

    Future minimum payments under all non-cancelable operating leases in effect
as of December 31, 2002 are as follows:

<Table>
<S>                                                           <C>
2003........................................................   $1,178
2004........................................................    1,149
2005........................................................    1,086
2006........................................................    1,013
2007........................................................    1,012
Thereafter..................................................    3,792
</Table>

(13) LEGAL MATTERS

    The Company, from time to time, has been subject to legal claims arising in
connection with its business. While the ultimate results of the legal claims
cannot be predicted with certainty, at December 31, 2002, other than default
claims on capital lease obligations (See Note 8) there were no asserted claims
against the Company which, in the opinion of management, if adversely decided
would have a material adverse effect on the Company's financial position and
cash flows.

(14) SIGNIFICANT CUSTOMERS AND FOREIGN BASED REVENUES

    For the years ended December 31, 2002, 2001 and 2000 approximately 4%, 6%
and 34%, respectively, of the Company's revenues resulted from foreign based
customers. For the years ended December 31, 2002, 2001 and 2000, 82%, 94% and
90%, of revenues resulted from transactions with three customers.

                                       62
<Page>
                       GENAISSANCE PHARMACEUTICALS, INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(15) QUARTERLY DATA--UNAUDITED

<Table>
<Caption>
                                                                          2002
                                                  -----------------------------------------------------
                                                  1ST QUARTER   2ND QUARTER   3RD QUARTER   4TH QUARTER
                                                  -----------   -----------   -----------   -----------
<S>                                               <C>           <C>           <C>           <C>
Revenues........................................    $  1,851      $  1,933      $  1,754      $  2,573
Operating expenses..............................      10,739        15,186         6,668         6,146
Operating loss..................................      (8,888)      (13,253)       (4,914)       (3,573)
Net loss applicable to common shareholders......      (9,060)      (13,463)       (5,210)       (5,360)
Net loss per common share:
Basic and diluted...............................       (0.40)        (0.59)        (0.23)        (0.23)
</Table>

<Table>
<Caption>
                                                                          2001
                                                  -----------------------------------------------------
                                                  1ST QUARTER   2ND QUARTER   3RD QUARTER   4TH QUARTER
                                                  -----------   -----------   -----------   -----------
<S>                                               <C>           <C>           <C>           <C>
Revenues........................................    $    997      $  1,069      $  1,083      $  2,196
Operating expenses..............................      12,958        14,741        15,629        14,992
Operating loss..................................     (11,961)      (13,672)      (14,546)      (12,796)
Net loss applicable to common shareholders......     (11,192)      (13,209)      (11,801)      (11,380)
Net loss per common share:
Basic and diluted...............................       (0.49)        (0.58)        (0.52)        (0.50)
</Table>

                                       63
<Page>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES

    The information required with respect to changes in the Company's
accountants was previously reported in the Current Report on Form 8-K of the
Company, filed on June 5, 2002, and is incorporated by reference into this
Annual Report on Form 10-K.

                                    PART III

    Items 10, 11, 12, 13 and 15 of Part III (except for information required
with respect to our executive officers which is set forth under "Executive
Officers" in Item 1A of Part I of this report) have been omitted from this
report, since we expect to file with the Securities and Exchange Commission, not
later than 120 days after the close of our fiscal year, a definitive proxy
statement. The information required by Items 10, 11, 12, 13 and 15 of this
report, which will appear in the definitive proxy statement, is incorporated by
reference into Part III of this report.

ITEM 14. CONTROLS AND PROCEDURES

    EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Based on their evaluation
of the Company's disclosure controls and procedures (as defined in rules
13a-14(c) and 15d-14(c) promulgated under the Securities and Exchange Act of
1934, as amended (the "Exchange Act")), as of a date within 90 days of the
filing date of this Annual Report on Form 10-K, the Company's chief executive
officer and chief financial officer have concluded that the Company's disclosure
controls and procedures are designed to ensure that the information required to
be disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms and are operating in an effective
manner.

    CHANGES IN INTERNAL CONTROLS. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
these controls subsequent to the date of their most recent evaluation.

                                    PART IV

ITEM 16. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

(a) 1. FINANCIAL STATEMENTS

       The financial statements are listed under Item 8 of this report.

    2.  FINANCIAL STATEMENT SCHEDULES

    The financial statement schedules listed under Item 8 of this report are
omitted because they are not applicable or required information and are shown in
the financial statements or the footnotes thereto.

(b) REPORTS ON FORM 8-K

    No reports on Form 8-K were filed during the fourth quarter of 2002.

                                       64
<Page>
(c) EXHIBITS

                                 EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT
NUMBER                                    DESCRIPTION OF DOCUMENT
-------                 ------------------------------------------------------------
<C>                     <S>
               3.1(1)   Amended and Restated Certificate of Incorporation.
               3.3(2)   Amended and Restated By-Laws.
               4.1(3)   Form of Common Stock Certificate.
               4.2(3)   Form of Common Stock Purchase Warrant, together with a list
                        of warrant holders.
             10.1*(8)   2000 Amended and Restated Equity Incentive Plan as amended.
            10.1A*(3)   Stock Option Plan.
             10.2*(3)   Employee Stock Purchase Plan 2000.
              10.3(3)   Form of Indemnification Agreement between Genaissance and
                        its directors.
              10.4(3)   Lease Agreement between Genaissance and Science Park
                        Development Corporation dated September 15, 1998.
              10.5(3)   Amendment No. 1 to Lease Agreement between Genaissance and
                        Science Park Development Corporation dated December 1, 1999.
              10.6(3)   Amendment No. 2 to Lease Agreement between Genaissance and
                        Science Park Development Corporation dated December 16,
                        1999.
             10.7*(3)   Genaissance 401(k) Plan
             10.8(3)+   Collaboration Agreement between Genaissance and Telik, Inc.
                        dated February 11, 1998.
              10.9(3)   First Amendment, dated February 11, 1999, to the
                        Collaboration Agreement between Genaissance and Telik, Inc.
                        dated February 11, 1998.
            10.10(3)+   License Agreement between Genaissance and Visible Genetics,
                        Inc. dated November 21, 1996.
            10.11(3)+   Patent License Amending Agreement between Genaissance and
                        Visible Genetics, Inc. dated March 16, 2000.
             10.12(3)   Loan Agreement between Genaissance and Connecticut
                        Innovations, Incorporated dated September 15, 1998.
             10.13(3)   Loan Agreement between Genaissance and Connecticut
                        Innovations, Incorporated dated December 1, 1999.
             10.14(3)   Master Lease Agreement between Genaissance and Finova
                        Technology Finance dated October 2, 1998, and attached
                        Schedules.
             10.15(3)   Letter Agreement with Finova Capital Corporation dated
                        January 24, 2000.
             10.16(3)   Master Equipment Lease Agreement between Genaissance and
                        Oxford Venture Finance dated June 10, 1999, and attached
                        Schedules.
             10.17(3)   Master Lease Agreement between Genaissance and Newcourt
                        Financial USA Inc. dated March 26, 1999, and attached
                        Schedules.
            10.18*(3)   Employment Agreement with Gualberto Ruano dated August 24,
                        1998.
            10.19*(3)   Employment Agreement with Kevin Rakin dated August 24, 1998.
            10.20*(3)   Employment Agreement with Gerald F. Vovis dated April 15,
                        1999.
            10.21*(3)   Confidentiality and Non-Competition Agreement with Richard
                        Judson dated November 16, 1999.
            10.22(3)+   Strategic Alliance Agreement between Genaissance and
                        Sequenom, Inc. dated as of May 3, 2000.
             10.23(3)   Letter Agreement with Finova Capital Corporation dated June
                        7, 2000.
             10.24(3)   Letter Agreement with Connecticut Innovations, Incorporated
                        dated June 2, 2000.
            10.25(3)+   Collaboration Agreement with Gene Logic, Inc. dated June 28,
                        2000.
             10.26(3)   Second Amended and Restated Registration Rights Agreement
                        with the purchasers of Series A and Series KBL Non-voting
                        Preferred Stock dated March 10, 2000.
</Table>

                                       65
<Page>

<Table>
<Caption>
EXHIBIT
NUMBER                                    DESCRIPTION OF DOCUMENT
-------                 ------------------------------------------------------------
<C>                     <S>
             10.27(3)   Amended and Restated Registration Rights Agreement with the
                        purchasers of Series B and Series KBH Preferred Stock dated
                        March 10, 2000.
             10.28(3)   Registration Rights Agreement with purchasers of Series C
                        Preferred Stock dated March 10, 2000.
             10.29(3)   Amendment No. 3 to Lease Agreement between Genaissance and
                        Science Park Development Corporation dated June 1, 2000.
             10.30(3)   Purchase Agreement with Connecticut Innovations,
                        Incorporated dated March 10, 1994.
             10.31(3)   Financing Agreement with Connecticut Innovations,
                        Incorporated dated November 16, 1994.
             10.32(3)   Financing Agreement with Connecticut Innovations,
                        Incorporated dated September 10, 1996.
             10.33(3)   Agreement Concerning Conversion of Convertible Note and
                        Connecticut Presence with Connecticut Innovations,
                        Incorporated dated August 24, 1998.
             10.34(3)   Supplemental Agreement to Agreement Concerning Conversion of
                        Convertible Note and Connecticut Presence with Connecticut
                        Innovations, Incorporated dated November 23, 1999.
             10.35(3)   Letter Agreement with Connecticut Innovations, Incorporated
                        dated February 17, 2000.
             10.36(3)   Loan and Security Agreement and Promissory Note with
                        Transamerica Business Credit Corporation dated April 30,
                        1999.
            10.37*(4)   Employment Agreement with Kenneth B. Kashkin dated September
                        13, 2000.
            10.38*(4)   Promissory Note with Gualberto Ruano dated August 7, 2000.
            10.39*(4)   Promissory Note with Kevin Rakin dated August 7, 2000.
            10.40(5)+   Collaboration Agreement with Janssen Research Foundation
                        dated November 22, 2000.
             10.41(5)   Third Loan Agreement with Connecticut Innovations,
                        Incorporated dated July 26, 2000.
            10.42(6)+   Agreement with Pfizer Inc. dated August 29, 2001.
            10.43(6)+   HAP-TM- Focus Trial License Agreement with AstraZeneca UK
                        Limited dated as of November 29, 2001.
            10.44(6)+   Mednostics-TM- Collaboration and License Agreement with
                        Biogen, Inc. dated as of January 31, 2002.
            10.45(6)+   International Sales Representative Agreement with Intec Web
                        and Genome Informatics Corporation dated as of February 4,
                        2002.
            10.46(6)+   Amendment, dated December 27, 2001, to Collaboration
                        Agreement with Gene Logic, Inc. dated June 28, 2000.
            10.47(6)+   HAP-TM- Focus Trial License Agreement with Biogen, Inc.
                        dated December 21, 2001.
             10.48(6)   Form of Registration Rights Agreement Waiver dated February
                        18, 2002.
            10.49*(6)   Employment Agreement with Richard Judson dated November 20,
                        2001.
             10.50(6)   Fourth Amendment to Lease between Science Park Development
                        Corporation and Genaissance dated September 30, 2001.
             10.51(6)   Amendment, dated May 13, 2002, to Agreement with Pfizer Inc.
                        dated August 29, 2001.
               10.52*   First Amendment, dated September 1, 2002, to Employment
                        Agreement with Gualberto Ruano dated August 24, 1998. Filed
                        herewith.
               10.53*   First Amendment, dated September 1, 2002, to Employment
                        Agreement with Kevin Rakin dated August 24, 1998. Filed
                        herewith.
               10.54+   Amendment, dated November 22, 2002, to Collaboration
                        Agreement with Janssen Research Foundation dated November
                        22, 2000. Filed herewith.
               10.55+   Amendment, dated December 18, 2002, to Mednostics-TM-
                        Collaboration and License Agreement with Biogen, Inc. dated
                        as of January 31, 2002. Filed herewith.
               10.56+   Agreement with Pharmacia & Upjohn Company dated December 12,
                        2002. Filed herewith.
</Table>

                                       66
<Page>

<Table>
<Caption>
EXHIBIT
NUMBER                                    DESCRIPTION OF DOCUMENT
-------                 ------------------------------------------------------------
<C>                     <S>
               10.57+   Training and License Agreement with Becton, Dickinson and
                        Company dated December 18, 2002. Filed herewith.
              16.1(7)   Letter from Arthur Andersen LLP to the Securities and
                        Exchange Commission, dated June 5, 2002.
                 23.1   Consent of PricewaterhouseCoopers LLP. Filed herewith.
                 99.1   Statement pursuant to 18 U.S.C. Section 1350. Filed
                        herewith.
                 99.2   Statement pursuant to 18 U.S.C. Section 1350. Filed
                        herewith.
</Table>

------------------------

*   Indicates a management contract or compensatory plan.

+  Confidential treatment requested as to certain portions, which portions have
    been filed separately with the Commission.

(1) Filed as Exhibit 3.2 to Genaissance's Registration Statement on Form S-1
    (File No. 333-35314) and incorporated herein by reference.

(2) Filed as Exhibit 3.4 to Genaissance's Registration Statement on Form S-1
    (File No. 333-35314) and incorporated herein by reference.

(3) Filed as an exhibit with the same number to Genaissance's Registration
    Statement on Form S-1 (File No. 333-35314) and incorporated herein by
    reference.

(4) Filed as an exhibit to Genaissance's Quarterly Report on Form 10-Q (File
    No. 000-30981) for the quarter ended September 30, 2000 and incorporated
    herein by reference.

(5) Filed as an exhibit to Genaissance's Annual Report on Form 10-K (File
    No. 000-30981) for the year ended December 31, 2000 and incorporated herein
    by reference.

(6) Filed as an exhibit to Genaissance's Annual Report on Form 10-K (File
    No. 000-30981) for the year ended December 31, 2001 and incorporated herein
    by reference.

(7) Filed as an exhibit to Genaissance's Current Report on Form 8-K (File
    No. 000-30981) filed with the SEC on June 4, 2002 and incorporated herein by
    reference.

(8) Filed as an exhibit to Genaissance's Quarterly Report on Form 10-Q (File No.
    000-30981) for the quarter ended June 30, 2002 and incorporated herein by
    reference.

                                       67
<Page>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the Town of New
Haven, Connecticut, on March 31, 2003.

<Table>
<S>                                                    <C>  <C>
                                                       GENAISSANCE PHARMACEUTICALS, INC.

                                                       By:               /s/ KEVIN RAKIN
                                                            -----------------------------------------
                                                                           Kevin Rakin
                                                                     CHIEF EXECUTIVE OFFICER
</Table>

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.

<Table>
<Caption>
                   SIGNATURE                                     TITLE                      DATE
                   ---------                                     -----                      ----
<C>                                               <S>                                  <C>
                /s/ KEVIN RAKIN                   President, Chief Executive Officer
     --------------------------------------       (Principal Executive Officer) and    March 31, 2003
                  Kevin Rakin                     Director

                /s/ JOSEPH KEYES                  Vice President, Chief Financial
     --------------------------------------       Officer (Principal Financial         March 31, 2003
                  Joseph Keyes                    Officer and Accounting Officer)

             /s/ JURGEN DREWS, M.D.
     --------------------------------------       Chairman of the Board                March 31, 2003
               Jurgen Drews, M.D.

            /s/ HARRY H. PENNER, JR.
     --------------------------------------       Director                             March 31, 2003
              Harry H. Penner, Jr.

             /s/ SETH RUDNICK, M.D.
     --------------------------------------       Director                             March 31, 2003
               Seth Rudnick, M.D.

             /s/ CHRISTOPHER WRIGHT
     --------------------------------------       Director                             March 31, 2003
               Christopher Wright
</Table>

                                       68
<Page>
                                 CERTIFICATIONS

I, Kevin Rakin, certify that:

1.  I have reviewed this annual report on Form 10-K of Genaissance
    Pharmaceuticals, Inc.;

2.  Based on my knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    this annual report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in all material
    respects the financial condition, results of operations and cash flows of
    the registrant as of, and for, the periods presented in this annual report;

4.  The registrant's other certifying officers and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    a)  designed such disclosure controls and procedures to ensure that material
       information relating to the registrant, including its consolidated
       subsidiaries, is made known to us by others within those entities,
       particularly during the period in which this annual report is being
       prepared;

    b)  evaluated the effectiveness of the registrant's disclosure controls and
       procedures as of a date within 90 days prior to the filing date of this
       annual report (the "Evaluation Date"); and

    c)  presented in this annual report our conclusions about the effectiveness
       of the disclosure controls and procedures based on our evaluation as of
       the Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based on
    our most recent evaluation, to the registrant's auditors and the audit
    committee of registrant's board of directors (or persons performing the
    equivalent functions):

    a)  all significant deficiencies in the design or operation of internal
       controls which could adversely affect the registrant's ability to record,
       process, summarize and report financial data and have identified for the
       registrant's auditors any material weaknesses in internal controls; and

    b)  any fraud, whether or not material, that involves management or other
       employees who have a significant role in the registrant's internal
       controls; and

6.  The registrant's other certifying officers and I have indicated in this
    annual report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective actions with regard to significant deficiencies and material
    weaknesses.

<Table>
<S>                                               <C>                                           <C>
Dated: March 31, 2003                             /s/ KEVIN RAKIN
                                                  -------------------------------------------
                                                  Kevin Rakin
                                                  PRESIDENT AND CHIEF EXECUTIVE OFFICER
</Table>

                                       69
<Page>
                                 CERTIFICATIONS

I, Joseph Keyes, certify that:

1.  I have reviewed this annual report on Form 10-K of Genaissance
    Pharmaceuticals, Inc.;

2.  Based on my knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    this annual report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in all material
    respects the financial condition, results of operations and cash flows of
    the registrant as of, and for, the periods presented in this annual report;

4.  The registrant's other certifying officers and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    a)  designed such disclosure controls and procedures to ensure that material
       information relating to the registrant, including its consolidated
       subsidiaries, is made known to us by others within those entities,
       particularly during the period in which this annual report is being
       prepared;

    b)  evaluated the effectiveness of the registrant's disclosure controls and
       procedures as of a date within 90 days prior to the filing date of this
       annual report (the "Evaluation Date"); and

    c)  presented in this annual report our conclusions about the effectiveness
       of the disclosure controls and procedures based on our evaluation as of
       the Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based on
    our most recent evaluation, to the registrant's auditors and the audit
    committee of registrant's board of directors (or persons performing the
    equivalent functions):

    a)  all significant deficiencies in the design or operation of internal
       controls which could adversely affect the registrant's ability to record,
       process, summarize and report financial data and have identified for the
       registrant's auditors any material weaknesses in internal controls; and

    b)  any fraud, whether or not material, that involves management or other
       employees who have a significant role in the registrant's internal
       controls; and

6.  The registrant's other certifying officers and I have indicated in this
    annual report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective actions with regard to significant deficiencies and material
    weaknesses.

<Table>
<S>                                               <C>                                           <C>
Dated: March 31, 2003                             /s/ JOSEPH KEYES
                                                  -------------------------------------------
                                                  Joseph Keyes
                                                  VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
</Table>

                                       70