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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended March
    31, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File
    No. 0-12716
  CLINICAL DATA, INC.
 (Exact Name of Registrant as
    Specified in its Charter)
  Delaware

04-2573920(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)One Gateway Center, Suite 702,
    Newton, Massachusetts

02458(Zip Code)(Address of Principal Executive
    Offices)   Registrants telephone number, including area code:
 (617) 527-9933
  Securities registered pursuant to Section 12(b) of the
    Act:
  Common Stock, $.01 par value

The NASDAQ Stock Market LLC
    (NASDAQ Global Market)  Securities registered pursuant to Section 12(g) of the
    Act:
   o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE




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##### 





INDEX TO
    FORM 10-K
  FOR THE
    FISCAL YEAR ENDED MARCH 31, 2008
   
 PagePART 1ITEM 1.


Business


1ITEM 1A.


Risk Factors


24ITEM 1B.


Unresolved Staff Comments


37ITEM 2.


Properties


37ITEM 3.


Legal Proceedings


37ITEM 4.


Submission of Matters to a Vote of Security
    Holders


37PART IIITEM 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


38ITEM 6.


Selected Consolidated Financial Data


39ITEM 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


41ITEM 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


51ITEM 8.


Financial Statements and Supplementary Data


51ITEM 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


51ITEM 9A.


Controls and Procedures


51ITEM 9B.


Other Information


54PART IIIITEM 10.


Directors, Executive Officers, and Corporate
    Governance


55ITEM 11.


Executive Compensation


55ITEM 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


55ITEM 13.


Certain Relationships and Related Transactions,
    and Director Independence


55ITEM 14.


Principal Accounting Fees and Services


55PART IVITEM 15.


Exhibits, Financial Statement Schedules


55SIGNATURES


56EX-3.1 Certificate of Elimination of the Series A Convertible Preferred StockEX-3.2 Restated Certificate of Incorporation filed June 11, 2008EX-10.8 Executive Employment Agreement of C. Evan BallantyneEX-10.11 Amended and Restated Executive Agreement of Carol R. Reed, M.D.EX-21.1 Subsidiaries of the CompanyEX-23.1 Consent of Deloitte & Touche LLPEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certifications of CEO & CFO




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NOTE REGARDING
    FORWARD-LOOKING STATEMENTS
  Form 10-K Form 10-K. Form 10-K Form 10-K.
  WHERE YOU
    CAN FIND MORE INFORMATION
  1-800-SEC-0330 http://www.sec.gov http://www.clda.com.




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PART I  ITEM 1.
    BUSINESS  General
  ® ®
  FAMILION® ®
    Company
    History
    tm FAMILION
 1




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and/or
    OUR
    INDUSTRIES
  Diagnostic
    and Genetic Testing Industries
  Poisal, J.A.,
    et al, Health Spending Projections Through 2016: Modest Changes
    Obscure Part Ds Impact. Health Affairs
    (21 February 2007): W242-253 Shah, N, et al., Determinants
    of growth in prescription drug expenditures. Paper presented at
    the annual meeting of the Economics of Population Health:
    Inaugural Conference of the American Society of Health
    Economists, June 2006 and/or trial-and-error Institute of
    Medicine of the National Academies, 2006
   2




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FAMILION
  Frost and Sullivan
    November 30, 2006 SG
    Cowen  2001
    
    operating within an antiquated reimbursement system that does
    not reflect either the investment to develop or the clinical or
    economic value of the test;
    demonstrating pharmacogenetic and medical economic data to
    support test adoption and reimbursement;
    educating providers on the value of incorporating
    pharmacogenetic testing into their practice;
    the potential for unduly burdensome regulation of these tests; 3




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
    establishing validated pharmacogenetic tests with adequate
    predictive characteristics;
    the complexity of the genetic underpinnings of disease, and the
    related complexity of identifying and validating biomarkers;
    other parties who have opposing interests in seeing these tests
    commercialized as they threaten their business models or
    markets; and
    ethical, legal, regulatory, and social considerations.    Development
    and Marketing of Drugs
  and/or
   4




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Journal of the American Medical Association (JAMA) 286:
    2270-2279,
    2001 MDR1 Table of Valid Genomic Biomarkers in the Context
    of Approved Drug Labels
  Fee-for-service
    Genomic Services
  PhorTech
    International 2005/2006 U.S. MSPPSA report on DNA
    Sequencing Market Analysis, September 9, 2005
  st
  Genetic Engineering and
    Biotechnology News Biobusiness Channel: Article May
    15 2007 (Vol. 27, No. 10). BioMarket Trends: The Future of
    Genome Synthesis and Design Implications for U.S. Economy.
    Rob Carlson, Ph.D., Jim Newcomb, Steven Aldrich Contract Pharma: CRO Industry Update by
    Kristin Brooks, May 2007
 5




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PhorTech International 2005/2006 U.S. MSPPSA report on
    DNA Sequencing Market Analysis, September 9, 2005 10-20% Genome Synthesis and Design Futures Cambridge, MA February 21, 2007  published by
    Bio Economic Research Associates
    
    researchers in academia and government laboratories answering
    basic science questions about gene structure and expression in
    plant, animal and lower species;
    drug discovery departments in pharmaceutical and biotechnology
    companies doing pathway analyses using gene expression tools to
    find new drug targets or biomarkers;
    academic and applied industrial researchers performing
    bio-distribution studies of recombinant vaccine and gene therapy
    candidates;
    applied clinical departments in pharmaceutical and biotechnology
    companies exploring the role of genetic variation among human
    clinical trial patients in genotyping studies as it relates to
    selective sensitivity to, or metabolism of, drug candidates and
    issues in personalized medicine;
    quality control and related process development and
    manufacturing departments in biopharmaceutical firms seeking to
    adhere to current Good Manufacturing Practices, or cGMP,
    regarding DNA sequence identity, DNA copy number, residual DNA
    and other requirements of the Chemistry, Manufacturing and
    Controls, or CMC, sections in Investigational New Drug, or IND
    or New Drug Applications, or NDA, and in post-launch cGMP
    manufacturing;
    customers or marketers of tests for genotypic markers of family
    inheritance patterns and other related tests; and
    companies that sell molecular biology reagent, instrument and
    research tools that require molecular biology services for
    quality control, component or other OEM contribution to their
    businesses.  PhorTech International 2005/2006 U.S. MSPPSA report on
    DNA Sequencing Market Analysis, September 9, 2005
     6




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OUR
    COMPANIES
  PGxHEALTH
  Our
    Strategy
  and/or
  Developing
    and Commercializing Genetic and Pharmacogenetic Tests
  FAMILION FAMILION
  FAMILION PGxPredict:RITUXIMAB PGxPredict:WARFARIN
    Strategic
    Acquisitions
    Sales and
    Marketing
  FAMILION
 7




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PGxHealth
    Offerings: Genetic and Pharmacogenetic Tests
  About our
    Tests
  The
    FAMILION Family of Tests
  Sudden Arrhythmia
    Death Syndromes Foundation citing CDC 2002]
    
    aids in the diagnosis of disease;
    aids in comprehensive risk assessment;
    guides lifestyle modifications;
    provides information needed to develop a comprehensive treatment
    plan, which may include the placement of an internal
    cardioverter defibrillator;
    determines if family members are at risk, including those who
    are currently asymptomatic; and
    provides important information for genetic counseling.  FAMILION FAMILION FAMILION
  Sudden Arrhythmia Death Syndromes
    Foundation Low Penetrance in the Long-QT Syndrome: Clinical Impact,
    Priori SG, et al., Circulation 1999;99:529-33
  Priori SG, et al., Circulation 1999; 99:529-33 FAMILION
  30-50% Mohamed U, et al. Molecular and Electrophysiological Bases
    of Catecholaminergic Polymorphic Ventricular Tachycardia. J
    Cardiovasc Electrophysiol. 2007; 18(7):791-7 Brugada
    Syndrome, Brugada R, et al. Gene Reviews
 8




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Keren A, et al., Hypertrophic cardiomyopathy: the genetic
    determinants of clinical disease expression. Nature. 2008;
    5(3):158-68 Prasad et al., Echocardiographic
    pitfalls in the diagnosis of hypertrophic cardiomyopathy. Heart.
    1999; 82:8-15
  Keren, et al, Nature 2008; 5(3);
    158-68 Prasad, et al., Heart
    1999; 82:8-15
  ACC/AHA/ESC 2006 Guidelines for Management
    of Patients With Ventricular Arrhythmias and the Prevention of
    Sudden Cardiac Death, Circulation [2006;114;1088-1132
  FAMILION
  PGxPredict
    Tests
  PGxPredict:RITUXIMAB: ® National Cancer Institute,
    U.S. National Institutes of Health ® ® PGxPredict:RITUXIMAB Cartron, G., et al. Therapeutic activity
    of humanized anti-CD20 monoclonal antibody and polymorphism in
    IgG Fc receptor FcgammaRIIIa gene. Blood 99.3 (2002):754-58; and
    Weng, W. K., and Levy, R, Two Immunoglobulin G Fragment C
    Receptor Polymorphisms Independently Predict Response to
    Rituximab in Patients With Follicular Lymphoma. J Clin Oncol
    21:3940-3947
 9




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PGxPredict:CLOZAPINE: National Institutes of
    Health Effectiveness of Clozapine
    Versus Olanzapine, Quetiapine, and Risperidone in Patients With
    Chronic Schizophrenia Who Did Not Respond to Prior Atypical
    Antipsychotic Treatment, McEvoy JP et al., Am. J. Psychiatry
    2006; 163:600-610
  PGxPredict:CLOZAPINE PGxPredict:CLOZAPINE
  PGxPredict:WARFARIN: PGxPredict:WARFARIN Pirmohamed M, Warfarin: almost 60 years old and still
    causing problems. Brit J Clin Pharm 62(5):
    509-511.
    2006
  WARFARIN
    PGxPredict:WARFARIN
  TPMT Genetic Test:
   10




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Challenges
    in Reimbursement
  case-by-case
  FAMILION
  Form 10-K in-network
  Our
    Pharmaceutical Pipeline: Vilazodone
  About
    Depression
  Acute and Longer
    Term Outcomes in Depressed Outpatients Requiring One or Several
    Treatment Steps: A STAR*D Report, Rush, et al. Am J Psychiatry.
    November 2006;163(11):1905-17
  About
    Vilazodone
   11




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12




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first-in-class
  COGENICS
  Our
    Strategy
    Our
    Offerings
  Global
    Pharmacogenomics and Molecular Biology Services
        
    isolating and banking DNA and RNA samples;
    sequencing DNA samples on both the traditional and next
    generation automated sequencing platforms;
    performing genotyping assays on several different instrument
    platforms, which measure the genetic variation present among DNA
    samples;
    performing gene expression profiling, and confirmatory
    validation analysis on microarray platforms and Quantitative
    Polymerase Chain Reaction, known as QPCR, instrumentation;
    providing genetic stability testing using DNA sequencing, QPCR
    and related molecular biology services for biopharmaceutical
    manufacturers; and
    developing and providing laboratory-based assays to assist data
    generation and analysis during small molecule drug-based
    clinical trials as well as gene therapy and recombinant vaccine
    studies.  GLP-Compliant
    RNA and DNA Banking Services
   13




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Custom
    DNA Sequencing Services
    
    FDA submission quality sequencing This
    sequencing work is designed for presentation in a report that
    can be incorporated into an application to be submitted to the
    FDA or other regulatory agencies;
    Express Sequencing This service is designed
    to give customers a quick look at high accuracy
    double or single strand sequence data from one or multiple
    clones, in which the data is returned to the customer within a
    very short period of time after receiving the sample;
    High-throughput sequencing services This
    service involves sequencing many clones from a genomic or an
    expressed sequence tag library utilizing high-throughput
    automated systems; and
    Large scale genomic sequencing services In
    this service, we construct libraries from a variety of genomic
    constructs and assemble them into full-length sequences, which
    can represent hundreds or thousands of genes. Alternately, we
    can perform directly whole genome sequencing, expressed sequence
    tag sequencing, and identification of small RNAs, transcriptome
    analysis, and metagenomics.  Custom
    Genotyping Services
    
    creating better informed, or smarter, clinical
    trials through the design of protocols that result in enrichment
    for response via the inclusion of those patients most likely to
    benefit 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 more efficient use of clinical resources;
    reducing the size and, hence, the cost, of late-stage clinical
    trials by enrolling patients who are most likely to respond to a
    drug and/or
    are least likely to suffer an adverse reaction; and
    testing for individual susceptibility to disease or response to
    pharmaceutical treatments.    
    a broad range of platform options including genotyping by
    restriction fragment length polymorphism mapping, mass
    spectrometry, sequencing, and microarray;
    a comprehensive catalog numbering in the hundreds of
    standardized genotyping assays for commonly requested SNP assays
    such as the liver drug metabolizing cytochromes and transporter
    genes. These are available for non-regulated or regulated
    environments;
    the ability to design, discover, develop and validate custom
    genotyping assays and then analyze samples with these validated
    assays on multiple platforms in non-regulated or regulated
    environments. In support of 14




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custom biomarker discovery, we may access our
    HAPtm
    Database, which contains highly informative, proprietary
    measures of genetic variation for more than 8,000
    pharmaceutically relevant genes; and  
    GLP for compliant genotyping services for assessing genomic
    variation among patients in a clinical trial, thereby permitting
    pharmaceutical and biotechnology companies to incorporate
    genomic variation information in their regulatory filings. For
    instance, we develop, validate, and run GLP-compliant genotype
    testing in support of global clinical trials (Phase I through
    Phase IV) for a wide variety of drug metabolism and drug
    target genes. GLP genotyping methods are developed and validated
    in accordance with Standard Operating Procedures, known as
    SOPs, detailing our formal validation program. Our GLP
    assays include full chain-of-custody documentation, QA data
    audits, and comprehensive data review to ensure that results are
    suitable for regulatory submission. Cogenics services in
    this area to date have been utilized in over 1,700 clinical
    trials.  Gene
    Expression Profiling Services
    
    We provide GLP-compliant RNA preparation, transcript profiling
    and data analysis and microarray services using Affymetrix
    Genechip®
    Gene Expression Analysis Arrays, Agilent Oligo microarrays and
    the proprietary
    MirChiptm
    technology we developed with Rosetta Genomics, as well as Laser
    Capture Micro dissection and the ability to process
    paraffin-embedded tissues on a fee-for-service basis.
    We are able to complement our microarray gene expression
    profiling service with confirmatory microarray validation
    studies using QPCR technology in both unregulated and regulated
    environments.
    In September of 2006, Cogenics joined with other participants of
    the Micro Array Quality Control, or MAQC, Consortium in
    publishing the results of the FDA-led initiative to assess the
    precision, reproducibility and comparability of microarray gene
    expression data. Cogenics contribution was unique in the
    generation and analysis of multi-platform gene expression data
    and resulted in three publications in the September 2006 issue
    of Nature Biotechnology. Cogenics is continuing to participate
    in the current MAQC Phase II study which is expanding upon
    the initial Phase I results.  Genetic
    Stability Testing Services
    
    DNA sequencing circumvents issues associated
    with having insufficient DNA and provides our clients with
    complete sequence data;
    Copy number monitors the number of copies of
    a gene contained within a cell; predictable changes in their
    copy number during production
    scale-up
    assures regulatory authorities that the process is well
    controlled; 15




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
    Insertion number is similar to copy number
    but in addition measures the stability of a cell bank;
    Plasmid loss or rearrangement detects the
    percentage of cells that are missing or have undergone a loss or
    rearrangement of their plasmid; and
    Phage detection detects contamination of a
    bacterial cell bank.  Custom
    Core Molecular Biology Services
    
    Polymerase chain reaction known as PCR, can
    be used to amplify a specific sequence of interest from plasmid,
    viral, or genomic DNA. We also have the expertise to provide
    reverse transcription PCR for amplification of an RNA product;
    Subcloning A procedure used to transfer a DNA
    region of interest into a vector that is more suitable for
    procedures such as DNA sequencing and gene expression. We can
    provide a strategy for subcloning a variety of different
    sequence fragments, including PCR products, into standard vector
    systems;
    Library screening During the gene discovery
    process, customers may find only a portion of a gene of
    interest. We can use such a gene fragment to screen a library of
    clones and isolate the full-length cDNA of interest;
    Southern blot analysis This analysis is used
    to determine the gene copy number and map the insertion
    location; and
    DNA preparation Many of our customers need
    large amounts of DNA for sequencing or probe generation. We have
    the ability to isolate DNA on a large-scale basis.  Discontinued
    Offerings
    Collaborations,
    Partnerships and Business Development Initiatives
    Affymetrix
   16




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Agilent
    Technologies, Inc.
        Algynomics,
    Inc.
    John
    Innes Centre
    Medical
    Research Council
    Rosetta
    Biosoftware
  ®
 17




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Roche
    Diagnostics
    Cogenics
    Market and Competition
    and/or and/or
    OTHER
    BUSINESS MATTERS
  PGxHealth
  Government
    Regulation
     18




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FAMILION
        Cogenics
  Governmental
    Approval
   19




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Governmental
    Regulations and Environmental Laws
        FAMILION
  Patents
    and Proprietary Technology
    PGxHealth
     20




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
    ten issued U.S. patents, four pending U.S. patent
    applications, 336 issued foreign patents, and 124 pending
    foreign patent applications owned by Merck relating to
    vilazodone, methods for manufacturing vilazodone, and methods of
    using vilazodone to treat depression and other anxiety disorders;
    five issued U.S. patents, three issued foreign patents, and
    seven pending foreign patent applications owned by the
    University of Utah relating to the diagnosis of inherited LQTS;
    one issued U.S. patent, three pending U.S. patent
    applications, ten issued foreign patents, and six pending
    foreign patent applications owned by Innate Pharma relating to a
    genetic marker predictive of rituximab response, heparin-induced
    thrombocytopenia, and cytokine release syndrome;
    one issued U.S. patent owned by St. Jude Childrens
    Research Hospital (exclusively sublicensed to Prometheus
    Laboratories Inc. and Specialty Laboratories, Inc.) relating to
    genetic markers predictive of thiopurine toxicity;
    one issued U.S. patent owned by Yale University
    (exclusively sublicensed to Siemens Medical Solutions
    Diagnostics) relating to the coupled amplification and
    sequencing of DNA; and
    one issued U.S. patent owned by Vanderbilt University
    relating to a genetic marker predictive of drug-induced cardiac
    arrhythmia.    
    FCGR3A The Fc receptor is a protein found on
    the surface of certain cells  including natural
    killer cells, macrophages, neutrophils, and mast
    cells  that contribute to the protective functions of
    the immune system. Fc receptors bind to antibodies that are
    attached to infected cells, tumor cells, or invading pathogens.
    Their activity stimulates phagocytic or cytotoxic cells to
    destroy microbes, tumor cells, or infected cells by
    antibody-mediated phagocytosis or antibody-dependent
    cell-mediated cytotoxicity. There is increasing evidence that
    the Fc portion of the anti-tumor mAbs (rituximab, traztuzumab,
    cetuximab, infliximab etc) is a major component of their
    therapeutic activity, through binding to Fc gamma receptors
    expressed by effect or cells present in the tumor environment
    [Fc Gamma Receptors: A Magic Link with the Outside World,
    Sautès-Fridman, C et. al., American Society of Human
    Immunology Quarterly (ASHI), Fourth Quarter 2003].
    MDR-1 P-glycoprotein (PGP), the product of
    the multidrug resistance gene (MDR1), acts as an
    energy-dependent efflux pump that exports its substrates out of
    the cell. PGP expression is an important factor regulating
    absorption of a wide variety of medications. It has also been
    associated with intrinsic and acquired cross resistance to a
    number of structurally unrelated anticancer drugs [Cancer
    multidrug resistance: A review of recent drug discovery
    research, Liscovitch, M. et. al., IDrugs. 2002 April
    5(4):349-55].
    CYP2D6, (cytochrome P450 2D6) is the best studied of the
    DMEs and acts on one-fourth of all prescription drugs, including
    some of the SSRI and tricylic antidepressants, and betablockers
    such as Inderal and the Type 1A antiarrhythmics. Approximately
    10% of the population has a slow acting form of this enzyme and
    7% a super-fast acting form. As many as 35%, varying by
    ethnicity, are carriers of a non-functional 2D6 allele,
    especially elevating the risk of ADRs when these individuals are
    taking multiple drugs. Drugs metabolized by CYP2D6 include
    Prozac, Zoloft, Paxil, Effexor, hydrocodone, amitriptyline,
    Claritin, cyclobenzaprine, Haldol, metoprolol, Rythmol, Tagamet,
    tamoxifen, and the over-the-counter diphenylhydramine drugs,
    Allegra, Dytuss, and Tusstat. CYP2D6 is responsible for
    activating the pro-drug codeine into its active form and the
    drug is therefore inactive in CYP2D6 slow metabolizers. The *42
    allele, which we have intellectual property to, is attributed to
    the intermediate metabolizers and is the second most frequent
    functional allele [www.edhayes.com/startp450.html].
    CYP2B6 is also a member of the cytochrome
    P450 group of enzymes. It is involved with metabolizing
    nicotine, along with many other substances including the HIV
    drug effavirenz (NRTI) and the antidepressant Buproprion
    [www.edhayes.com/startp450.html]. 21




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
    MRP-1 Human Multidrug Resistance protein
    known as MRP1 confers resistance to many natural product
    chemotherapeutic agents (anthracyclines and A member of the ABCC
    branch of ATP Binding Cassette (ABC) superfamily and has been
    designated ABCC1 for example) and actively transports
    structurally diverse organic anion conjugates (glutathione and
    glucuronide, for example) [Determinants of the substrate
    specificity of Multidrug Resistance Protein 1 (MRP1): role of
    amino acid residues with hydrogen bonding potential in predicted
    transmenbrane helix 17*, Zhang, D., et. al., J Biol Chem.
    2002 June 7;277(23):20934-41]
    The FAMILIONfamily of tests detects mutations in genes
    responsible for several inherited cardiac diseases, enabling
    molecular diagnosis of these diseases and allowing physicians to
    tailor treatment based on specific knowledge of the cause of a
    patients disease. The FAMILION LQTS test is
    performed across five genes including KCNQ1 for LQT1, KCNH2 for
    LQT2, SCN5A for LQT3, KCNE1 for LQT5 and KCNE2 for LQT6. For
    LQT1 patients, there is a significantly higher risk for
    cardiac events when mutations are located in the transmembrane
    region rather than in the C-terminus. LQT1 and
    LQT2 patients show a significant reduction in cardiac
    events with beta-blocker therapy, however, beta-blocker therapy
    has been shown to be less effective for LQT2 patients.
    Beta-blocker therapy has not been shown to provide reliable
    protection against cardiac events for LQT3 patients.
    Knowing a patients genotype will allow for proper
    lifestyle modifications, decreasing the risk for cardiac events.
    Our FAMILIONtest will identify a genetic mutation in
    approximately 75% of patients with a high index of suspicion for
    LQTS. The second FAMILIONtest is for BrS. It identifies
    mutations in the SCN5A gene, the main gene responsible for this
    syndrome.    Epidauros
        Cogenics
  Patents
    and Proprietary Technology
     22




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Backlog
    Seasonality
    Employees
    Environmental
    Matters
    Significant
    Customers
    Discontinued
    Operations
    Vital
    Diagnostics
    CDSS
   23




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Vital
    Scientific
      Electa
    Lab
      ITEM 1A.
    RISK
    FACTORS    Risk
    Factors Relating to Our Business and Operations
  Without
    additional capital raising opportunities, we will not have
    sufficient cash resources available to fund our current level of
    activities beyond September 2009, including our Phase III
    clinical trial program for our lead product candidate,
    vilazodone.
      Given
    our current product development efforts which have resulted in
    significant net losses, we expect to incur net losses for the
    foreseeable future.
   24




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In
    previous clinical trials performed by others, vilazodone failed
    to demonstrate significant efficacy and we may be unable to
    develop a commercially viable drug.
    Personalized
    medicine and pharmacogenomics is an emerging field, and
    therefore regulatory approval of our drug candidate and
    diagnostic tests may take longer and be less predictable than
    approval for untargeted medicines. Ultimately, personalized
    medicine may prove to be an unsuccessful industry, which would
    have a material adverse impact on our business and
    prospects.
  and/or
   25




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If our
    assumption about the role of genes in diseases or drug response
    is wrong, we may not be able to develop useful
    products.
    We may
    not successfully develop or derive revenues from any
    products.
    
    establish that they are safe and effective;
    establish that they are clinically valid and useful;
    successfully compete with other technologies and products;
    ensure that they do not infringe on the proprietary rights of
    others;
    establish that they can be manufactured in sufficient quantities
    at reasonable costs;
    obtain and maintain regulatory approvals for them; and
    market them successfully.    We may
    not derive significant revenues from our diagnostic
    tests.
  FAMILION
  If
    physicians and patients do not accept and use our tests and
    drugs, we will not achieve sufficient product revenues and our
    business will suffer.
    
    perceptions by members of the healthcare community, including
    physicians, about the safety and effectiveness of our drugs;
    published studies demonstrating the cost-effectiveness of our
    drugs relative to competing products;
    accuracy and reliability of our laboratory testing; 26




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
    availability of reimbursement for our products from government
    or healthcare payers; and
    effectiveness of marketing and distribution efforts by us and
    our licensees and distributors, if any.    If we
    are unable to develop new and enhanced products that achieve
    widespread market acceptance, we may be unable to recoup product
    development costs, and our revenues and earnings may
    decline.
    If our
    products are not granted adequate reimbursement from third-party
    payers, we may be unable to successfully commercialize our
    products and we may never achieve widespread market acceptance
    of our products.
      We
    recently have entered into new business areas and may not have
    the expertise, experience and resources to pursue all of our
    businesses at once.
    If we
    are unable to develop and/or in-license or otherwise acquire new
    products and technologies, we may not be able to grow our
    company successfully.
  and/or
 27




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Due to
    our recent merger activity, it may be more difficult to obtain
    additional financing at favorable terms, if at
    all.
    Because
    a significant portion of our total assets are represented by
    goodwill that is subject to mandatory annual impairment
    evaluations, we could be required to write-off some or all of
    this goodwill which may adversely affect our financial condition
    and results of operations.
    We may
    be unable to successfully complete the integration of the
    businesses of Genaissance, Genome Express, Icoria and
    Epidauros.
    
    retaining existing customers and strategic partners of each
    company;
    coordinating research and development activities to enhance
    introduction of new products and technologies, especially in
    light of rapidly evolving markets for those products and
    technologies;
    preserving the value of various research and development,
    collaboration, distribution, manufacturing and other important
    relationships;
    effectively managing the diversion of management attention from
    business matters to integration issues;
    eliminating corporate overhead and consolidating administrative
    functions;
    combining product offerings and incorporating acquired
    technology and rights into product offerings effectively and
    quickly; and
    developing and maintaining uniform standards, controls,
    procedures and policies. 28




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We may
    not be able to successfully integrate companies that we acquire
    in the future.
      
    difficulties in integrating the operations, technologies and
    products of the acquired companies;
    the risk of diverting managements attention from normal
    daily operations of the business;
    potential difficulties in completing projects associated with
    in-process research and development;
    risks of entering markets in which we have no or limited direct
    prior experience and where competitors in such markets have
    stronger market positions;
    initial dependence on unfamiliar supply chains or relatively
    small supply partners;
    insufficient revenues to offset increased expenses associated
    with the acquisition; and
    potential loss of key employees of the acquired companies.    We are
    dependent upon certain key personnel.
    We
    must implement additional and expensive finance and accounting
    systems, procedures and controls in order to grow our business
    and organization and to satisfy new reporting requirements,
    which will increase our costs and require additional management
    resources.
    In
    order to conduct clinical trials and to market our drugs, we
    will have to develop methods to produce these drugs using
    approved methods and at commercially viable rates.
   29




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##### Table of Contents



If we
    cannot successfully form and maintain suitable arrangements with
    third parties for the manufacturing of the products we may
    develop, our ability to develop or deliver products may be
    impaired.
      New
    drug and genetic and pharmacogenetic test development involves a
    lengthy and complex process, and we may be unable to
    commercialize any of the products we develop.
      
    collect and analyze DNA samples;
    conduct association studies to discover and replicate
    relationships between genetic variations in the DNA samples and
    phenotype of interest;
    undertake clinical trials to validate the efficacy, safety,
    toxicology, pharmacology, pharmacokinetics and other aspects of
    our drug candidates, and predictiveness of any related
    diagnostic tests;
    expend significant resources;
    maintain and expand our intellectual property rights;
    obtain, where necessary, marketing approvals from the FDA and
    other regulatory agencies; and
    find collaborative partners with manufacturing and commercial
    capabilities for our current and future drug candidates and
    related diagnostics.    
    the failure of products in the research and development stage;
    the high cost of clinical trials and our lack of financial and
    other resources; 30




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
    the inability to locate partners with sufficient resources to
    assist in conducting clinical trials; and
    the lack of clinical validation data to support the validity and
    utility of our products.    Our
    operations may be affected by unexpected problems frequently
    encountered in connection with the development and transition to
    other technologies and by the competitive environment in which
    we operate.
    Our
    international operations and sales expose us to foreign currency
    exchange rate fluctuation risks.
    Risk
    Factors Relating to Our Intellectual Property
  If we
    are unable to protect effectively our intellectual property, we
    may not be able to operate our business and third parties may
    use our technology, both of which would impair our ability to
    compete in our markets.
      
    our pending patent applications may not result in issued patents;
    the claims of any issued patents may not provide meaningful
    protection; 31




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##### Table of Contents




    we may be unsuccessful in developing additional proprietary
    technologies that are patentable;
    our patents may not provide a basis for commercially viable
    products or provide us with any competitive advantages and may
    be challenged by third parties; and
    others may have patents that relate to our technology or
    business.      If
    third parties make or file claims of intellectual property
    infringement against us, or otherwise seek to establish their
    intellectual property rights, we may have to spend time and
    money in response and cease some of our
    operations.
    Any
    patent protection we obtain for our products may not prevent
    marketing of similar competing products.
    Any
    patents we obtain may be challenged by producers of generic
    drugs.
   32




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##### Table of Contents



Risk
    Factors Relating to Our Industry
  Our
    biopharmaceutical or diagnostic product candidates must undergo
    rigorous clinical trials and regulatory approvals, which could
    substantially delay or prevent their development or
    marketing.
      
    we must demonstrate through clinical trials that the proposed
    product is safe and effective for its intended use;
    we have limited experience in conducting the clinical trials
    necessary to obtain regulatory approval; and
    data obtained from pre-clinical and clinical activities are
    susceptible to varying interpretations, which could delay, limit
    or prevent regulatory approvals.    and/or
  Concerns
    regarding the use of genetic testing results may limit the
    commercial viability of any products we develop.
  and/or
 33




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##### Table of Contents



If we
    were sued for product liability, we could face substantial
    liabilities that may exceed our resources.
    We may
    not be able to compete successfully with other companies and
    government agencies in the development and marketing of products
    and services.
          
    develop proprietary products;
    develop and maintain products that reach the market first, and
    are technologically superior to and more cost effective than,
    other products on the market;
    obtain patent or other proprietary protection for our products
    and technologies;
    attract and retain scientific and product development personnel; 34




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##### Table of Contents




    obtain required regulatory approvals; and
    manufacture, market and sell products that we develop.  Intense
    competition could reduce our market share or limit our ability
    to increase market share, which could harm our financial
    performance.
    
    develop technologies, products and services that are more
    effective than our products or services, or that render our
    technologies, products or services obsolete or noncompetitive;
    obtain patent protection or other intellectual property rights
    that would prevent us from developing our potential
    products; or
    obtain regulatory approval for the commercialization of their
    products more rapidly or effectively than we do.    We
    operate in a very competitive environment.
    
    health care and other companies that manufacture
    laboratory-based tests and analyzers;
    diagnostic and pharmaceutical companies;
    molecular services businesses;
    companies developing drug discovery technologies;
    companies developing molecular diagnostic and genetic
    tests; and
    companies developing point-of-care diagnostic and genetic tests.     35




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Risk
    factors relating to our common stock
  Future
    sales of our common stock or other securities may dilute our
    stockholders.
    If the
    investors in our private placements sell their shares, which
    have been registered under the Securities Act, the market price
    of our common stock may decline significantly.
    Our
    ownership is concentrated among a small number of
    stockholders.
    The
    price of our common stock is volatile and could cause investors
    to lose a substantial part of their investment.
    
    the timing of our announcements or of our competitors
    announcements regarding significant products, contracts or
    acquisitions;
    variations in results of operations;
    changes in earnings estimates by securities analysts;
    general economic and market conditions; and
    sales of substantial amounts of our common stock into the public
    market, or the perception that such sales might occur.  We may
    issue preferred stock with rights that could affect your rights
    and prevent a takeover of the business.
   36




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##### Table of Contents



We
    currently do not intend to pay dividends on our common stock and
    consequently, your only opportunity to achieve a return on your
    investment is if the price of our common stock
    appreciates.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    Approximate




ExpirationLocation

Square Footage


Use

DateOne Gateway Center, Suite 702
    Newton, Massachusetts


6,700


Corporate office


8/31/20115 Science Park
    New Haven, Connecticut


29,300


Office and laboratory


1/11/2010100 Perimeter Park Drive
    Morrisville, North Carolina


37,000


Office and laboratory


1/31/20159441 West Sam Houston Parkway
    Houston, Texas


15,500


Office and laboratory


12/31/200911 chemin des Pres
    Meylan, France


11,800


Office and laboratory


7/31/2009Am Neuland 1
    Bernried, Germany


7,400


Office and laboratory


6/30/2009Am Neuland 3
    Bernried, Germany


3,000


Office and laboratory


6/30/2009Hope End
    Takely, United Kingdom


10,000


Office and laboratory


6/30/2014     ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   37




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##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  Market
    Information
    High


LowFiscal Year Ended March 31, 2008(1)First Quarter

$
16.19


$
13.00Second Quarter

$
26.99


$
13.25Third Quarter

$
28.90


$
19.83Fourth Quarter

$
23.26


$
15.34Fiscal Year Ended March 31, 2007(1)First Quarter

$
14.67


$
9.71Second Quarter

$
10.67


$
7.63Third Quarter

$
11.44


$
9.00Fourth Quarter

$
15.26


$
10.64     (1)
    
    The prices for the quarters ended before October 1, 2007
    have been adjusted to reflect the
    3-for-2
    stock split effected on that date.  Holders
    of Common Stock
    Dividends
    Securities
    Authorized for Issuance under Equity Compensation
    Plans
    Equity
    Compensation Plan Information
  Weighted AverageNumber of Securities to be


Exercise Price ofIssued upon Exercise of


Outstanding


Number of SecuritiesOutstanding Options,


Options, Warrants


Remaining Available forPlan Category

Warrants and Rights


and Rights


Future IssuanceEquity compensation plans approved by security holders


2,539,000


$
14.53



538,000Equity compensation plans not approved by security holders


N/A



N/A



N/ATotal


2,539,000


$
14.53



538,000    38




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##### Table of Contents



3820-3829:
  Comparison
    of 5 Year Cumulative Total Return
 Assumes Initial Investment of $100
 March 2008
  
  ITEM 6.
    SELECTED
    CONSOLIDATED FINANCIAL DATA  Form 10-K. Form 10-K,
  Recent Acquisitions Affect the Comparability of the Selected
    Consolidated Financial Data
    Acquiree

Date of AcquisitionGenaissance Pharmaceuticals, Inc.

October 6, 2005Icoria, Inc.

December 20, 2005Genome Express, S.A.

March 7, 2006Epidauros Biotechnologie A.G.

August 23, 2007    39




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##### Table of Contents



Years Ended March 31,2008


2007


2006


2005


2004(In thousands, except per share amounts)Consolidated Statements of Operations DataRevenues


34,032



31,556



12,357







Cost of revenues


26,266



19,703



9,412







Gross profit


7,766



11,853



2,945







OPERATING EXPENSES:Research and development


18,586



11,551



3,493







Sales and marketing


9,997



5,746



1,299







General and administrative


27,387



25,922



11,069



863



815Purchased in-process research and development










39,700







Total operating expenses


55,970



43,219



55,561



863



815Operating loss


(48,204
)


(31,366
)


(52,616
)


(863
)


(815
)Interest expense


(531
)


(596
)


(309
)


(31
)


(36
)Interest income


2,071



407



92



2



Other income (expense), net


519



879



(38
)


10



18Loss from continuing operations before taxes


(46,145
)


(30,676
)


(52,871
)


(882
)


(833
)Benefit from (provision for) income taxes


28



(107
)


(95
)






Loss from continuing operations


(46,117
)


(30,783
)


(52,966
)


(882
)


(833
)Income (loss) from discontinued operations, net of taxes


10,787



(6,739
)


2,085



4,277



3,004Net (loss) income


(35,330
)


(37,522
)


(50,881
)


3,395



2,171Preferred stock dividend






(104
)


(97
)






(525
)Net (loss) income applicable to common stockholders

$
(35,330
)

$
(37,626
)

$
(50,978
)

$
3,395


$
1,646Loss (income) per basic and diluted share:Continuing operations

$
(2.42
)

$
(2.18
)

$
(5.92
)

$
(0.13
)

$
(0.33
)Discontinued operations


0.57



(0.47
)


0.23



0.65



0.73Net (loss) income

$
(1.85
)

$
(2.65
)

$
(5.69
)

$
0.52


$
0.40Cash dividends paid per common share

$



$



$
0.04


$
0.07


$
0.04Weighted average shares:Basic and diluted


19,081



14,186



8,953



6,584



4,119   March 31,2008


2007


2006


2005


2004(In thousands)Consolidated Balance Sheet Data:Cash, cash equivalents and marketable securities

$
67,480


$
14,071


$
7,225


$
4,171


$
1,800Total assets


129,448



87,490



109,789



41,130



42,144Long-term obligations


7,684



10,337



13,422



3,165



1,365Shareholders equity


106,075



50,720



59,789



23,809



20,264  40




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  You should read the following discussion and analysis of
    financial condition and results of operations together with the
    Selected Consolidated Financial Data included in
    Item 6 above and our consolidated financial statements and
    related notes appearing elsewhere in this Annual Report on
    Form 10-K.
    In addition to historical financial information, the following
    discussion contains forward-looking statements within the
    meaning of the Private Securities Litigation Reform Act of 1995,
    as amended, and within the meaning of Section 27A of the
    Securities Act of 1933, as amended, that reflect our plans,
    estimates and beliefs. Our actual results could differ
    materially from those discussed in the forward-looking
    statements. Factors that could cause or contribute to these
    differences include those discussed below and elsewhere in this
    document, particularly in the section entitled Risk
    Factors.
  Readers are cautioned that any forward-looking statements
    involve known and unknown risks, uncertainties and other factors
    which may cause our actual results, performance or achievements
    to be materially different from any future results, performance
    or achievements expressed or implied by such forward-looking
    statements. The forward-looking statements in this Annual Report
    on
    Form 10-K
    are subject to risks, uncertainties and assumptions including,
    among other things:
  
    our ability to raise the necessary capital to fund our
    operations and to develop and commercialize our products;
    our ability to successfully design and conduct our planned
    clinical trials;
    our ability to achieve expected synergies and operating
    efficiencies in our acquisitions, and to successfully integrate
    the operations, business and technology obtained in our
    acquisitions;
    general economic and business conditions in our markets;
    the impact of current, pending or future legislation and
    regulation of our businesses in the U.S. and abroad;
    our expectations and estimates concerning future financial
    performance, financing plans and the impact of competition;
    and
    the impact of technological developments and competition.  In light of these risks and uncertainties, the
    forward-looking events and circumstances discussed in this
    Annual Report on
    Form 10-K
    might not occur. We undertake no obligation to publicly update
    or revise any forward-looking statements made herein because of
    new information, future events or otherwise.
  Overview
    Vilazodone
   41




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##### Table of Contents



and/or and/or
  Predictive
    Tests
    FAMILION FAMILION
   42




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##### Table of Contents



FAMILION
  FAMILION Form 10-K
  Genomic
    Services
         43




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##### Table of Contents



Financial
    Operations Overview
  Revenue.
  Cost of Revenue.
  Sales and Marketing Expense.
  Research and Development Expense.
  General and Administrative Expense.
  Purchased Research and Development
    Expense. Business
    Combinations,
  Interest and Other Income (Expense),
    Net.
  Changes
    in Foreign Currency Rates
    Critical
    Accounting Policies and Significant Judgments and
    Estimates
   44




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##### Table of Contents



Form 10-K.
  Revenue Recognition 
      Allowance for Doubtful Accounts 
  Valuation of Intangibles  Business Combinations
  Goodwill and Intangible Assets
  Accounting for the Impairment or Disposal of Long-Lived
    Assets
 45




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##### Table of Contents



Accrued Expenses 
  Income Taxes 
  Recent
    Accounting Pronouncements
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities
 46




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##### Table of Contents



No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or
    Services to be Used in Future Research and Development
    Activities No. 07-3). No. 07-3 No. 07-3 states No. 07-3 No. 07-3
  No. 07-1, Accounting for Collaborative Arrangements, No. 07-1). No. 07-1 No. 07-1 No. 07-1
  Business Combinations
  Results
    of Operations
  Fiscal
    Year Ended March 31, 2008 Compared to Fiscal Year Ended
    March 31, 2007
  Revenue.
  Gross Profit.
 47




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##### Table of Contents



Research and Development Expense.
  Sales and Marketing Expense.
  General and Administrative Expense
  Interest and Other Income (Expense), Net
  Fiscal
    Year Ended March 31, 2007 Compared to Fiscal Year Ended
    March 31, 2006
  12-month
  Revenues
  Gross Profit
  Research and Development Expense
 48




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##### Table of Contents



Sales and Marketing Expense
  General and Administrative Expense
  Purchased Research and Development Expense
  Interest and Other Income (Expense), Net
      Preferred Stock Dividends
  Liquidity
    and Capital Resources
    Year End March 31,2008


2007


2006(In thousands)Cash (used in) provided by:Operating activities

$
(24,532
)

$
(12,874
)

$
(6,182
)Investing activities


(5,190
)


753



(1,444
)Financing activities


69,984



18,447



11,597Effect of exchange rate


422



520



(917
)Increase in cash and cash equivalents

$
40,684


$
6,846


$
3,054     
    In November 2007, we sold Electa Lab for $2.5 million.
    In October 2007, we sold Vital Scientific for $15.0 million.
    In August 2007, we acquired Epidauros for approximately
    $11.9 million in cash.
    In July 2007, we sold approximately 5.2 million shares of
    our common stock for net proceeds of $71.4 million. 49




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##### Table of Contents




    In June 2007, we sold CDSS for $7.0 million. Based on the
    final balance sheet, the purchase price was reduced by
    $1.0 million. This amount was remitted to the buyer in
    November 2007.
    In June 2007, we received $2.8 million from the settlement
    of a breach of contract law suit filed against a third-party.      Payments
    Due by Period
  Fiscal 2010


Fiscal 2012through


through


AfterTotal


Fiscal 2009


Fiscal 2011


Fiscal 2013


Fiscal 2013(In thousands)Contractual Obligations:Short and long-term debt(1)

$
5,100


$
1,870


$
2,999


$
231


$
Capital lease obligations(1)


3,147



1,032



1,647



468



Operating lease obligations


6,379



2,501



2,707



1,171



Total contractual cash obligations

$
14,626


$
5,403


$
7,353


$
1,870


$
     (1)
    
    Includes interest expense      and/or
     50




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##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    Interest
    Rate Risk
    Foreign
    Exchange
    Auction
    Rate Preferred Securities
    ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Form 10-K Page F-1.
  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL STATEMENT DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  (a)
    Evaluation
    of Disclosure Controls and Procedures.  Rule 13a-15
 51




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##### Table of Contents



(b)
    Managements
    Annual Report on Internal Control Over Financial
    Reporting  Rule 13a-15(f)
          Internal Control  Integrated
    Framework
    Changes
    in Internal Controls
  Rules 13a-15(f) 15d-15(f)
 52




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal Control  Integrated Framework
        Internal Control  Integrated Framework
     
    53




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##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION      Gross-Up Gross-Up
     54




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##### Table of Contents



Form 10-Q
 PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE    ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   PART IV  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES  Consolidated Financial Statements
    Consolidated Financial Statement Schedules
    Exhibits
 55




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SIGNATURES      
        
          
       
      56




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57




---



##### 



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
 Consolidated Financial Statements

PageReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets at March 31,
    2008 and 2007


F-3Consolidated Statements of Operations for the
    Years Ended March 31, 2008, 2007 and 2006


F-4Consolidated Statements of Stockholders
    Equity for the Years Ended March 31, 2008, 2007 and 2006


F-5Consolidated Statements of Cash Flows for the
    Years Ended March 31, 2008, 2007 and 2006


F-6Notes to Consolidated Financial Statements


F-8   F-1




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##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM            Share-Based Payment
  Internal Control  Integrated Framework
   
    F-2




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##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES



CONSOLIDATED
    BALANCE SHEETS  March 31,2008


2007(In thousands, except share and per share amounts)ASSETSCurrent Assets:Cash and cash equivalents

$
54,755


$
14,071Accounts receivable, net


6,290



5,501Prepaid expenses and other current assets


2,534



3,099Assets of discontinued operations






22,332Total current assets


63,579



45,003Marketable securities, at fair value


12,725



Property, plant and equipment, net


9,169



5,311Goodwill


31,080



18,973Intangible assets, net


12,117



11,756Other assets, net


778



720Assets of discontinued operations






5,727TOTAL ASSETS

$
129,448


$
87,490LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current portion of long-term debt

$
1,701


$
1,404Current portion of capital leases


861



148Accounts payable


6,134



3,586Accrued expenses


7,299



5,451Customer advances and deferred revenue


2,256



1,686Other current liabilities






776Liabilities of discontinued operations






14,934Total current liabilities


18,251



27,985Long-Term Liabilities:Long-term debt, net of current portion


3,077



5,506Capital lease obligations, net of current portion


1,937



171Other long-term liabilities


108



1,780Liabilities of discontinued operations






1,328Total long-term liabilities


5,122



8,785Commitments and contingencies (Note 9)Stockholders Equity:Preferred Stock, $.01 par value, 1,500,000 shares
    authorized; 484,070 designated Series A voting, convertible
    preferred stock, -0- and 184,000 shares issued and
    outstanding at March 31, 2008 and 2007, respectively






2Common stock, $.01 par value, 60,000,000 shares
    authorized; 21,151,000 and 15,033,000 shares issued at
    March 31, 2008 and 2007, respectively; 21,136,000 and
    15,018,000 shares outstanding at March 31, 2008 and
    2007, respectively


212



150Additional paid-in capital


221,059



132,385Accumulated deficit


(118,766
)


(83,436
)Treasury stock, 15,000 shares at cost


(47
)


(47
)Accumulated other comprehensive income


3,617



1,666Total stockholders equity


106,075



50,720TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
129,448


$
87,490    F-3




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF OPERATIONS  Years Ended March 31,2008


2007


2006(In thousands, except share and per share amounts)Revenues

$
34,032


$
31,556


$
12,357Cost of revenues


26,266



19,703



9,412Gross Profit


7,766



11,853



2,945OPERATING EXPENSES:Research and development


18,586



11,551



3,493Sales and marketing


9,997



5,746



1,299General and administrative


27,387



25,922



11,069Purchased in process research and development










39,700Total operating expenses


55,970



43,219



55,561Operating loss


(48,204
)


(31,366
)


(52,616
)Interest expense


(531
)


(596
)


(309
)Interest income


2,071



407



92Other income (expense), net


519



879



(38
)Loss from continuing operations before taxes


(46,145
)


(30,676
)


(52,871
)Benefit from (provision for) income taxes


28



(107
)


(95
)Loss from continuing operations


(46,117
)


(30,783
)


(52,966
)Income (loss) from discontinued operations, net of taxes


10,787



(6,739
)


2,085Net loss


(35,330
)


(37,522
)


(50,881
)Preferred stock dividend






(104
)


(97
)Net loss applicable to common stockholders

$
(35,330
)

$
(37,626
)

$
(50,978
)(Loss) income per basic and diluted share:Continuing operations

$
(2.42
)

$
(2.18
)

$
(5.92
)Discontinued operations

$
0.57


$
(0.47
)

$
0.23Net loss

$
(1.85
)

$
(2.65
)

$
(5.69
)Weighted average shares:Basic and diluted


19,081



14,186



8,953    F-4




---



##### Table of Contents






CLINICAL
    DATA, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
    FOR THE YEARS ENDED MARCH 31, 2008, 2007 AND 2006
    (In thousands)  Common





(Accumulated








AccumulatedPreferred


Preferred


Common


Stock


Additional


Deficit)








OtherStock


Stock Par


Stock


Par


Paid-in


Retained


Treasury


Deferred


Comprehensive





ComprehensiveShares


Value


Shares


Value


Capital


Earnings


Stock


Compensation


Income


Total


Loss(In thousands)BALANCE at April 1, 2005





$




6,608


$
66


$
16,973


$
5,344


$
(47
)

$



$
1,473


$
23,809Series A preferred stock issued in connection with
    acquisitions


484



5











9,512



















9,517Conversion of Series A preferred stock into common stock


(250
)


(3
)


375



4



(1
)


















Equity issued in connection with acquisitions










4,560



46



62,488











(572
)






61,962Exercise of stock options










63



1



330



















331Private placement of equity, net of transaction costs of $83










921



9



11,927



















11,936Exercise of stock warrants










229



2



3,587



















3,589Issuance of restricted stock










24







286











(143
)






143Dividends paid on common stock






















(176
)














(176
)Dividends accrued on preferred stock






















(97
)














(97
)Amortization of deferred compensation






























397







397Translation adjustment


































(741
)


(741
)

$
(741
)Net loss






















(50,881
)














(50,881
)


(50,881
)Total comprehensive loss









































$
(51,622
)BALANCE at March 31, 2006


234



2



12,780



128



105,102



(45,810
)


(47
)


(318
)


732



59,789Conversion of Series A preferred stock into common stock


(50
)






75



1



(1
)


















Adoption of FAS 123R


















(318
)










318







Exercise of stock options










153



1



574



















575Private placement of equity, net of transaction costs of $63










1,560



16



16,840



















16,856Exercise of stock warrants










286



3



3,702



















3,705Dividends accrued on preferred stock






















(104
)














(104
)Common stock issued for Merck license










154



1



1,622



















1,623Purchase of treasury stock


























(234
)










(234
)Retirement of treasury stock










(24
)






(234
)






234











Issuance of warrants


















120



















120Equity issued in connection with acquisitions










23







347



















347Stock-based compensation










26







4,631



















4,631Translation adjustment


































934



934


$
934Net loss






















(37,522
)














(37,522
)


(37,522
)Total comprehensive loss









































$
(36,588
)BALANCE at March 31, 2007


184



2



15,033



150



132,385



(83,436
)


(47
)






1,666



50,720Conversion of Series A preferred stock into common stock


(184
)


(2
)


276



3



(1
)


















Exercise of stock options










199



2



1,751



















1,753Exercise of stock warrants










162



2



2,561



















2,563Issuance of common stock, net of transaction costs of
    $4.5 million










5,175



52



71,312



















71,364Common stock issued for Merck license










135



1



3,618



















3,619Conversion of convertible debt










140



2



2,335



















2,337Stock-based compensation










31







6,985



















6,985Other


















113



















113Translation adjustment


































2,451



2,451


$
2,451Unrealized loss on marketable securities


































(500
)


(500
)


(500
)Net loss






















(35,330
)














(35,330
)


(35,330
)Total comprehensive loss









































$
(33,379
)BALANCE at March 31, 2008





$




21,151


$
212


$
221,059


$
(118,766
)

$
(47
)

$



$
3,617


$
106,075    F-5




---



##### Table of Contents





CLINICAL
    DATA, INC. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Years Ended March 31,2008


2007


2006(In thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(35,330
)

$
(37,522
)

$
(50,881
)Less (income) loss from discontinued operations


(10,787
)


6,739



(2,085
)Loss from continuing operations


(46,117
)


(30,783
)


(52,966
)Adjustments to reconcile loss from continuing operations to net
    cash used in operating activities:Depreciation and amortization


6,602



9,443



4,406Purchased research and development










39,700Impairment of intangible assets






2,583



Stock-based compensation including Merck license


10,555



6,109



540Equipment received in exchange for revenue


(333
)






Gain on sale of investment






(890
)


(Gain) loss on sales of equipment


(113
)


(41
)


26Deferred taxes










(54
)Changes in current assets and liabilities, net of acquired
    assets and liabilities:Accounts receivable


(199
)


1,382



754Prepaid expenses and other current assets


1,082



1,852



1,360Other assets


(93
)


608



162Accounts payable and accrued liabilities


2,509



(3,690
)


(1,480
)Customer advances and deferred revenue


(532
)


(505
)


746Other liabilities


(586
)


(1,168
)


53Cash used in continuing operations


(27,225
)


(15,100
)


(6,753
)Cash provided by discontinued operations


2,693



2,226



571Net cash used in operating activities


(24,532
)


(12,874
)


(6,182
)CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of equipment


(2,687
)


(954
)


(450
)Proceeds from sale of investment






1,000



Proceeds from sales of equipment


218



393



78Purchases of marketable securities


(15,275
)






Proceeds from sale of marketable securities


2,050







Cash used in business combinations, net of cash acquired


(11,997
)


(222
)


(535
)Cash (used in) provided by investing activities 
    continuing operations


(27,691
)


217



(907
)Cash provided by (used in) investing activities 
    discontinued operations


22,501



536



(537
)Net cash (used in) provided by investing activities


(5,190
)


753



(1,444
)    F-6




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended March 31,2008


2007


2006(In thousands)CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings under other debt arrangements






121



121Payment on debt and capital leases


(2,002
)


(2,359
)


(6,961
)Proceeds from the sale of common stock and warrants, net of
    transaction costs


71,364



20,561



15,525Purchase of treasury shares






(234
)


Exercise of stock options and warrants


4,316



575



331Stockholder dividends










(231
)Cash provided by financing activities  continuing
    operations


73,678



18,664



8,785Cash (used in) provided by financing activities 
    discontinued operations


(3,694
)


(217
)


2,812Net cash provided by financing activities


69,984



18,447



11,597EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


422



520



(917
)NET INCREASE IN CASH AND CASH EQUIVALENTS


40,684



6,846



3,054CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR


14,071



7,225



4,171CASH AND CASH EQUIVALENTS, END OF YEAR

$
54,755


$
14,071


$
7,225Supplemental disclosure of cash flow information:Cash paid during the year for:Interest

$
365


$
916


$
341Income taxes

$
946


$
865


$
1,331Non-cash transactions:Equipment acquired through capital leases

$
2,723


$
279


$
Equity issued to acquired technology rights

$
3,619


$
1,623


$
Issuance of common stock upon note conversion

$
2,337


$



$
Warrants issued in connection with amendment of convertible note
    payable

$



$
120


$
Accrued preferred stock dividends

$



$
146


$
42Equity issued in business acquisitions

$



$
219


$
71,479Debt issued in business acquisitions

$



$



$
607Accrued acquisition costs

$



$



$
60     F-7




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MARCH 31, 2008, 2007 AND 2006 (1)
    Nature of
    Business and Basis of Presentation  Nature
    of Business
  ® ®
        Basis
    of Presentation
       F-8




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (2)
    Significant
    Accounting Policies  Principles
    of Consolidation
    Use
    of Estimates
    Cash
    and Cash Equivalents
    Marketable
    Securities
  Accounting for Certain Investments in
    Debt and Equity Securities
    Accounts
    Receivable
   F-9




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007


2006(In thousands)Allowance for uncollectible accounts  beginning of
    year

$
664


$
702


$
Provisions


226



96



702Less: deductions


(85
)


(134
)


Allowance for uncollectible accounts  end of year

$
805


$
664


$
702   Depreciation
    and Amortization
    Asset Classification

Useful LivesLaboratory equipment

2-7 yearsLeasehold improvements

Lesser of useful life or lease termComputer equipment

3-7 yearsFurniture and fixtures

2-7 years     Goodwill
    and Intangibles
    Goodwill and other
    Intangible Assets
  Accounting for the
    Impairment or Disposal of Long-Lived Assets
  Revenue
    Recognition
   F-10




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Research
    and Development Costs
    Income
    Taxes
    Accounting for Uncertainty
    in Income Taxes
  Comprehensive
    Loss
   F-11




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Foreign
    Currency
    Loss
    per Share
    3-for-2
    2008


2007


2006(In thousands)Common stock options


2,539



2,010



918Common stock warrants


1,011



1,183



678Convertible note payable






134



142Restricted common stock






12



24Convertible Series A preferred stock






276



351Total


3,550



3,615



2,113   Equity-Based
    Compensation
  Share-Based Payment Accounting for Stock Issued to
    Employees, Accounting
    for Stock-Based Compensation
 F-12




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Concentration
    of Credit Risk
    Fair
    Value of Financial Instruments
    Recent
    Accounting Pronouncements
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities
  No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or
    Services to be Used in Future Research and Development
    Activities No. 07-3). No. 07-3 No. 07-3 states No. 07-3 No. 07-3
  No. 07-1, Accounting for Collaborative Arrangements, No. 07-1). No. 07-1 No. 07-1 No. 07-1
  Business Combinations
 F-13




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (3)
    Discontinued
    Operations    Vital
    Diagnostics
    CDSS
    Vital
    Scientific
      Electa
    Lab
   F-14




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007


2006(In thousands)Revenue

$
21,456


$
56,937


$
56,391Income from Operations Before Disposal:Income before taxes and minority interest

$
4,049


$
1,707


$
4,187Minority interest






(9
)


(19
)Income before taxes


4,049



1,698



4,168Income taxes


(1,163
)


(1,259
)


(2,083
)Income from discontinued operations, net of taxes


2,886



439



2,085Disposal:Income (loss) on disposal before taxes


7,901



(7,178
)


Income tax (expense) benefit










Income (loss) on disposal, net of taxes


7,901



(7,178
)


Income (loss) from discontinued operations, net of tax

$
10,787


$
(6,739
)

$
2,085     (In thousands)Accounts receivable, net

$
9,559Inventory, net


12,003Prepaid expenses and other current assets


770Property, plant and equipment, net


3,386Goodwill


1,153Intangible assets, net


906Other assets


282Assets of discontinued operations

$
28,059Revolving credit facility

$
3,970Current portion of capital leases and long-term debt


519Accounts payable


4,917Other accrued expenses


3,566Customer advances


1,235Other current liabilities


727Capital leases and long-term debt, net of current portion


922Other long-term liabilities


406Liabilities of discontinued operations

$
16,262   (4)
    Business
    Combinations  Genaissance
    Pharmaceuticals,
    Inc.
   F-15




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          (In thousands)Value of the Companys common stock

$
45,570Value of the Companys Series A preferred stock


9,517Fair value of stock options and warrants


2,846Transaction costs


1,248Less: cash acquired


(978
)$
58,203   Icoria,
    Inc.
          (In thousands)Value of the Companys common stock

$
11,329Fair value of stock options and warrants


308Transaction costs


367Less: cash acquired


(1,901
)$
10,103   Genome
    Express
    S.A.
   F-16




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (In thousands)Value of the Companys common stock

$
2,485Value of the Companys contingently issuable common stock


361Transaction costs


490Less: cash acquired


(9
)$
3,327   Epidauros
    Biotechnologie AG
      (In thousands)Cash

$
11,883Transaction costs


337Less: cash acquired


(223
)$
11,997     (In thousands)Purchase Price Allocation:Accounts receivable

$
198Inventories


69Other current assets


369Equipment


143Intangible assets  Completed Technology (8 year
    life)


3,965Accounts payable


(148
)Bank note


(1,390
)Accrued expenses and other current liabilities


(884
)Deferred revenue


(669
)Goodwill


10,344Total purchase price

$
11,997    F-17




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    In-Process
    Research and Development
    project-by-project
      
    Clozapine:  In December 2004, Genaissance
    reported the discovery of genetic markers that are believed to
    predict who is at risk of developing clozapine-induced
    agranulocytosis, a life threatening decrease of white blood
    cells that requires frequent blood testing of patients.
    Genaissance was in the process of organizing another clinical
    trial to further support its findings. This IPRD project was
    estimated to be 60% complete as of the acquisition date. The
    estimated fair value of this IPRD project was $17.9 million
    as of October 6, 2005.
    Vilazodone:  In September 2004, Genaissance
    acquired an exclusive license from Merck KGaA, now Merck-Serono
    or Merck, to develop and commercialize vilazodone, which is
    under development for the treatment of depression. Genaissance
    was attempting to identify the genetic biomarkers that identify
    patients who are more likely to respond to vilazodone and
    develop a pharmacogenetic test. This project was estimated to be
    25% complete as of the acquisition date. The estimated fair
    value of this IPRD project was $18.4 million as of
    October 6, 2005.
    Acute liver injury and liver-disease-related research projects:
    Icoria had several research projects underway to identify
    biomarkers. These projects were estimated to be 75% complete
    relative to Icorias role. The estimated fair value of
    these IPRD projects was $3.4 million as of
    December 20, 2005.   F-18




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (5)  Property,
    Plant and Equipment
    2008


2007(In thousands)Laboratory equipment

$
7,251


$
3,413Leasehold improvements


3,466



3,076Computer equipment and software


2,467



1,899Furniture and fixtures


676



37013,860



8,758Less: accumulated depreciation and amortization


(4,691
)


(3,447
)$
9,169


$
5,311     (6)
    Goodwill
    and Intangible Assets    (In thousands)Balance at April 1, 2006

$
20,044Purchase Price Adjustments, net


(1,071
)Balance at March 31, 2007


18,973Adoption of FIN 48


(1,593
)Acquisition of Epidauros


10,344Effect of foreign currency translation


3,356Balance at March 31, 2008

$
31,080    F-19




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Goodwill and Other
    Intangible Assets,
    AverageUsefulLife


2008


2007(In thousands)Completed technology


5.6 years


$
13,824


$
9,210Customer relationships


6.7 years



10,800



10,800Other


3.3 years



670



66625,294



20,676Less: accumulated amortization






(13,177
)


(8,920
)Intangible assets, net





$
12,117


$
11,756       (7)
    Accrued
    Expenses    2008


2007(In thousands)Payroll and payroll-related expenses

$
4,095


$
2,090Commissions, royalties and license fees


1,013



1,002Other


2,191



2,359$
7,299


$
5,451  F-20




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (8)
    Debt  Long-term
    Debt
    2008


2007(In thousands)Notes payable, bearing interest at 6.5%, with maturities between
    February 2009 and May 2011 and secured by certain of
    PGxHealths leasehold improvements

$
2,556


$
3,033Advances from French government under a program to stimulate
    national innovation, with final maturity on September 2010


1,274



1,123Euro note payable, bearing interest at 6.5%, with maturity on
    June 2009


948



Convertible note payable, bearing interest at 10.75% with
    maturity on October 19, 2010






2,570Euro note payable, bearing interest at 5.5%, with maturity on
    September 2007






166Other note payable






184,778



6,910Less: current portion


(1,701
)


(1,404
)$
3,077


$
5,506       2009

$
1,7012010


1,2132011


1,6352012


2292013


After


Total

$
4,778   (9)
    Commitments
    and Contingencies  Litigation
   F-21




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##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Contractual
    Commitments and Commercial Obligations
    Operating


CapitalYear Ending March 31,

Leases


Leases2009

$
2,501


$
1,0322010


1,887



8962011


820



7512012


589



4682013


582



Thereafter






Total

$
6,379



3,147Less: amount representing interest






(349
)Total principal obligations






2,798Less: current portion






(861
)Long-term capital lease





$
1,937       Vilazodone
    Commitments
    (10)
    Equity  Preferred
    Stock
   F-22




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Common
    Stock
      3-for-2
               F-23




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##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (11)
    Income
    Taxes        Jurisdiction

Tax YearsUnited States


2005-2008United Kingdom


2005-2008France


2005-2008Germany


2003-2008     2008


2007


2006(In thousands)United States

$
(54,335
)

$
(30,933
)

$
(52,546
)Foreign


8,190



257



(325
)$
(46,145
)

$
(30,676
)

$
(52,871
)     2008


2007


2006(In thousands)Current:Federal

$
(15
)

$



$
(247
)Foreign


(13
)


107



206Total Current


(28
)


107



(41
)Deferred:Federal






(418
)


(63
)Foreign










Change in valuation allowance






418



9Total Deferred










(54
)$
(28
)

$
107


$
(95
)  F-24




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##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007


2006(In thousands)Benefits from taxes at statutory rate

$
(15,689
)

$
(10,430
)

$
(17,976
)Losses not benefited


15,836



9,849



3,898Prior losses utilized


(128
)


(224
)


Change in valuation reserves






418



9Write-off of purchased research and development










13,498Other


(47
)


494



476$
(28
)

$
107


$
(95
)     2008


2007(In thousands)Deferred tax assets:Net operating losses

$
74,097


$
41,055Capitalized research costs


8,332



10,287Stock-based compensation, severance and accrued payroll


2,807



1,157Fixed assets


2,070



2,185Tax credits


778



1,787Other reserves and accrued liabilities


5,676



2,678Total assets


93,760



59,149Deferred tax liabilities:Purchased intangibles


(4,290
)


(4,190
)Other


(17
)


Total liabilities


4,307



(4,190
)Net deferred tax asset


89,453



54,959Less: valuation allowance


(89,453
)


(54,959
)$



$
   Accounting for Income Taxes
   F-25




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##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (12)
    Stock
    Incentive Plans and Equity Based Compensation          WeightedWeighted


AverageAverage


Remaining


AggregateNumber of


Exercise


Contractual


IntrinsicShares


Price


Term


Value(In thousands, except for per share amounts)Outstanding April 1, 2007


2,010


$
12.24Granted


908



17.71Forfeited


(180
)


13.32Exercised


(199
)


8.80Outstanding March 31, 2008


2,539


$
14.53



8.3 years


$
13,282Exercisable March 31, 2008


936


$
14.19



7.2 years


$
6,039Exercisable March 31, 2007


640


$
14.29Available for future grants March 31, 2008


538        F-26




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##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2008


2007(In thousands)Cost of revenues

$
349


$
146Sales and marketing


905



533Research and development


731



99General and administrative


4,951



3,719Pre-tax stock based compensation expense

$
6,936


$
4,497Income tax benefits






Stock based compensation expense, net

$
6,936


$
4,497           2008

2007

2006Weighted-average interest rate

2.75 - 4.75%

4.00 - 5.18%

3.88-4.75%Expected dividend yield

0.00%

0.00%

0.00%Expected lives

6 years

5 - 6 years

3 - 5 yearsExpected volatility

71 - 79%

73 - 82%

32 - 43%Weighted average grant date fair value

$12.30

$6.89

$20.11    F-27




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    OutstandingWeighted





ExercisableAverage


Weighted





WeightedNumber of


Remaining


Average


Number of


AverageShares


Contractual Life


Exercise


Shares


ExercisePrice Range

(Thousands)


(Years)


Price


(Thousands)


Price$3.21  -   5.23


27



1.02


$
3.51



27


$
3.51$7.33  -   9.87


329



8.09



9.45



128



9.35$10.31 -  12.61


1,196



7.82



11.99



671



12.09$13.23 -  14.99


460



9.10



14.74



25



14.22$15.00 -  18.71


158



9.15



16.73



8



16.62$20.00 -  23.62


324



9.55



22.36



34



22.86$26.20 -  27.49


23



5.61



26.29



23



26.29$30.77 -  35.79


6



5.70



34.82



5



34.73$37.75 -  42.05


5



5.88



39.31



4



39.30$44.92 -  46.97


2



3.65



46.56



2



46.56$52.40 - 3,024.99


9



2.48



175.40



9



175.422,539



8.27


$
14.53



936


$
14.19   (13)
    Defined
    Contribution Plans    (14)
    Segment
    Information       F-28




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Disclosures about Segments of an
    Enterprise and Related Information
      2008


2007


2006(In thousands)Revenues:PGxHealth

$
5,107


$
3,828


$
1,660Cogenics


28,925



27,728



10,697Total Revenues


34,032



31,556



12,357Cost of revenues


26,266



19,703



9,412Research and development expenses:PGxHealth


16,889



9,265



2,797Cogenics


1,697



2,286



696Total research and development expenses


18,586



11,551



3,493Other operating expenses


37,384



31,668



52,068Operating loss

$
(48,204
)

$
(31,366
)

$
(52,616
)  F-29




---



##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    North America

Europe

All Other

Consolidated(In thousands)Revenues2008

$
22,423


$
11,342


$
267


$
34,0322007


22,717



8,288



551



31,5562006


9,354



2,991



12



12,357Property Plant & Equipment, net2008

$
6,611


$
2,558


$



$
9,1692007


4,421



890







5,311Goodwill & Intangibles, net2008

$
19,466


$
23,731


$



$
43,1972007


24,952



5,777







30,729     (15)
    Related
    Party Transactions           F-30




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##### Table of Contents



CLINICAL
    DATA, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Concluded)
      (16)
    Quarterly
    Summarized Financial Information (Unaudited)  First


Second


Third


FourthQuarter 2008


Quarter 2008


Quarter 2008


Quarter 2008(In thousands, except per share amounts)Total revenues

$
6,627


$
9,071


$
10,509


$
7,825Gross profit


1,394



1,692



3,196



1,484Operating loss


(7,702
)


(10,544
)


(14,486
)


(15,472
)Loss from continuing operations


(7,723
)


(9,795
)


(13,869
)


(14,730
)Income (loss) from discontinued operations


2,310



(1,087
)


9,521



43Net loss


(5,413
)


(10,882
)


(4,348
)


(14,687
)Net loss per basic and diluted share:Continuing operations

$
(0.51
)

$
(0.51
)

$
(0.66
)

$
(0.70
)Discontinued operations

$
0.15


$
(0.06
)

$
0.45


$
0.00   First


Second


Third


FourthQuarter 2007


Quarter 2007


Quarter 2007


Quarter 2007(1,2)(In thousands, except per share amounts)Total revenues

$
9,202


$
7,262


$
7,999


$
7,093Gross profit


3,956



2,446



3,014



2,437Operating loss


(6,744
)


(8,295
)


(6,832
)


(9,495
)Loss from continuing operations


(6,724
)


(8,177
)


(6,244
)


(9,638
)Income (loss) from discontinued operations


539



57



(28
)


(7,307
)Net loss


(6,185
)


(8,120
)


(6,272
)


(17,049
)Net loss per basic and diluted share:Continuing operations

$
(0.52
)

$
(0.51
)

$
(0.43
)

$
(0.65
)Discontinued operations

$
0.04


$
0.00


$
(0.00
)

$
(0.49
)     (1)
    
    Loss from continuing operations includes a $2.6 million
    impairment charge relating to intangible assets at Icoria.(2)
    
    The loss from discontinued operations includes a disposal loss
    of $7.0 million related to the reduction of the carrying
    value of CDSS to fair value. F-31




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description2
.1

Agreement and Plan of Merger, dated as of June 20, 2005, among
    Clinical Data, Safari Acquisition Corporation and Genaissance
    Pharmaceuticals, Inc. Filed as Exhibit 2.1 to the Companys
    Current Report on Form 8-K, as filed with the Commission on June
    28, 2005, and incorporated herein by reference.2
.2

First Amendment to Agreement and Plan of Merger, dated as of
    July 28, 2005, among Clinical Data, Safari Acquisition
    Corporation and Genaissance Pharmaceuticals, Inc. Filed as
    Exhibit 2.1 to the Companys Current Report on Form 8-K, as
    filed with the Commission on August 2, 2005, and incorporated
    herein by reference.2
.3

Agreement and Plan of Merger, dated as of September 19, 2005,
    among Clinical Data, Inc., Irides Acquisition Corporation and
    Icoria, Inc. Filed as Exhibit 2.1 to the Companys Current
    Report on Form 8-K, as filed with the Commission on September
    22, 2005, and incorporated herein by reference.2
.4

Share Purchase Agreement, dated as of August 23, 2007, among
    Clinical Data, Inc., Clinical Data B.V, and the stockholders of
    Epidauros Biotechnologie AG. Filed as Exhibit 99.1 to the
    Companys Current Report on Form 8-K, as filed with the
    Commission on August 29, 2007, and incorporated herein by
    reference.2
.5

Stock Purchase Agreement, dated as of October 25, 2007, among
    Clinical Data, Inc., Clinical Data B.V, Financiere Elitech
    S.A.S. and Elitech Holding B.V. Filed as Exhibit 99.2 to the
    Companys Current Report on Form 8-K, as filed with the
    Commission on October 30, 2007, and incorporated herein by
    reference.3
.1

Certificate of Elimination of the Series A Convertible Preferred
    Stock filed with the Secretary of State of the State of Delaware
    on June 11, 2008. Filed herewith.3
.2

Restated Certificate of Incorporation filed with the Secretary
    of State of the State of Delaware on June 11, 2008. Filed
    herewith.3
.3

Amended and Restated By-laws of the Company, as of June 20,
    2005. Filed as Exhibit 3.1 to the Companys Current Report
    on Form 8-K, filed with the Commission on June 24, 2005, and
    incorporated herein by reference.4
.1

Specimen Common Stock Certificate. Filed as Exhibit 4.1 to the
    Companys Registration Statement on Form S-1 (File No.
    2-82494), as filed with the Commission on March 17, 1983, and
    incorporated herein by reference.10
.1

2002 Incentive and Stock Plan. Filed as Exhibit A to the
    Companys Proxy Statement on Schedule 14A filed with the
    Commission on July 29, 2002, and incorporated herein by
    reference.10
.2

Form of Incentive Stock Option Certificate under the 2002 Equity
    Incentive and Stock Plan for all U.S. employees, including
    executive officers. Filed as Exhibit 10.5 to the Companys
    Quarterly Report on Form 10-Q, filed with the Commission on
    November 14, 2005, and incorporated herein by reference.10
.3

Form of Non-Statutory Stock Option Certificate under the 2002
    Incentive and Stock Plan for all U.S. employees, including
    executive officers. Filed as Exhibit 10.6 to the Companys
    Quarterly Report on Form 10-Q, filed with the Commission on
    November 14, 2005, and incorporated herein by reference.10
.4

Amended and Restated 2005 Equity Incentive Plan. Filed as
    Exhibit 10.1 to the Companys Quarterly Report on Form
    10-Q, filed with the Commission on November 14, 2007, and
    incorporated herein by reference.10
.5

Form of Stock Option Grant Notice and Stock Option Agreement
    under the Companys 2005 Equity Incentive Plan for all U.S.
    employees, including executive officers, and directors. Filed as
    Exhibit 10.6 to the Companys Annual Report on Form 10-K,
    filed with the Commission on June 29, 2006, and incorporated
    herein by reference.10
.6*

Executive Employment Agreement of Andrew J. Fromkin effective as
    of May 12, 2006. Filed as Exhibit 99.2 to the Companys
    Current Report on Form 8-K/A, filed with the Commission on
    November 13, 2006, and incorporated herein by reference.10
.7*

Executive Employment Agreement of Caesar J. Belbel effective as
    of May 12, 2006. Filed as Exhibit 99.3 to the Companys
    Current Report on Form 8-K/A, filed with the Commission on
    November 13, 2006, and incorporated herein by reference.10
.8*

Executive Employment Agreement of C. Evan Ballantyne effective
    as of June 16, 2008. Filed herewith.10
.9*

Form of Amended and Restated Indemnification Agreement between
    the Company and Arthur Malman. Filed as Exhibit 99.1 to the
    Companys Current Report on Form 8-K, filed with the
    Commission on July 11, 2005, and incorporated herein by
    reference.10
.10*

Form of Indemnification Agreement between the Company and
    certain executive officers and directors of the Company. Filed
    as Exhibit 99.2 to the Companys Current Report on Form
    8-K, filed with the Commission on July 11, 2005, and
    incorporated herein by reference.




---



##### Table of Contents



ExhibitNumber

Description10
.11*

Amended and Restated Executive Employment Agreement of Carol R.
    Reed, M.D. effective as of June 16, 2008. Filed herewith.10
.12

Form of Securities Purchase Agreement among the Company and the
    Investors listed therein, dated as of November 17, 2005. Filed
    as Exhibit 99.1 to the Companys Current Report on Form
    8-K, filed with the Commission on November 21, 2005, and
    incorporated herein by reference.10
.13

Form of Common Stock Purchase Warrant issued in connection with
    the Securities Purchase Agreement, dated as of November 17,
    2005. Filed as Exhibit 99.2 to the Companys Current Report
    on Form 8-K, filed with the Commission on November 21, 2005, and
    incorporated herein by reference.10
.14

Form of Registration Rights Agreement among the Company and the
    Investors listed therein, dated as of November 17, 2005. Filed
    as Exhibit 99.3 to the Companys Current Report on Form
    8-K, filed with the Commission on November 21, 2005, and
    incorporated herein by reference.10
.15

Form of Two Year Common Stock Purchase Warrant, dated as of
    August 31, 2006. Filed as Exhibit 99.8 to the Companys
    Current Report on Form 8-K, filed with the Commission on
    September 7, 2006, and incorporated herein by reference.10
.16

Form of Securities Purchase Agreement among the Company and the
    Investors, dated as of June 13, 2006. Filed as Exhibit 99.1 to
    the Companys Current Report on Form 8-K, filed with the
    Commission on June 15, 2006, and incorporated herein by
    reference.10
.17

Form of Common Stock Purchase Warrant issued in connection with
    the Securities Purchase Agreement, dated as of June 13, 2006.
    Filed as Exhibit 99.2 to the Companys Current Report on
    Form 8-K, filed with the Commission on June 15, 2006, and
    incorporated herein by reference.10
.18

Form of Registration Rights Agreement among the Company and the
    Investors, dated as of June 13, 2006. Filed as Exhibit 99.3 to
    the Companys Current Report on Form 8-K, filed with the
    Commission on June 15, 2006, and incorporated herein by
    reference.10
.19

License, Development and Cooperation Agreement by and between
    Merck KGaA and Genaissance Pharmaceuticals, Inc., dated
    September 22, 2004. Filed as Exhibit 99.1 to Genaissances
    Current Report on Form 8-K/A, filed with the Commission on
    October 13, 2004, and incorporated herein by reference.10
.20

Selective Share Buy-Back Agreement among Vital Diagnostics Pty.
    Ltd., Clinical Data, B.V., and Clinical Data, Inc. (with respect
    to Sections 4.4, 6 and 7 only) dated November 13, 2006. Filed as
    Exhibit 10.1 to the Companys Quarterly Report on Form
    10-Q, filed with the Commission on November 14, 2006, and
    incorporated herein by reference.14
.1

Code of Business Conduct and Ethics. Filed as Exhibit 14.1 to
    the Companys Annual Report on Form 10-K, filed with the
    Commission on June 29, 2006, and incorporated herein by
    reference.21
.1

Subsidiaries of the Company. Filed herewith.23
.1

Consent of Deloitte & Touche LLP, an independent registered
    public accounting firm. Filed herewith.31
.1

Certification of Chief Executive Officer Pursuant to
    §240.13a-14 or §240.15d-14 of the Securities Exchange
    Act of 1934, as amended. Filed herewith.31
.2

Certification of Chief Financial Officer Pursuant to
    §240.13a-14 or §240.15d-14 of the Securities Exchange
    Act of 1934, as amended. Filed herewith.32
.1

Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350. Filed herewith.     *
    
    Indicates a contract with management.
    
    Confidential treatment requested as to certain portions, which
    portions have been filed separately with the Commission.