##### 



---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

|           |  |                                                                                                                                      
|---------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                                                      
|[X]        |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                              
|           |  | For the quarterly period ended June 30, 2003                                                                                         
|           |  |                                                                                                                                      
|           |  | OR                                                                                                                                   
|           |  |                                                                                                                                      
|[   ]      |  | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from______to______

Commission File Number 0-23317

---

GENE LOGIC INC.(Exact name of registrant as specified in its charter)

---

|                                |  |                    
|------------------------------- |  | -------------------
|Delaware                        |  | 06-1411336         
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

708 Quince Orchard Road
Gaithersburg, Maryland 20878
(Address of principal executive offices)(301) 987-1700
(Registrants phone number, including area code)



---

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES    ý    NO    q

The number of shares outstanding of the Registrants Common Stock, $.01
par value, was 31,122,989 as of July 31, 2003.



---

---





---



##### 



GENE LOGIC INC.

TABLE OF CONTENTS

|                                                                                                |  |   
|----------------------------------------------------------------------------------------------- |  | --
|PART I    FINANCIAL INFORMATION                                                                 |  |   
|                                                                                                |  |   
|Item 1.Financial Statements                                                                     |  |   
|                                                                                                |  |   
|Consolidated Balance Sheets at June 30, 2003 and December 31, 2002                              |  | 3 
|Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2003 and 2002 |  | 4 
|Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002           |  | 5 
|Notes to Consolidated Financial Statements                                                      |  | 6 
|                                                                                                |  |   
|Item 2.Managements Discussion and Analysis of Results of Operations and Financial Condition    |  | 11
|                                                                                                |  |   
|Item 3.Quantitative and Qualitative Disclosure About Market Risk                                |  | 16
|                                                                                                |  |   
|Item 4.Controls and Procedures                                                                  |  | 16
|                                                                                                |  |   
|PART II    OTHER INFORMATION                                                                    |  |   
|                                                                                                |  |   
|Item 1.Legal Proceedings                                                                        |  | 17
|                                                                                                |  |   
|Item 2.Changes in Securities and Use of Proceeds                                                |  | 17
|                                                                                                |  |   
|Item 3.Defaults Upon Senior Securities                                                          |  | 17
|                                                                                                |  |   
|Item 4.Submission of Matters to a Vote of Security Holders                                      |  | 18
|                                                                                                |  |   
|Item 5.Other Information                                                                        |  | 18
|                                                                                                |  |   
|Item 6.Exhibits and Reports on Form 8-K                                                         |  | 24
|                                                                                                |  |   
|Signatures                                                                                      |  | 25

2.



---



##### 



PART I    FINANCIAL INFORMATION

Item 1. Financial Statements

GENE LOGIC INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |              |          |         |        | 
|------------------------------------------------- | ----------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------------------------ | -------- | ----------- | ------ | ------------ | -------- | ------- | ------ | 
|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          | June 30,    |        | December 31,
|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          | 2003        |        | 2002        
|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |             
|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          | (Unaudited) |        |              |          |        
|                                                  |                                                       |                                                                                                                                                                             |                                            | ASSETS                               |          |             |        |              |          |         |        | 
|Current assets:                                   |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |             
|                                                  | Cash and cash equivalents                             |                                                                                                                                                                             | $                                          | 71,195                               |          |             | $      | 106,957      |         
|                                                  | Marketable securities available-for-sale              |                                                                                                                                                                             |                                            | 47,865                               |          |             |        | 60,145       |         
|                                                  | Accounts receivable, net of allowance of $370 in 2003 |                                                                                                                                                                             |                                            | 9,009                                |          |             |        | 4,793        |         
|                                                  | Unbilled services, net of allowance of $41 in 2003    |                                                                                                                                                                             |                                            | 3,471                                |          |             |        |             |         
|                                                  | Inventory, net                                        |                                                                                                                                                                             |                                            | 6,069                                |          |             |        | 8,936        |         
|                                                  | Prepaid expenses                                      |                                                                                                                                                                             |                                            | 2,397                                |          |             |        | 1,610        |         
|                                                  | Other current assets                                  |                                                                                                                                                                             |                                            | 890                                  |          |             |        | 1,117        |         
|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |              |         
|                                                  |                                                       |                                                                                                                                                                             | Total current assets                       |                                      |          | 140,896     |        |              |          | 183,558 |       
|Property and equipment, net                       |                                                       |                                                                                                                                                                             | 23,430                                     |                                      |          |             | 14,770 |             
|Long-term investments                             |                                                       |                                                                                                                                                                             | 5,268                                      |                                      |          |             | 5,268  |             
|Notes receivable from employees                   |                                                       |                                                                                                                                                                             | 51                                         |                                      |          |             | 50     |             
|Goodwill                                          |                                                       |                                                                                                                                                                             | 45,707                                     |                                      |          |             | 2,677  |             
|Intangibles, net                                  |                                                       |                                                                                                                                                                             | 22,170                                     |                                      |          |             | 21,094 |             
|Other assets                                      |                                                       |                                                                                                                                                                             | 75                                         |                                      |          |             | 43     |             
|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |              |         
|                                                  |                                                       |                                                                                                                                                                             | Total assets                               |                                      | $        | 237,597     |        |              | $        | 227,460 |       
|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |              |         
|                                                  |                                                       |                                                                                                                                                                             |                                            | LIABILITIES AND STOCKHOLDERS EQUITY |          |             |        |              |          |         |        | 
|Current liabilities:                              |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |             
|                                                  | Accounts payable                                      |                                                                                                                                                                             | $                                          | 5,549                                |          |             | $      | 8,225        |         
|                                                  | Accrued expenses                                      |                                                                                                                                                                             |                                            | 7,365                                |          |             |        | 5,187        |         
|                                                  | Current portion of capital lease obligations          |                                                                                                                                                                             |                                            | 119                                  |          |             |        |             |         
|                                                  | Current portion of long-term debt                     |                                                                                                                                                                             |                                            | 41                                   |          |             |        | 40           |         
|                                                  | Deferred revenue                                      |                                                                                                                                                                             |                                            | 6,791                                |          |             |        | 6,425        |         
|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |              |         
|                                                  |                                                       |                                                                                                                                                                             |                                            | Total current liabilities            |          |             | 19,865 |              |          |         | 19,877 | 
|Deferred revenue                                  |                                                       |                                                                                                                                                                             | 860                                        |                                      |          |             | 1,363  |             
|Capital lease obligations, net of current portion |                                                       |                                                                                                                                                                             | 403                                        |                                      |          |             |       |             
|Long-term debt, net of current portion            |                                                       |                                                                                                                                                                             | 689                                        |                                      |          |             | 710    |             
|Other noncurrent liabilities                      |                                                       |                                                                                                                                                                             | 1,523                                      |                                      |          |             | 1,072  |             
|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |              |         
|                                                  |                                                       |                                                                                                                                                                             |                                            | Total liabilities                    |          |             | 23,340 |              |          |         | 23,022 | 
|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |              |         
|Commitments and contingencies                     |                                                       |                                                                                                                                                                             |                                           |                                      |          |             |       |             
|Stockholders equity:                             |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |             
|                                                  |                                                       | Preferred stock, $.01 par value; 10,000,000 shares authorized; no
shares issued and outstanding as of June 30, 2003 and December 31,
2002                                   |                                            |                                      |         |             |        |              |         |        
|                                                  |                                                       | Common stock, $.01 par value; 60,000,000 shares authorized; 31,063,176
and 27,056,487 shares issued and outstanding as of June 30, 2003
and December 31, 2002, respectively |                                            |                                      | 311      |             |        |              | 271      |        
|                                                  |                                                       | Additional paid-in capital                                                                                                                                                  |                                            |                                      | 383,064  |             |        |              | 363,294  |        
|                                                  |                                                       | Accumulated other comprehensive income                                                                                                                                      |                                            |                                      | 28       |             |        |              | 248      |        
|                                                  |                                                       | Accumulated deficit                                                                                                                                                         |                                            |                                      | (169,146 | )           |        |              | (159,375 | )      
|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |              |         
|                                                  |                                                       |                                                                                                                                                                             | Total stockholders equity                 |                                      |          | 214,257     |        |              |          | 204,438 |       
|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |              |         
|                                                  |                                                       |                                                                                                                                                                             | Total liabilities and stockholders equity |                                      | $        | 237,597     |        |              | $        | 227,460 |       
|                                                  |                                                       |                                                                                                                                                                             |                                            |                                      |          |             |        |              |         

See accompanying notes.

3.



---



##### 



GENE LOGIC INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

|                                                                                   |                                     |                                    |        |                    |        |                  |        |        |        |      |        |        |         |   |        |        |         |  
|---------------------------------------------------------------------------------- | ----------------------------------- | ---------------------------------- | ------ | ------------------ | ------ | ---------------- | ------ | ------ | ------ | ---- | ------ | ------ | ------- | - | ------ | ------ | ------- | -
|                                                                                   |                                     |                                    |        | Three Months Ended |        | Six Months Ended
|                                                                                   |                                     |                                    |        | June 30,           |        | June 30,        
|                                                                                   |                                     |                                    |        |                    |        |                 
|                                                                                   |                                     |                                    |        | 2003               |        | 2002             |        | 2003   |        | 2002
|                                                                                   |                                     |                                    |        |                    |        |                  |        |        |        |     
|Revenue:                                                                           |                                     |                                    |        |                    |        |                  |        |        |        |      |        |        |         |   |        |       
|                                                                                   | Information services revenue        |                                    | $      | 13,089             |        |                  | $      | 14,066 |        |      | $      | 25,813 |         |   | $      | 25,908 |        
|                                                                                   | Contract study services revenue     |                                    |        | 6,343              |        |                  |        |       |        |      |        | 6,343  |         |   |        |       |        
|                                                                                   |                                     |                                    |        |                    |        |                  |        |        |        |      |        |        |         |   |        |        |        
|                                                                                   |                                     | Total revenue                      |        |                    | 19,432 |                  |        |        | 14,066 |      |        |        | 32,156  |   |        |        | 25,908  |  
|Expenses:                                                                          |                                     |                                    |        |                    |        |                  |        |        |        |      |        |        |         |   |        |       
|                                                                                   | Cost of contract study services     |                                    |        | 5,056              |        |                  |        |       |        |      |        | 5,056  |         |   |        |       |        
|                                                                                   | Database production                 |                                    |        | 12,068             |        |                  |        | 13,478 |        |      |        | 25,679 |         |   |        | 26,992 |        
|                                                                                   | Research and development            |                                    |        | 463                |        |                  |        | 637    |        |      |        | 1,060  |         |   |        | 1,416  |        
|                                                                                   | Selling, general and administrative |                                    |        | 5,912              |        |                  |        | 4,977  |        |      |        | 10,365 |         |   |        | 10,703 |        
|                                                                                   |                                     |                                    |        |                    |        |                  |        |        |        |      |        |        |         |   |        |        |        
|                                                                                   |                                     | Total expenses                     |        |                    | 23,499 |                  |        |        | 19,092 |      |        |        | 42,160  |   |        |        | 39,111  |  
|                                                                                   |                                     |                                    |        |                    |        |                  |        |        |        |      |        |        |         |   |        |        |        
|                                                                                   |                                     | Loss from operations               |        |                    | (4,067 | )                |        |        | (5,026 | )    |        |        | (10,004 | ) |        |        | (13,203 | )
|Interest (income), net                                                             |                                     |                                    | (651   | )                  |        |                  | (785   | )      |        |      | (1,313 | )      |         |   | (1,624 | )     
|Other (income) expense                                                             |                                     |                                    |       |                    |        |                  | (250   | )      |        |      |       |        |         |   | (250   | )     
|                                                                                   |                                     |                                    |        |                    |        |                  |        |        |        |      |        |        |         |   |        |        |        
|                                                                                   |                                     | Net loss before income tax expense |        |                    | (3,416 | )                |        |        | (3,991 | )    |        |        | (8,691  | ) |        |        | (11,329 | )
|Income tax expense                                                                 |                                     |                                    | 554    |                    |        |                  | 389    |        |        |      | 1,080  |        |         |   | 584    |       
|                                                                                   |                                     |                                    |        |                    |        |                  |        |        |        |      |        |        |         |   |        |        |        
|                                                                                   |                                     | Net loss                           |        | $                  | (3,970 | )                |        | $      | (4,380 | )    |        | $      | (9,771  | ) |        | $      | (11,913 | )
|                                                                                   |                                     |                                    |        |                    |        |                  |        |        |        |      |        |        |         |   |        |        |        
|Basic and diluted net loss per share                                               |                                     | $                                  | (0.13  | )                  |        | $                | (0.16  | )      |        | $    | (0.34  | )      |         | $ | (0.44  | )     
|                                                                                   |                                     |                                    |        |                    |        |                  |        |        |        |      |        |        |         |   |        |        |        
|Shares used in computing basic and
diluted                      net loss per share |                                     |                                    | 31,059 |                    |        |                  | 26,915 |        |        |      | 29,093 |        |         |   | 26,874 |       
|                                                                                   |                                     |                                    |        |                    |        |                  |        |        |        |      |        |        |         |   |        |        |        

See accompanying notes.

4.



---



##### 



GENE LOGIC INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

|                                                                               |                                                                             |                                          |         |                  |         |      |         |        |        |  
|------------------------------------------------------------------------------ | --------------------------------------------------------------------------- | ---------------------------------------- | ------- | ---------------- | ------- | ---- | ------- | ------ | ------ | -
|                                                                               |                                                                             |                                          |         | Six Months Ended
|                                                                               |                                                                             |                                          |         | June 30,        
|                                                                               |                                                                             |                                          |         |                 
|                                                                               |                                                                             |                                          |         | 2003             |         | 2002
|                                                                               |                                                                             |                                          |         |                  |         |     
|Cash flows from operating activities:                                          |                                                                             |                                          |         |                  |         |      |         |       
|Net loss                                                                       |                                                                             | $                                        | (9,771  | )                |         | $    | (11,913 | )     
|Adjustments to reconcile net loss to net cash flows from operating activities: |                                                                             |                                          |         |                  |         |      |         |       
|                                                                               | Depreciation and amortization                                               |                                          |         | 8,051            |         |      |         | 6,374  |       
|                                                                               | Loss on abandonment of patent costs                                         |                                          |         | 99               |         |      |         |       |       
|                                                                               | Loss of disposal of property and equipment                                  |                                          |         | 56               |         |      |         |       |       
|                                                                               | Gain from the sale of equity investment                                     |                                          |         |                 |         |      |         | (250   | )     
|Changes in operating assets and liabilities (net of effects of acquisition):   |                                                                             |                                          |         |                  |         |      |         |       
|                                                                               | Accounts receivable and unbilled services, net                              |                                          |         | (1,673           | )       |      |         | (588   | )     
|                                                                               | Inventory, net                                                              |                                          |         | 2,867            |         |      |         | (454   | )     
|                                                                               | Prepaid expenses                                                            |                                          |         | (202             | )       |      |         | (832   | )     
|                                                                               | Other current assets                                                        |                                          |         | 209              |         |      |         | 2,470  |       
|                                                                               | Accounts payable                                                            |                                          |         | (6,179           | )       |      |         | (2,444 | )     
|                                                                               | Accrued expenses and other noncurrent liabilities                           |                                          |         | 1,612            |         |      |         | (319   | )     
|                                                                               | Deferred revenue                                                            |                                          |         | (2,527           | )       |      |         | (1,990 | )     
|                                                                               |                                                                             |                                          |         |                  |         |      |         |       
|                                                                               |                                                                             | Net cash flows from operating activities |         |                  | (7,458  | )    |         |        | (9,946 | )
|                                                                               |                                                                             |                                          |         |                  |         |      |         |       
|Cash flows from investing activities:                                          |                                                                             |                                          |         |                  |         |      |         |       
|                                                                               | Purchases of property and equipment                                         |                                          |         | (521             | )       |      |         | (1,433 | )     
|                                                                               | Purchases of licenses and patent costs                                      |                                          |         | (248             | )       |      |         | (1,103 | )     
|                                                                               | Software development costs                                                  |                                          |         | (3,544           | )       |      |         | (3,633 | )     
|                                                                               | Database upgrade costs                                                      |                                          |         |                 |         |      |         | (3,791 | )     
|                                                                               | Sale of equity investment                                                   |                                          |         |                 |         |      |         | 1,250  |       
|                                                                               | Repayments of notes receivable from employees                               |                                          |         | 38               |         |      |         | 44     |       
|                                                                               | Cash paid to acquire TherImmune Research Corporation, net of cash acquired  |                                          |         | (30,433          | )       |      |         |       |       
|                                                                               | Purchase of marketable securities available-for-sale                        |                                          |         | (78,297          | )       |      |         |       |       
|                                                                               | Proceeds from sale and maturity of marketable securities available-for-sale |                                          |         | 90,357           |         |      |         | 69,528 |       
|                                                                               |                                                                             |                                          |         |                  |         |      |         |       
|                                                                               |                                                                             | Net cash flows from investing activities |         |                  | (22,648 | )    |         |        | 60,862 |  
|                                                                               |                                                                             |                                          |         |                  |         |      |         |       
|Cash flows from financing activities:                                          |                                                                             |                                          |         |                  |         |      |         |       
|                                                                               | Proceeds from issuance of common stock                                      |                                          |         | 410              |         |      |         | 1,351  |       
|                                                                               | Cash used to repay TherImmune debt                                          |                                          |         | (6,017           | )       |      |         |       |       
|                                                                               | Proceeds from note payable                                                  |                                          |         |                 |         |      |         | 450    |       
|                                                                               | Repayments of capital lease obligations and equipment loans                 |                                          |         | (49              | )       |      |         | (19    | )     
|                                                                               |                                                                             |                                          |         |                  |         |      |         |       
|                                                                               |                                                                             | Net cash flows from financing activities |         |                  | (5,656  | )    |         |        | 1,782  |  
|                                                                               |                                                                             |                                          |         |                  |         |      |         |       
|Net (decrease) increase in cash and cash equivalents                           |                                                                             |                                          | (35,762 | )                |         |      | 52,698  |       
|Cash and cash equivalents, beginning of period                                 |                                                                             |                                          | 106,957 |                  |         |      | 128,273 |       
|                                                                               |                                                                             |                                          |         |                  |         |      |         |       
|Cash and cash equivalents, end of period                                       |                                                                             | $                                        | 71,195  |                  |         | $    | 180,971 |       
|                                                                               |                                                                             |                                          |         |                  |         |      |         |       
|Supplemental disclosure:                                                       |                                                                             |                                          |         |                  |         |      |         |       
|                                                                               | Taxes paid                                                                  |                                          | $       | 1,089            |         |      | $       | 754    |       
|                                                                               |                                                                             |                                          |         |                  |         |      |         |       
|                                                                               | Interest paid                                                               |                                          | $       | 20               |         |      | $       | 8      |       
|                                                                               |                                                                             |                                          |         |                  |         |      |         |       
|Non-cash transactions:                                                         |                                                                             |                                          |         |                  |         |      |         |       
|                                                                               | Issuance of common stock in TherImmune acquisition                          |                                          | $       | 19,400           |         |      | $       |       |       
|                                                                               |                                                                             |                                          |         |                  |         |      |         |       
|                                                                               | Equity investment received as partial payment for GeneExpress subscription  |                                          | $       |                 |         |      | $       | 1,000  |       
|                                                                               |                                                                             |                                          |         |                  |         |      |         |       

See accompanying notes.

5.



---



##### 



GENE LOGIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003
(in thousands, except share and per share data)
(Unaudited)

Note 1  Organization and Basis of Presentation

Description of Business

Gene Logic Inc. and its wholly owned subsidiary (collectively the
Company) is a leading drug development services company providing a wide
range of discovery and development services to
pharmaceutical and biotechnology companies worldwide, as well as U.S. Government
entities. The Companys services are organized into two business
segments: information services and contract study services. The
information services business is based on the Companys gene expression reference
database, the GeneExpress System, for research related to drug discovery and
optimization. The contract study services business consists of
services related to drug development, including preclinical safety and
pharmacology studies, as well as analytical laboratory and Phase I clinical
trial services.

Basis of Presentation and Principles of Consolidation

On April 1, 2003, TherImmune Research Corporation was merged into Gene
Logics wholly owned subsidiary, GLA II Corp. Concurrently, GLA II Corp., the
surviving corporation, was renamed TherImmune Research Corporation
(TherImmune). The acquisition of TherImmune has been accounted for under the
purchase method of accounting, and consolidated financial statements herein
reflect the inclusion of TherImmunes operating results since the acquisition
date. All material intercompany accounts and transactions have been eliminated
in consolidation.

The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. The balance sheet as of June 30, 2003, statements of operations for the
three and six months ended June 30, 2003 and 2002 and the statements of cash
flows for the six months ended June 30, 2003 and 2002 are unaudited, but
include all adjustments (consisting of normal recurring adjustments) which the
Company considers necessary for a fair presentation of the financial position,
operating results and cash flows for the periods presented. Although the
Company believes that the disclosures in these financial statements are
adequate to make the information presented not misleading, certain information
and footnote information normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission.

Results for any interim period are not necessarily indicative of results
for any future interim period or for the entire year. The accompanying
unaudited financial statements should be read in conjunction with the audited
financial statements and notes thereto included in the Companys Annual Report
on Form 10-K for the year ended December 31, 2002 and, with respect to
TherImmune, the Companys Form 8-K filing on June 2, 2003.

Use of Estimates

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

6.



---



##### 



Note 2  Summary of Significant Accounting Policies

Inventory

Inventory is stated at the lower of cost or market. Cost for microarrays
and laboratory reagents is determined using the first-in, first-out method;
cost for tissue samples is determined using the average cost basis method. All
inventory is reviewed for impairment and appropriate reserves are recorded. At
June 30, 2003 and December 31, 2002, all inventory was classified as raw
materials.

|                              |  |               |       |                   |  |   |       |  
|----------------------------- |  | ------------- | ----- | ----------------- |  | - | ----- | -
|                              |  | June 30, 2003 |       | December 31, 2002
|                              |  |               |       |                  
|Microarrays                   |  | $             | 1,340 |                   |  | $ | 3,695 |  
|Laboratory reagents           |  |               | 1,008 |                   |  |   | 803   |  
|Tissue samples                |  |               | 4,461 |                   |  |   | 5,018 |  
|                              |  |               |       |                   |  |   |       |  
|                              |  |               | 6,809 |                   |  |   | 9,516 |  
|Less  tissue sample reserves |  |               | (740  | )                 |  |   | (580  | )
|                              |  |               |       |                   |  |   |       |  
|Inventory, net                |  | $             | 6,069 |                   |  | $ | 8,936 |  
|                              |  |               |       |                   |  |   |       |  

Comprehensive Loss

The Company accounts for comprehensive loss as prescribed by Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income.
Comprehensive income (loss) is the total net income (loss) plus all changes in
equity during the period except those changes resulting from investment by
owners and distributions to owners. Total comprehensive loss was $4,121 and
$4,380 for the three months ended June 30, 2003 and 2002, respectively, and
$9,991 and $11,930 for the six months ended June 30, 2003 and 2002,
respectively.

Revenue Recognition

Information services revenue consists primarily of subscription fees
earned under subscription agreements for all or parts of our gene expression
reference database, the GeneExpress System. Information derived from the
GeneExpress System is used for research related to drug discovery and
optimization by pharmaceutical and biotechnology companies. Revenue from
subscription fees is recorded ratably over the term of the related GeneExpress
System subscription agreement. Typically, subscriptions to the GeneExpress
System are under multi-year agreements; however, under certain circumstances,
some subscription agreements provide customers a right for early termination
without penalty. When there are early termination rights, subscription fees
for the period up to the date of early termination are recorded ratably over the period up to the early termination date. If the
subscription agreement is not terminated, subscription fees for the
remainder of the term are recorded ratably over the remaining portion of the term.

Contract study services revenue is derived from cost-plus and fixed-fee
contracts with pharmaceutical and biotechnology companies, as well as U.S.
Government entities. Revenue is recognized on cost-plus contracts on the basis
of the direct costs incurred plus indirect costs and an allocable portion of
the fee earned. Revenue is recognized on fixed-fee contracts as services are
performed, based primarily upon the percentage of hours worked (including
subcontractor hours) to the total estimated hours for the contract. The
Company believes that hours worked is the best measure of proportional
performance under fixed-fee contracts. Billings under government contracts are
based on provisional billing rates which permit recovery of fringe benefits,
overhead and general and administrative expenses not exceeding certain limits.
These indirect expense rates are subject to review by the government on an
annual basis. When the final determination of the allowable rates for any year
has been made, billings may be adjusted accordingly. Cost and profit estimates are
reviewed periodically as the work progresses, and adjustments, if needed, are
reflected in the period in which the estimates are revised. Provisions for
estimated losses on uncompleted contracts are made in the period in which such
losses are determined. Unbilled services are recorded for revenue recognized
to date that has not been billed to the customer pursuant to the contractual
terms. In general, amounts become billable upon the achievement of milestones
or in accordance with predetermined payment schedules. Unearned revenue is
recorded for cash received from customers for whom services have not yet been
performed as of the balance sheet date.

Stock Option Plans

At June 30, 2003, the Company has two stock-based employee compensation
plans. The Company accounts for those plans under the recognition and
measurement principles of Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25), and related
interpretations. Under APB 25, compensation expense is recorded over the
vesting period only to the extent that the fair value of the underlying stock
on the date of grant exceeds the exercise or acquisition price of the stock or
stock-based award. Stock options granted under the Companys 1997 Equity
Incentive Plan are granted with an exercise price equal to the fair value on
the grant date; stock issued under the Employee Stock Purchase Plan is
purchased at 85% of the lesser of either the fair value of the shares at the
time of purchase or the fair value at the employees eligibility date.

7.



---



##### 



During the year ended December 31, 2002, the Company initiated a tender
offer for outstanding stock options held by employees of the Company. Under
the terms of the tender offer, eligible employees could tender stock options
that were granted with an exercise price equal to or greater than $11.00 per
share, subject to additional requirements for any stock option granted after May
4, 2002. Once tendered and accepted, the old stock options were cancelled and
each employee who tendered stock options was entitled, subject to meeting
certain conditions, to receive new stock options for 80% of the number of
shares available under the cancelled stock options at the fair  value on
the date of the grant. One of the conditions to receiving the new stock
options was that the individual was required to be employed by the Company on
the date of grant. Of the eligible stock options, 2,290,207 stock options were
tendered and cancelled, and on June 13, 2003, the Company granted new options
for 1,794,847 shares with an exercise price of $7.21, the fair value on the
date of grant.

The following table illustrates the effect on net loss and loss per share
as if the Company had applied the fair value recognition provisions of
Statement of Financial Accounting Standards No. 123, Accounting for Stock
Based Compensation (SFAS 123), to stock-based
employee compensation.

|                                                                                                          |             |   |                             |       |                           |   |        |       |      |   |         |       |   |   |         |       |  
|--------------------------------------------------------------------------------------------------------- | ----------- | - | --------------------------- | ----- | ------------------------- | - | ------ | ----- | ---- | - | ------- | ----- | - | - | ------- | ----- | -
|                                                                                                          |             |   | Three months ended June 30, |       | Six months ended June 30,
|                                                                                                          |             |   |                             |       |                          
|                                                                                                          |             |   | 2003                        |       | 2002                      |   | 2003   |       | 2002
|                                                                                                          |             |   |                             |       |                           |   |        |       |     
|Net loss, as reported                                                                                     |             | $ | (3,970                      | )     |                           | $ | (4,380 | )     |      | $ | (9,771  | )     |   | $ | (11,913 | )    
|Deduct: Stock-based employee
compensation expense determined
under fair value based method for
all awards |             |   | (5,967                      | )     |                           |   | (4,432 | )     |      |   | (6,626  | )     |   |   | (8,691  | )    
|                                                                                                          |             |   |                             |       |                           |   |        |       |      |   |         |       |   |   |         |      
|Pro forma net loss                                                                                        |             | $ | (9,937                      | )     |                           | $ | (8,812 | )     |      | $ | (16,397 | )     |   | $ | (20,604 | )    
|                                                                                                          |             |   |                             |       |                           |   |        |       |      |   |         |       |   |   |         |      
|Basic and diluted net loss per share:                                                                     |             |   |                             |       |                           |   |        |       |      |   |         |       |   |   |         |      
|                                                                                                          | As reported |   | $                           | (0.13 | )                         |   | $      | (0.16 | )    |   | $       | (0.34 | ) |   | $       | (0.44 | )
|                                                                                                          | Pro forma   |   | $                           | (0.32 | )                         |   | $      | (0.33 | )    |   | $       | (0.56 | ) |   | $       | (0.77 | )

Reclassifications

Certain reclassifications have been made to the prior years financial
statements to conform to the current year presentation.

New Accounting Pronouncements

The Emerging Issues Task Force Issue No. 00-21, Accounting for Revenue
Arrangement with Multiple Deliverables (Issue No. 00-21), addresses
circumstances involving the delivery or performance of multiple products,
services, and/or rights to use assets, and for which performance may occur at
different points in time or over different periods of time. The issue also
addresses whether the different revenue-generating activities, or deliverables,
are sufficiently separable, and there exists sufficient evidence of their fair
values to separately account for some or all of the deliverables. The issue
applies to all contractual arrangements under which a vendor will perform
multiple revenue-generating activities. Issue No. 00-21 is effective for all
revenue arrangements entered into in fiscal periods beginning after June 15,
2003, with early adoption permitted. The Company adopted this guidance
prospectively for all revenue arrangements entered into after January 1, 2003,
and the impact of adoption is not expected to be material to the Companys
results of operations.

In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46, Consolidation of Variable Interest Entities
(Interpretation No. 46). The objective of Interpretation No. 46 is to
improve financial reporting by companies involved with variable interest
entities. The Interpretation requires variable interest entities to be
consolidated by a company if that company is subject to a majority of the risk
of loss from the variable interest entitys activities or is entitled to
receive a majority of the entitys residual returns or both. Interpretation
No. 46 is effective immediately for arrangements entered into or modified after
January 31, 2003 and will be applied to all arrangements entered into or
modified before February 1, 2003 during the quarter ended September 30, 2003.
The initial adoption of Interpretation No. 46 for arrangements entered into or
modified after January 31, 2003 did not have any impact on the Companys
financial position or results of operations. The Company is still evaluating
the impact of Interpretation No. 46 for all arrangements entered into prior to
February 1, 2003; however, the Company does not anticipate that the impact of
these arrangements will have a material effect on the Companys financial
position or results of operations.

8.



---



##### 



Note 3  Acquisition of TherImmune Research Corporation

On February 25, 2003, the Company
announced an agreement to acquire
TherImmune, a privately held contract study services Company, in
order for the Company to: 1) create a more sizeable drug discovery
and development services entity with expanded service capabilities;
2) realize potential synergies from the
combination of the Companys information services business and
TherImmunes contract study
services business; and 3) enhance the Companys revenue growth and accelerate the time to
profitability.

On April 1, 2003, the Company acquired by merger 100% of the outstanding
common stock of TherImmune for a total purchase price of $51,081, which
consisted of cash paid to TherImmune securityholders of $30,405, 3,927,214 shares of Gene Logic Common Stock,
valued at $19,400, issued to TherImmune stockholders, and approximately $1,275
in transaction costs. The value of the shares issued was determined on the
date of final adjustment to the purchase price and was based on the average market price of the Companys Common Stock
surrounding such date. Approximately 5% of the total consideration is being
held in escrow to satisfy potential indemnification obligations of the
TherImmune securityholders.

The acquisition was recorded using the purchase method of accounting. The
total purchase price was allocated as follows:

|                                                        |  |   |         |  
|------------------------------------------------------- |  | - | ------- | -
|Current assets                                          |  | $ | 8,103   |  
|Property and equipment                                  |  |   | 11,130  |  
|Customer Relationships (estimated useful life, 2 years) |  |   | 2,500   |  
|Liabilities assumed                                     |  |   | (13,682 | )
|Goodwill                                                |  |   | 43,030  |  
|                                                        |  |   |         |  
|                                                        |  | $ | 51,081  |  
|                                                        |  |   |         |  

The following unaudited pro forma financial information gives effect to
Gene Logics acquisition by merger of TherImmune as if the transaction had
occurred at the beginning of each period presented and is based on the
historical statements of Gene Logic and TherImmune during such periods,
adjusted to give effect to the merger.

|                                     |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |         |  
|------------------------------------ |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                     |  | Three Month Period |        | Six Month Period
|                                     |  | Ended June 30,     |        | Ended June 30,  
|                                     |  |                    |        |                 
|                                     |  | 2003               |        | 2002             |  | 2003 |        | 2002
|                                     |  |                    |        |                  |  |      |        |     
|Total
Revenue                        |  | $                  | 19,432 |                  |  | $    | 20,374 |      |  | $ | 37,855  |   |  | $ | 37,220  |  
|Net loss                             |  |                    | (3,970 | )                |  |      | (4,780 | )    |  |   | (11,080 | ) |  |   | (12,553 | )
|Basic and diluted net loss per share |  | $                  | (0.13  | )                |  | $    | (0.15  | )    |  | $ | (0.36   | ) |  | $ | (0.41   | )
|Weighted average shares outstanding  |  |                    | 31,059 |                  |  |      | 30,842 |      |  |   | 31,045  |   |  |   | 30,801  |  

The pro forma adjustments used herein are based upon available information
and various assumptions that management believes are reasonable. These
adjustments give effect to events directly attributable to the transaction and
do not reflect any integration costs or other synergies that management expects
to realize as a result of the transaction. Such unaudited pro forma financial
information is not necessarily indicative of what the actual consolidated
results of the operations might have been had the acquisition been effective at
the beginning of each period presented.

Note 4  Segment Information

On April 1,
2003, the Company began managing its business as two business segments:
information services and contract study services. Prior to this date, the
Company operated as one business segment, information services. Information
services is based on the Companys
gene expression reference database, the GeneExpress System, for research
related to drug discovery and optimization. Contract study services consists
of services related to drug development including, preclinical safety
and pharmacology studies, as well as analytical laboratory and Phase I clinical
trial services.

9.



---



##### 



The following table presents the results
  of operations by segment used by management to evaluate performance. Information
  services segment operating income (loss) is determined by revenue less database
  production and research and development expenses. Contract study services segment
  operating income (loss) is determined by revenue less costs related to contract
  studies. The Company does not identify or allocate, nor does management evaluate,
  assets by business segment. Amortization and depreciation is allocated by business
  segment as identified below.

|                        |                            |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|----------------------- | -------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                        |                            |  | Three Month Period |        | Six Month Period
|                        |                            |  | Ended June 30,     |        | Ended June 30,  
|                        |                            |  |                    |        |                 
|                        |                            |  | 2003               |        | 2002             |  | 2003 |        | 2002
|                        |                            |  |                    |        |                  |  |      |        |     
|Information Services    |                            |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |       
|                        | Revenue                    |  | $                  | 13,089 |                  |  | $    | 14,066 |      |  | $ | 25,813 |   |  | $ | 25,908 |  
|                        | Operating income (loss)(1) |  |                    | 558    |                  |  |      | (49    | )    |  |   | (926   | ) |  |   | (2,500 | )
|Contract Study Services |                            |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |       
|                        | Revenue                    |  | $                  | 6,343  |                  |  | $    |       |      |  | $ | 6,343  |   |  | $ |       |  
|                        | Operating income (2)       |  |                    | 1,287  |                  |  |      |       |      |  |   | 1,287  |   |  |   |       |  

|                                                                                                    |                                              |  |       |        |   |  |     |        |   |  |     |        |   |  |        |         |  
|--------------------------------------------------------------------------------------------------- | -------------------------------------------- |  | ----- | ------ | - |  | --- | ------ | - |  | --- | ------ | - |  | ------ | ------- | -
|Reconciliation
of segment operating income (loss) to net loss before income tax
expense as follows:
|                                                                                                    |                                              |  |       |        |   |  |     |        |   |  |     |        |   |  |        |        
|Segment Operating income (loss)                                                                     |                                              |  |       |        |   |  |     |        |   |  |     |        |   |  |        |        
|                                                                                                    | Information Services                         |  | $     | 558    |   |  | $   | (49    | ) |  | $   | (926   | ) |  | $      | (2,500  | )
|                                                                                                    | Contract Study Services                      |  |       | 1,287  |   |  |     |       |   |  |     | 1,287  |   |  |        |        |  
|                                                                                                    |                                              |  |       |        |   |  |     |        |   |  |     |        |   |  |        |        
|                                                                                                    |                                              |  | 1,845 |        |   |  | (49 | )      |   |  | 361 |        |   |  | (2,500 | )      
|                                                                                                    | Selling,
general and administrative expenses |  |       | 5,912  |   |  |     | 4,977  |   |  |     | 10,365 |   |  |        | 10,703  |  
|                                                                                                    | Interest
(income), net                       |  |       | (651   | ) |  |     | (785   | ) |  |     | (1,313 | ) |  |        | (1,624  | )
|                                                                                                    | Other
(income) expenses                      |  |       |       |   |  |     | (250   | ) |  |     |       |   |  |        | (250    | )
|                                                                                                    |                                              |  |       |        |   |  |     |        |   |  |     |        |   |  |        |        
|                                                                                                    | Net
loss before income tax expense           |  | $     | (3,416 | ) |  | $   | (3,991 | ) |  | $   | (8,691 | ) |  | $      | (11,329 | )
|                                                                                                    |                                              |  |       |        |   |  |     |        |   |  |     |        |   |  |        |        

(1)  Includes an allocation of amortization and depreciation of $3,373 and
$2,922 for the three months ended June 30, 2003 and 2002, respectively, and
$6,872 and $5,522 for the six months ended June 30, 2003 and 2002, respectively.

(2)  Includes an allocation of amortization and depreciation of $385 for the
three and six months ended June 30, 2003.

For no periods reported herein
  did a single customer account for 10% or more of the Companys revenue.
  The following is a breakdown of the Companys revenue by geographic region
  outside of the United States exceeding ten percent (10%) of such revenue:

|                            |               |  |                   |    |             |  |  |    |  
|--------------------------- | ------------- |  | ----------------- | -- | ----------- |  |  | -- | -
|                            |               |  | Geographic Region
|                            |               |  |                  
|                            |               |  | Europe            |    | Pacific Rim
|                            |               |  |                   |    |            
|For the three months ended: |               |  |                   |    |             |  |  |   
|                            | June 30, 2003 |  |                   | 16 | %           |  |  | 29 | %
|                            | June 30, 2002 |  |                   | 17 | %           |  |  | 35 | %
|For the six months ended:   |               |  |                   |    |             |  |  |   
|                            | June 30, 2003 |  |                   | 18 | %           |  |  | 34 | %
|                            | June 30, 2002 |  |                   | 18 | %           |  |  | 31 | %

Note 5  Commitments

Operating Leases

The Company conducts all of its operations from leased facilities in
Gaithersburg, Maryland and Berkeley, California, under operating leases with
varying terms expiring through 2013. These leases obligate the Company to pay
building operating costs and also contain renewal provisions which may extend
their term.

Future minimum lease payments on these operating leases for the years
ending December 31 are as follows:

|                                           |  |   |        | 
|------------------------------------------ |  | - | ------ | 
|For the six months ended December 31, 2003 |  | $ | 2,389  | 
|2004                                       |  |   | 4,683  | 
|2005                                       |  |   | 4,660  | 
|2006                                       |  |   | 4,789  | 
|2007                                       |  |   | 4,684  | 
|2008 and thereafter                        |  |   | 10,735 | 
|                                           |  |   |        | 
|                                           |  | $ | 31,940 | 
|                                           |  |   |        | 

10.



---



##### 



Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition

Certain statements contained in this Form 10-Q constitute forward-looking
statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995, as amended. Such statements are typically
identified by words or phrases such as believe, expect, anticipate,
intend, estimate, may, goals, hopes, strategies, and similar
expressions or future or conditional verbs such as will, should, would,
and could. These statements are based on managements current expectations
and involve estimates, assumptions, risks and uncertainties that could cause
actual results to differ materially from those stated or implied by the
forward-looking statements. The Company assumes no obligation to update any
forward-looking statements herein, which speak only as of the date of this Form
10-Q. These risks and uncertainties are those set forth in Item 5. Other Information
 Risks Related To Our Business herein and other risks that we disclose from
time to time in our Annual Report on Form 10-K or other filings with the
Securities and Exchange Commission.

Unless the context requires otherwise, references in this Quarterly Report
to Gene Logic, the Company, we, us, and our refer to Gene Logic Inc.
GeneExpress® and ToxExpress® are registered trademarks of Gene Logic.
GeneChip® is a registered trademark of Affymetrix, Inc.

Overview

We are a leading drug development services company providing a wide range
of discovery and development services to pharmaceutical
and biotechnology companies worldwide, as well as U.S. Government entities. On April 1,
2003, we completed our acquisition by merger of TherImmune Research Corporation
(TherImmune), a privately held contract study services
company. The purpose of the acquisition was to 1) create a more
sizeable drug discovery and development services entity with expanded
service capabilities; 2) realize potential synergies from the combinations of our information
services business and their contract study services business; and 3) enhance our revenue
growth and accelerate our time to profitability. Total
consideration paid for the acquisition, after adjustment, was $51.1 million, including
transaction costs
of $1.3 million. Of the consideration paid to securityholders, we paid $30.4
million in cash and issued 3,927,214 shares of Common Stock, with a value of
$19.4 million based on the average market price of our Common
Stock surrounding the date the final adjustment was made to the purchase
price. Approximately 5% of the total consideration
is being held in escrow to satisfy potential indemnification obligations of the
TherImmune securityholders. The transaction has been accounted for under the
purchase method of accounting.

Our services are designed to assist in improving the predictive value of
research activities and product success rates. We manage our business
as two segments: information services and
contract study services. Our information services is based on our gene expression reference database, the
GeneExpress System, for research related to drug discovery and optimization.
These services primarily include subscriptions to the GeneExpress System. We
have also licensed other products, which historically have
constituted less than 10% of our total revenue. Our contract study services
business consists of services related to drug development including,
preclinical safety and pharmacology studies, as well as analytical laboratory
and Phase I clinical trial services.

Our future profitability will depend on: 1) the continued successful
commercialization of our information services business through the
establishment of subscription agreements with new GeneExpress System customers,
and, with respect to existing GeneExpress System customers, the renewal of
current subscription agreements and agreements for additional information
services; and 2) the continued successful commercialization of our contract
study services business. While our primary source of revenue to date has
been from our information services based on the GeneExpress
System, we expect going forward that our primary sources of revenue will be
from a combination of our information services and contract study services.
Revenue from our customers may be subject to significant fluctuation in both
timing and amount; therefore, our results of operations for any period may not
be comparable to the results of operations for any other period or predictive
of any long term trend.

We have incurred operating losses in each year since our inception,
including losses of $24.1 million in 2002, $33.2 million in 2001 and $24.0
million in 2000. At June 30, 2003, we had an accumulated deficit of $169.1
million. Our losses have resulted principally from costs incurred in the
development of our GeneExpress System and selling, general and administrative
costs associated with our operations. These costs have exceeded our
revenue;
we expect to incur additional operating losses in the
future.

Quarterly Results

Our quarterly operating results are subject to variation, and are expected
to continue to be subject to variation, as a result of factors such
as 1) the offering of new
or improved services; 2) timing of additional customers and service renewals
for existing customers; 3) revenue increases as a result of acquisitions; 4)
delays in initiation and/or nonrenewal of subscription agreements to the
GeneExpress System by major customers; and 5) delays in initiation, reduction
in size and/or termination of drug development services for our major
customers. Such factors will continue to be unpredictable, based primarily on
the dynamics of the drug discovery and development industry.

11.



---



##### 



Results of Operations

Consolidated results of operations below reflect the inclusion of
TherImmune since the acquisition date, April 1, 2003, and do not include any
pro forma information except where noted.

Three Months Ended June 30, 2003 and 2002

The following table sets forth
  certain consolidated data by reportable business segment revenue and operating
  income (loss) (excluding an allocation of selling, general and administrative
  expenses) for the three months ended June 30:

|                        |                         |  |      |        |      |  |   |        |  
|----------------------- | ----------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                        |                         |  | 2003 |        | 2002
|                        |                         |  |      |        |     
|Information Services    |                         |  |      |        |      |  |   |       
|                        | Revenue                 |  | $    | 13,089 |      |  | $ | 14,066 |  
|                        | Operating income (loss) |  |      | 558    |      |  |   | (49    | )
|Contract Study Services |                         |  |      |        |      |  |   |       
|                        | Revenue                 |  | $    | 6,343  |      |  | $ |       |  
|                        | Operating income        |  |      | 1,287  |      |  |   |       |  

Total Revenue.Total revenue increased $5.4 million or 38% to $19.4
million for the three months ended June 30, 2003 from $14.1 million for the
same period in 2002. During the three months ended June 30, 2003, no customer
accounted for  10% or greater of our revenue. During the three
months ended June 30, 2003 and 2002, 29% and 35% of our revenue was
from customers in the Pacific Rim, respectively.

Information
  Services Revenue.Revenue from our information services business for
  the three months ended June 30, 2003 was $13.1 million, a decrease
  of $1.0 million or 7% from $14.1 million for the same period in 2002.
  Such revenue consisted primarily of fees from subscription agreements to gene
  expression-based information solutions derived from the GeneExpress System.
  Of the decrease in revenue, $3.0 million resulted from the conclusion of
  subscription agreements with various smaller biopharmaceutical customers, partially
  offset by increased revenue of $1.9 million in subscription fees from new
  customers. As of June 30, 2003, we concluded all of our obligations under the
  terms of the GeneExpress System subscription agreements with Morphochem AG and
  N.V. Organon. Currently, negotiations are continuing with N.V. Organon for renewal
  of its subscription agreement. There can be no assurance that these negotiations
  will result in renewal of the subscription or under what terms such renewal
  might occur. Avalon Pharmaceuticals substantially reduced its access to the
  GeneExpress System under its subscription agreement. Finally, we concluded negotiations
  with Wyeth, which resulted in a renewal of its subscription to a part of the
  GeneExpress System. Due to current economic uncertainty, we continue to experience
  delays in purchasing decisions among a number of our existing and potential
  customers which we expect to slow our rate of revenue growth for the foreseeable
  future. For the remainder of 2003, we expect a slight decrease in revenue from
  our information services business, as compared to the same period in 2002.

Contract Study Services Revenue.Revenue from our contract study services
business for the three months ended June 30, 2003 was $6.3 million as a result
of the acquisition of TherImmune on April 1, 2003. Such revenue consisted
primarily of fees from services related to drug development, including preclinical safety
and pharmacology studies, as well as analytical laboratory and Phase I clinical
trial services. We expect contract study services revenue for 2003 to be
higher than that for 2002, after taking into effect the elimination of
intercompany sales to Gene Logic.

Cost of Contract Study Services Revenue.Cost of contract study services
revenue was $5.1 million for the three months ended June 30, 2003. Such costs
consist primarily of direct costs and indirect allocations related to
conducting contract study services. Gross margin for our contract study
services business during this period was 20.3%, and is expected to increase for
the remainder of 2003.

Database Production Expense.Database production expenses decreased to
$12.1 million for the three months ended June 30, 2003 from $13.5 million for
the same period in 2002. Such expenses primarily consist of costs related to
the acquisition and processing of tissues and overhead expenses needed to
support the content of the GeneExpress System. The decrease reflected a
reduction of expenses of $2.4 million for database content generation resulting
from more focused content development of our GeneExpress System, partially
offset by an increase in employee and depreciation and amortization expenses of
$0.6 million and $0.5 million, respectively. For the remainder of 2003,
database production expenses are expected to be lower than those for the
comparable period in 2002 due to our continued effort to focus content
development in areas of most interest to our customers.

Research and Development Expense.Research and development expenses
decreased to $0.5 million during the three months ended June 30, 2003 from $0.6
million for the same period in 2002. Such expenses include the costs
associated with our efforts to improve the processes currently used in the
production of our GeneExpress System, as well as research on additional
technology platforms.

Selling, General and Administrative Expense.Selling, general and
administrative expenses increased to $5.9 million during the three months ended
June 30, 2003 from $5.0 million for the same period in 2002. Such expenses
include the costs of sales and marketing,

12.



---



##### 



finance and accounting, legal, human resources and other general corporate
operations. Excluding the $1.4 million in selling, general and
administrative expenses as a result of the TherImmune acquisition, the
resulting decrease in 2003 was due primarily to
continued cost savings efforts, including a reduction in travel and marketing expenses by
$0.5 million. For the remainder of 2003, selling, general and administrative
expenses are expected to increase from 2002 as a result of the acquisition of
TherImmune.

Net Interest Income.Net interest income decreased to $0.7 million during
the three months ended June 30, 2003 from $0.8 million for the same period in
2002, due to a decline in the rates of return in and our balance of cash, cash equivalents and
marketable securities available-for-sale as a result of cash used for the TherImmune
acquisition, completed on April 1, 2003.

Income Tax.Income tax expense increased to $0.6 million for the three
months ended June 30, 2003 from $0.4 million for the same period in 2002, due
to Japanese government tax on certain payments by new Japanese
customers. We expect income tax expense to increase in the second half of
2003, compared to 2002, as we recognize a full year of activity from such
customers.

Six Months Ended June 30, 2003 and 2002

The following table sets forth certain consolidated data by reportable
business segment revenue and operating income (loss) (excluding an
allocation of selling, general and administrative expenses) for the six months ended June 30:

|                        |                  |  |      |        |      |  |   |        |  
|----------------------- | ---------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                        |                  |  | 2003 |        | 2002
|                        |                  |  |      |        |     
|Information Services    |                  |  |      |        |      |  |   |       
|                        | Revenue          |  | $    | 25,813 |      |  | $ | 25,908 |  
|                        | Operating loss   |  |      | (926   | )    |  |   | (2,500 | )
|Contract Study Services |                  |  |      |        |      |  |   |       
|                        | Revenue          |  | $    | 6,343  |      |  | $ |       |  
|                        | Operating income |  |      | 1,287  |      |  |   |       |  

Total Revenue.Total revenue increased $6.2 million or 24% to $32.2
million for the six months ended June 30, 2003 from $25.9 million for the same
period in 2002. During the six months ended June 30, 2003, no customer
accounted for 10% or greater of our revenue. During the six months
ended June 30, 2003 and 2002, 34% and 31% of our revenue was from
customers in the Pacific Rim, respectively.

Information Services Revenue.Revenue from our information services
business for the six months ended June 30, 2003 was $25.8 million compared to
$25.9 million for the same period in 2002. Of the decrease in revenue, $4.6
million resulted from the conclusion of subscription agreements with smaller
biopharmaceutical customers and $1.5 million resulted from the absence of certain
service deliverables in 2003 which were concluded in 2002, partially offset by
increased revenue of $4.8 million and $0.9 million in subscription fees from
new customers and a full period of revenue from existing customers,
respectively.

Contract Study Services Revenue.Revenue from our contract study services
business for the six months ended June 30, 2003 was $6.3 million.

Cost of Contract Study Services Revenue.Cost of contract study services
revenue was $5.1 million for the six months ended June 30, 2003. Gross margin for our contract study services
business during this period was 20.3%.

Database Production Expense.Database production expenses decreased to
$25.7 million for the six months ended June 30, 2003 from $27.0 million for the
same period in 2002, reflecting a reduction in expenses of $4.1 million for
database content generation resulting from more focused content development of
our GeneExpress System, partially offset by an increase in employee and
depreciation and amortization expenses of $1.6 million and $1.4 million,
respectively.

Research and Development Expense.Research and development expenses
decreased to $1.1 million during the six months ended June 30, 2003 from $1.4
million for the same period in 2002, due primarily to reductions in employee
costs and laboratory supplies of $0.1 million each.

Selling, General and Administrative Expense.Selling, general and
administrative expenses decreased to $10.4 million during the six months ended
June 30, 2003 from $10.7 million for the same period in
2002. Excluding the $1.4 million in selling, general and administrative expenses as a
result of the TherImmune acquisition, the resulting decrease in 2003
was due primarily to cost saving efforts, including
a reduction in travel, marketing and other expenses by $1.1 million.
Also in 2002, we incurred severance expenses of $0.3 million
which did not recur in 2003.

Net Interest Income.Net interest income decreased to $1.3 million during
the six months ended June 30, 2003 from $1.6 million for the same period in
2002, due to a decline in the rates of return in and our balance of cash, cash equivalents and
marketable securities available-for-sale as a result of our TherImmune
acquisition.

13.



---



##### 



Income Tax.Income tax expense increased to $1.1 million for the six
months ended June 30, 2003 from $0.6 million for the same period in 2002, due
to Japanese government tax on certain payments by new Japanese
customers.

LIQUIDITY AND CAPITAL RESOURCES

From inception through June 30, 2003, we have financed our operations and
acquisitions through the sale of equity securities and payments from customers.
As of June 30, 2003, we had approximately $119.1 million in cash, cash
equivalents and marketable securities available-for-sale, compared to $167.1
million as of December 31, 2002. During the quarter ended June 30, 2003, we
used approximately $36.2 million in cash for payment to TherImmune
securityholders, retirement of TherImmune debt and transaction costs.

Net cash used in operating activities was $7.5 million for the six months
ended June 30, 2003 and $9.9 million during the same period in 2002, due
primarily to the continued funding of our operating losses.

During the six months ended June 30, 2003 and 2002, our investing
activities, other than purchases, sales and maturities of available-for-sale
securities and the acquisition of TherImmune, consisted primarily of capital
expenditures and software development and database upgrade costs. Capital
expenditures for the six months ended June 30, 2003 and 2002 amounted to $0.5
million and $1.4 million, respectively. The decrease in expenditures related
to the purchases of laboratory and computer equipment in 2002 needed to expand
the content of the GeneExpress System. We expect capital expenditures for the
remainder of 2003 to continue at a similar rate as compared to the same period
in 2002. However, we expect to have additional expenditures of approximately
$2.2 million in connection with the build-out and furnishing of our
expanded
facilities.

We have capitalized software development costs of $3.5 million and $3.6
million for the six months ended June 30, 2003 and 2002, respectively, related
to ongoing efforts to enhance the software platform of our GeneExpress System.
During the six months ended June 30, 2002, we capitalized $3.8 million of costs
related to the upgrade of the human content in the GeneExpress System, as a
result of Affymetrixs release of their GeneChip Human Genome U-133 Set.
Software development and database upgrade costs are being amortized over their
expected useful lives of three and two years, respectively. Additional
software development costs are expected to continue as a result of ongoing
efforts to further enhance the software platform of our GeneExpress System.

In connection with the acquisition of TherImmune, during the six months
ended June 30, 2003 we paid $30.4 million in cash to stock and option holders
of TherImmune, paid $1.1 million in transaction costs related to the
acquisition and acquired $1.2 million in cash from TherImmune.

Our financing activities, other than the repayment of loans and capital
leases, primarily consisted of cash provided from the exercise of stock options
and participation in our employee stock purchase plan. In connection with the
TherImmune acquisition, we repaid $6.0 million in debt of TherImmune.

We have an agreement with Affymetrix, pursuant to which Affymetrix
supplies its microarrays to us for the development of our GeneExpress System.
During the three months ended June 30, 2003, we extended the agreement so that
it expires in December 2005. Under the terms of the agreement, we pay
Affymetrix subscription fees for access to microarrays, purchase microarrays
and related instrumentation and software and expect to pay royalties, beginning
in 2004, based on GeneExpress System subscription revenue thresholds. The
agreement is terminable by either party for breach of the agreement by the
other party. Upon termination of the agreement, certain rights and obligations
will remain, including our obligation to pay royalties and, if terminated by
natural expiration, our rights to use any microarrays previously purchased.
We also purchase from Affymetrix RNA labeling kits.

As of June 30, 2003,
future minimum capital lease, long-term debt and
operating lease payments are listed below:

|                          |  |       |        |          |  |        |       |        |  |        |       |        |  |   |        |  |  |   |        | 
|------------------------- |  | ----- | ------ | -------- |  | ------ | ----- | ------ |  | ------ | ----- | ------ |  | - | ------ |  |  | - | ------ | 
|                          |  |       |        |          |  | Within |       | 2004 & |  | 2006 & |       | Beyond
|                          |  | Total |        | 6 Months |  | 2005   |       | 2007   |  | 2007  
|                          |  |       |        |          |  |        |       |        |  |       
|Capital lease obligations |  | $     | 522    |          |  | $      | 58    |        |  | $      | 260   |        |  | $ | 204    |  |  | $ |       | 
|Long-term debt            |  |       | 730    |          |  |        | 20    |        |  |        | 86    |        |  |   | 546    |  |  |   | 78     | 
|Operating leases          |  |       | 31,940 |          |  |        | 2,389 |        |  |        | 9,343 |        |  |   | 9,473  |  |  |   | 10,735 | 
|                          |  |      
|Total                     |  | $     | 33,192 |          |  | $      | 2,467 |        |  | $      | 9,689 |        |  | $ | 10,223 |  |  | $ | 10,813 | 
|                          |  |      

We believe that existing cash, cash equivalents and marketable securities
available-for-sale and anticipated payments from customers will be sufficient
to support our operations for the foreseeable future. These estimates are
forward-looking statements that involve risks and uncertainties. Our actual
future capital requirements and the adequacy of our available funds will depend
on many factors, including those discussed in Item 5. Other
Information  Risks Related to Our Business herein.

CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States, which require
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the

14.



---



##### 



financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from these estimates.
The following discussion highlights what we believe to be the critical
accounting policies and judgments made in the preparation of these consolidated
financial statements.

Revenue Recognition

Information Services Revenue.Information services revenue consists
primarily of subscription fees earned under subscription agreements for all or
parts of our gene expression reference database, the GeneExpress System.
Information derived from the GeneExpress System is used for research related to
drug discovery and optimization by pharmaceutical and biotechnology companies.
Revenue from subscription fees is recorded ratably over the term of the related
GeneExpress System subscription agreement. Typically, subscriptions to the
GeneExpress System are under multi-year agreements; however, under certain
circumstances, some subscription agreements provide customers a right for early
termination without penalty. When there are early termination rights,
subscription fees for the period up to the date of early termination are recorded ratably over the period up to the early
termination date. If the subscription agreement is not terminated,
subscription fees for
the remainder of the term are recorded ratably over the remaining portion of
the term.

Contract Study Services Revenue.Contract study services revenue is
derived from cost-plus and fixed-fee contracts with pharmaceutical and
biotechnology companies, as well as U.S. Government entities. Revenue is
recognized on cost-plus contracts on the basis of the direct costs incurred
plus indirect costs and an allocable portion of the fee earned. Revenue is
recognized on fixed-fee contracts as services are performed, based primarily
upon the percentage of hours worked (including subcontractor hours) to the
total estimated hours for the contract. The Company believes that hours worked
is the best measure of proportional performance under fixed-fee contracts.
Billings under government contracts are based on provisional billing rates
which permit recovery of fringe benefits, overhead and general and
administrative expenses not exceeding certain limits. These indirect expense
rates are subject to review by the government on an annual basis. When the
final determination of the allowable rates for any year has been made, billings
may be adjusted accordingly. Cost and profit estimates are reviewed
periodically as the work progresses, and adjustments, if needed, are reflected
in the period in which the estimates are revised. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses are
determined.

Our revenue recognition policy is significant because revenue is a key
component of our results of operations. Revenue is recognized in accordance
with SAB 101. SAB 101 requires four basic criteria be met before revenue can be
recognized: 1) persuasive evidence of an arrangement exists; 2) delivery has
occurred or services rendered; 3) the fee is fixed and determinable; and 4)
collectability is reasonably assured. As to 1), our business practices require
that our services be performed pursuant to contracts with our customers. As to
2), we recognize revenue when services are rendered to our customers.
Determination of 3) and 4) are based on managements judgments regarding the
fixed nature of our arrangements taking into account termination provisions and
the collectability of fees under our arrangements (see Accounts Receivable and
Unbilled Services). In addition, management reviews costs billed under our
government contracts to ensure compliance with governmental regulations and
cost and profit estimates on uncompleted contracts. Should changes in
conditions cause management to determine these criteria are not met for certain
future arrangements, that billed costs under our government contracts are not
allowed or that cost or profit estimates change resulting in losses under such
contracts, revenue recognized for any reporting period would be adjusted and could be
adversely affected.

Accounts Receivable and Unbilled Services

Our ability to collect outstanding receivables and unbilled services from
our customers is critical to our operating performance and cash flows.
Typically, arrangements with our customers require that the payments be made in
advance for our services, based upon the achievement of milestones or in
accordance with predetermined payment schedules. In the past, we have not had
a history of collectability problems with our customers. However, as a result
of the TherImmune acquisition, we have recorded an allowance for doubtful
accounts based on our estimate of accounts receivable and unbilled services
that are at risk of noncollection. Further, as we continue to expand our
customer base, the risk of collectability may increase and management will
continue to make estimates as to collectability of such accounts. If the
financial condition of our customers were to deteriorate, resulting in an
impairment of their ability to make payments, an increase in the allowance for
doubtful accounts may be required.

15.



---



##### 



Goodwill and Intangible Assets Impairment

We have recently recorded goodwill of $43.0 million and an intangible
asset, customer relationships, of $2.5 million as a result of the acquisition
of TherImmune. Prior to the acquisition, we had recorded goodwill and other
intangible assets including licenses to technologies or data, patent costs and
software development and database upgrade costs. The determination of their
estimated useful lives and whether or not any of these assets are impaired
involves significant judgments including the following:



| |  |  | Our licenses and internally developed intellectual property may not provide valid and economical competitive advantage;
| | - |  | -----------------------------------------------------------------------------------------------------------------------
|
| |  |  | Our services may become obsolete before we recover the costs incurred in connection with their development;            
|
| |  |  | Our use of such assets; and                                                                                            
|
| |  |  | The fair value of each business segment relative to its book value.                                                    

Goodwill and other intangible assets are reviewed for impairment on an
ongoing basis under the established accounting guidelines. Changes in business
condition could potentially cause adjustments to asset valuations, possibly
necessitating an impairment charge in the future.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Emerging Issues Task Force Issue No. 00-21, Accounting for Revenue
Arrangement with Multiple Deliverables (Issue No. 00-21), addresses
circumstances involving the delivery or performance of multiple products,
services, and/or rights to use assets, and for which performance may occur at
different points in time or over different periods of time. The issue also
addresses whether the different revenue-generating activities, or deliverables,
are sufficiently separable, and there exists sufficient evidence of their fair
values to separately account for some or all of the deliverables. The issue
applies to all contractual arrangements under which a vendor will perform
multiple revenue-generating activities. Issue No. 00-21 is effective for all
revenue arrangements entered into in fiscal periods beginning after June 15,
2003, with early adoption permitted. We adopted this guidance prospectively
for all revenue arrangements entered into after January 1, 2003, and the impact
of adoption is not expected to be material to our results of operations.

In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46, Consolidation of Variable Interest Entities
(Interpretation No. 46). The objective of Interpretation No. 46 is to
improve financial reporting by companies involved with variable interest
entities. The Interpretation requires variable interest entities to be
consolidated by a company if that company is subject to a majority of the risk
of loss from the variable interest entitys activities or is entitled to
receive a majority of the entitys residual returns or both. Interpretation
No. 46 is effective immediately for arrangements entered into or modified after
January 31, 2003 and will be applied to all arrangements entered into or
modified before February 1, 2003 during the quarter ended September 30, 2003.
The initial adoption of Interpretation No. 46 for arrangements entered into or
modified after January 31, 2003 did not have any impact on our financial
position or results of operations. We are still evaluating the impact of
Interpretation No. 46 for all arrangements entered into prior to February 1,
2003; however, we do not anticipate that the impact of these arrangements will
have a material effect on our financial position or results of operations.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

We have limited exposure to financial market risks, including changes in
interest rates. At June 30, 2003, we had cash and cash equivalents of
approximately $71.2 million and marketable securities available-for-sale of
$47.9 million. We invest our excess cash primarily in money market funds,
obligations of the U. S. Government and its agencies and marketable debt
securities of companies with strong credit ratings. These instruments have
maturities of twenty-four months or less when purchased. We do not utilize
derivative financial instruments, derivative commodity instruments or other
market risk sensitive instruments, positions or transactions in any material
fashion. Accordingly, we believe that, while the instruments we hold are
subject to changes in the financial standing of the issuer of such securities,
we are not subject to any material risks arising from changes in foreign
currency exchange rates, commodity prices, equity prices or other market
changes that affect market risk sensitive instruments. Based on our cash and
cash equivalents and marketable securities available-for-sale balances at June
30, 2003, a 100 basis point adverse movement in interest rates would have
resulted in an increase in the net loss for the three and six months ended June
30, 2003 of approximately $0.3 million and $0.6 million, respectively. Actual
changes in rates may differ from the hypothetical assumptions used in computing
this exposure.

Item 4. Controls and Procedures

As of June 30, 2003, an evaluation was performed under the supervision and
with the participation of our management, including the Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation
of our disclosure controls and procedures. Based on that evaluation, our
management, including the Chief Executive Officer and Chief Financial Officer,
concluded that our disclosure controls and procedures were effective as of June
30, 2003.

16.



---



##### 



PART II    OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any material legal proceedings.

Item 2. Change in Securities and Use of Proceeds

On March 31, 2003, the stockholders of TherImmune approved the merger of
TherImmune in and to GLA II Corp., a Delaware corporation and wholly owned
subsidiary of the Registrant, pursuant to the Agreement and Plan of Merger
dated February 25, 2003 (the Merger). Pursuant to the Merger, we issued
3,927,214 shares of Gene Logic Inc.s Common Stock, $.01 par value (the
Shares), to the stockholders of TherImmune as partial consideration for 100% of the
outstanding common stock of TherImmune. The Shares of Gene Logic were issued
as of the closing date of April 1, 2003. The Shares were issued in reliance on
Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended, in reliance
upon, among others, the following facts:



| |  |  | That we reasonably believed that there were no more than 35
nonaccredited purchasers of the Shares, calculated in accordance with
Rule 501(e);                                                                                                                                   
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | That information was furnished to the stockholders of TherImmune in
accordance with Rule 502(b);                                                                                                                                                                                 
|
| |  |  | That a purchaser representative, as defined and in accordance with
Rule 501(h), was made available to each investor who was not an
accredited investor;                                                                                                                          
|
| |  |  | That each purchaser who was not an accredited investor either alone
or with the purchaser representative had such knowledge and experience
in financial and business matters that the purchaser was capable of
evaluating the merits and risks of the prospective investment; and
|
| |  |  | That certain disclosures were made in accordance with Rule 502(d) as
to the limitations on resale of the Shares issued in the Merger and a
restricted stock legend was placed on certificates for Shares issued in
the Merger.                                                   

Item 3. Defaults Upon Senior Securities

None.

17.



---



##### 



Item 4. Submission of Matters to a Vote of Security Holders

The Company held its Annual Meeting of Stockholders on June 5, 2003. At
the Annual Meeting, the Companys stockholders elected two directors to the
Companys Board of Directors and approved the proposals described below. At
the Annual Meeting, 27,508,491 shares out of a total of 31,056,194 shares of
Common Stock outstanding at the record date were represented in person or by
proxy.

The proposals considered at the Annual Meeting were voted on as follows:

|  |  |                                                                                                                                                                                                       |  |            |  |         |  |          
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  | ------- |  | ---------
|  |  |                                                                                                                                                                                                       |  | For        |  | Against |  | Withheld 
|  |  |                                                                                                                                                                                                       |  |            |  |         |  |          
|1 |  | To elect two directors
to hold office until the
2006 Annual Meeting of
Stockholders or his
earlier resignation or
removal.                                                                            |  |            |  |         |  |          
|  |  |                                                                                                                                                                                                       |  |            |  |         |  |          
|  |  | Charles L. Dimmler III                                                                                                                                                                                |  | 25,915,496 |  | N/A     |  | 1,592,995
|  |  | G. Anthony Gorry, Ph.D.                                                                                                                                                                               |  | 25,893,314 |  | N/A     |  | 1,615,177
|  |  |                                                                                                                                                                                                       |  |            |  |         |  |          
|  |  | The following
individuals term of
office as a director
continue after the
meeting: Jules Blake,
Ph.D.; Michael J.
Brennan, M.D., Ph.D.;
Mark D. Gessler; J.
Stark Thompson; and
Stephen J. Trevisan. |  |            |  |         |  |          

|  |  |                                                                                                                                                                                         |  |     |            |         |  |          |           |  |  |  |        | 
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --- | ---------- | ------- |  | -------- | --------- |  |  |  | ------ | 
|  |  |                                                                                                                                                                                         |  | For |            | Against |  | Withheld
|  |  |                                                                                                                                                                                         |  |     |            |         |  |         
|2 |  | To approve the Companys
1997 Equity Incentive
Plan, as amended, to
increase the aggregate
number of shares of
Common Stock authorized
for issuance under such
plan by 1,000,000
shares |  |     | 20,081,216 |         |  |          | 7,409,072 |  |  |  | 18,203 | 

|  |  |                                                                                                                                                                                         |  |     |            |         |  |          |           |  |  |  |        | 
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --- | ---------- | ------- |  | -------- | --------- |  |  |  | ------ | 
|  |  |                                                                                                                                                                                         |  | For |            | Against |  | Withheld
|  |  |                                                                                                                                                                                         |  |     |            |         |  |         
|3 |  | To approve the Companys
Employee Stock Purchase
Plan, as amended, to
increase the aggregate
number of shares of
Common Stock authorized
for issuance under such
plan by 500,000 shares |  |     | 26,361,195 |         |  |          | 1,126,027 |  |  |  | 21,269 | 

|  |  |                                                                                                                             |  |     |            |         |  |          |           |  |  |  |        | 
|- |  | --------------------------------------------------------------------------------------------------------------------------- |  | --- | ---------- | ------- |  | -------- | --------- |  |  |  | ------ | 
|  |  |                                                                                                                             |  | For |            | Against |  | Withheld
|  |  |                                                                                                                             |  |     |            |         |  |         
|4 |  | To ratify the selection
of Ernst & Young, LLP as
independent auditors of
the Company for its year
ending December 31,
2003. |  |     | 26,420,396 |         |  |          | 1,076,809 |  |  |  | 11,286 | 

Item 5. Other Information

RISKS RELATED TO OUR BUSINESS

We operate in a rapidly changing environment that involves a number of
risks, some of which are beyond our control. The following discussion attempts
to highlight the risks that are presently identified as material. The reader should carefully consider these
risks before making an investment decision.

WE HAVE A HISTORY OF OPERATING LOSSES THAT ARE LIKELY TO CONTINUE FOR SOME TIME.

We have incurred operating losses in each year since our inception,
including losses of $24.1 million in 2002, $33.2 million in 2001 and $24.0
million in 2000. At June 30, 2003, we had an accumulated deficit of $169.1
million. Our losses to date have resulted principally from costs incurred in
the development of the GeneExpress System and selling, general and
administrative costs associated with our operations. We expect to incur
additional losses in the future and cannot assure if or when we will achieve
profitability.

18.



---



##### 



THE ACQUISITION AND INTEGRATION OF THERIMMUNE CREATES RISKS AND UNCERTAINTIES.

On April 1, 2003, we completed the acquisition of TherImmune Research
Corporation.

As a result of this transaction, we are currently integrating into our
Company the TherImmune employees, organization, customers and operations.
These integration activities divert managements time and attention from other
business matters. Furthermore, there can be no assurance that we will succeed
in realizing the anticipated economic benefits of this acquisition, including
anticipated business synergies and increased revenue in the contract study
services business. In addition, we will be subject to additional governmental
regulation and new risks of liability. Further, as a result of the acquisition
of TherImmune, we recorded significant goodwill in our financial statements,
which may be subject to future impairment and could adversely affect our
financial performance and stock price.

Also, in connection with the acquisition, we have issued 3,927,214 shares
of our Common Stock to the stockholders of TherImmune, which will be available
for sale and, if sold, could depress our stock price. In accordance with the
merger agreement with TherImmune, we have commenced the process of registering
such shares with the Securities and Exchange Commission (SEC) for resale for a
30-day period from the date of effectiveness of such registration.

ANY INADEQUACY IN THE PROTECTION OF OUR INTELLECTUAL PROPERTY COULD HURT OUR BUSINESS.

Our success will depend in part on our ability to obtain and protect our
intellectual property and preserve our freedom to operate when third
parties obtain patents related to our activities. Our patent position involves
complex legal and factual questions. Legal standards relating to the validity
and scope of claims in our technology field are still evolving. Therefore, the
degree of future protection for our proprietary rights is uncertain. In
addition, other organizations, including companies, academic and non-profit
institutions and governmental organizations are developing technology in this
field. The risks and uncertainties that we face in this area include:



| |  |  | the pending patent applications we have filed, or to which we have
exclusive rights, may not result in issued patents or may take longer
than we expect to result in issued patents;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the claims of any patents which are issued may not provide commercially meaningful protection;                                                                                      
|
| |  |  | we may not be able to develop additional proprietary technologies that are patentable;                                                                                              
|
| |  |  | the patents licensed or issued to us may not provide a basis for
commercially viable technologies or services or provide a competitive
advantage;                                   
|
| |  |  | other companies may challenge patents issued or licensed to us;                                                                                                                     
|
| |  |  | patents issued to other organizations may restrict our ability to do
business and we may be unable to obtain or maintain licenses on
acceptable terms;                              
|
| |  |  | other organizations may independently develop similar or alternative technologies or replicate our technologies; and                                                                
|
| |  |  | other organizations may design around technologies we have licensed and/or patented.                                                                                                

We also rely on confidentiality agreements and other trade secret
protective measures to protect our interests in proprietary know-how and
technology that are not patentable or for which patents are difficult to
enforce. We have taken security measures to protect our proprietary know-how
and confidential data and continue to explore further methods of protection.
While we require all employees, consultants and customers with access to our
trade secrets to enter into confidentiality agreements, we cannot be certain
that we will be able to protect our trade secrets. Any material leak of
confidential data into the public domain, or to third parties, could cause our
business, financial condition and results of operations to suffer. It may be
necessary for us to initiate litigation to protect and enforce our intellectual
property rights. Such litigation may involve substantial costs, diversion of
managements time and attention from the operations of our business and the
risk of an adverse outcome.

19.



---



##### 



WE MAY IN THE FUTURE BE SUBJECT TO LITIGATION AND PATENT INFRINGEMENT CLAIMS.

The technologies that we use to develop our services, and those that we
incorporate in our services, may be subject to claims that they infringe the
patents or proprietary rights of others. In particular, we are aware of a
number of patents and patent applications owned by others relating to
individual genes and to the analysis of gene expression or the manufacture and
use of microarrays and related materials. The risk of additional litigation may increase as the
genomics, biotechnology and software industries expand, more patents are issued
and other companies engage in genomic-related businesses. Therefore, we could
be sued by third parties alleging patent infringement.

Litigation thus may be necessary to:



| |  |  | defend against third party claims of infringement of intellectual property rights;   
| | - |  | -------------------------------------------------------------------------------------
|
| |  |  | assert claims of infringement and otherwise enforce our patents;                     
|
| |  |  | protect our trade secrets or know-how; or                                            
|
| |  |  | determine the enforceability, scope and validity of the proprietary rights of others.

We could incur substantial litigation costs to defend ourselves in patent
suits brought by other companies or to initiate such suits. Substantial
litigation costs and potential adverse outcomes could cause our business,
financial condition and results of operations to suffer. In addition,
litigation could cause disruption in our business activities and divert
managements time and attention from the operation of our business.

INTERNATIONAL PATENT PROTECTION IS UNCERTAIN.

Patent law outside the United States for the genomics, biotechnology and
software industries is uncertain and is currently undergoing review and
revision in various countries. Further, the laws of some foreign countries may
not protect our intellectual property rights to the same extent as United
States laws. We may participate in opposition proceedings to determine the
validity of our or our competitors foreign patents, which could result in
substantial costs and diversion of our efforts and may not be successful in
limiting the patent scope of competitors.

OUR STOCK PRICE MAY BE VOLATILE.

The market price of
our Common Stock may be volatile
due to risks and uncertainties related to our activities, as well as other
factors including: conditions and publicity regarding the genomics, life
sciences or contract study services industries generally; sales of substantial
amounts of our stock by existing stockholders; price and volume fluctuations in
the stock market which do not relate to our operating performance; and comments
by securities analysts or our failure to meet analysts expectations. In
general, decreases in our stock price could limit our ability to raise
necessary capital or make acquisitions of assets, technologies or
businesses. For the last two years ending June 30, 2003, our stock has ranged in price
from a high of $26.05 to a low of $4.38.

WE HAVE ANTI-TAKEOVER PROVISIONS THAT MAY HAVE
AN ADVERSE IMPACT ON THE VALUE OF OUR COMMON STOCK AND REDUCE THE
STOCKHOLDERS ABILITY TO REMOVE MEMBERS OF MANAGEMENT.

Provisions in our certificate of incorporation and bylaws, as well as
Delaware law could make it difficult and expensive for a third party to pursue
a takeover attempt that we oppose, even if a change in control would be
beneficial to the interests of some, or even a majority, of our stockholders.
These provisions could discourage, delay or prevent potential takeover attempts
and could adversely affect the value of our common stock. Furthermore,
these provisions could prevent or frustrate attempts to replace current
management. These provisions:



| |  |  | Prohibit our stockholders from taking action other than at a duly
called annual or special meeting. Under our bylaws, meetings may be
called only by certain members of management and by the board of
directors. Therefore, the stockholders do not have the ability to act
independently of our management and board.                                                                                                                                                                                        
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Authorize our board of directors, without stockholder approval, to
issue up to 10,000,000 shares of blank check preferred stock. These
shares could be issued by our board to increase the number of
outstanding shares and prevent a takeover attempt or could be issued to
a party deemed friendly by our board of directors in order to impede a
takeover attempt that the board views as hostile, even though this
latter attempt could be more favorable to some, or even a majority, of
our stockholders.
|
| |  |  | Provide that only one-third of our board of directors is elected at
each annual meeting. Therefore, it would require at least two annual
meetings to replace a majority of our directors. This, in turn, could
discourage an attempt to effect a change in our control by making the
process longer, more expensive and more uncertain. Furthermore,
limiting the ability of stockholders to effect a                                                                                                          

20.



---



##### 





| |   |  | change in the membership of
the board of directors limits the
stockholders ability to affect the management of the Company, including
through attempts to replace current management or the removal of one or
more incumbent directors.                               
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Prohibit us from engaging in mergers and other business combinations
with stockholders that beneficially own 15% or more of our voting stock,
or with their affiliates, unless our directors or stockholders approve
the business combination in the prescribed manner.

TO GENERATE SIGNIFICANT REVENUE, WE MUST RETAIN EXISTING AND OBTAIN ADDITIONAL
CUSTOMERS FOR OUR INFORMATION SERVICES BASED ON THE GENEEXPRESS SYSTEM.

Our strategy depends on the continued successful commercialization of our
information services business through the establishment of subscription
agreements with new GeneExpress System customers and the renewal of
subscription agreements with, and agreements for additional services for,
existing GeneExpress System customers. Each of the subscription agreements
that we have with our GeneExpress System customers is for a specific term, and
certain subscription agreements include a right of early termination under
certain circumstances without penalty by such customers prior to expiration.
If subscription agreements with major customers are terminated or expire and are not renewed or
existing customers fail to buy additional services, or if we fail to enter into
subscription agreements with new customers, our business could suffer. For the
remainder of 2003, the GeneExpress System subscription agreements that are up
for renewal with major customers accounted for approximately 11% of our revenue
in 2002.

OUR REVENUE IS DERIVED PRIMARILY FROM, AND IS SUBJECT TO
RISKS FACED BY, THE PHARMACEUTICAL AND BIOTECHNOLOGY INDUSTRY IN THE
U.S., JAPAN AND OTHER FOREIGN COUNTRIES.

We expect that our
information services revenue will continue to be
derived primarily from agreements to the GeneExpress System by
pharmaceutical and biotechnology customers and our contract
study services revenue will continue to be derived primarily from
study services contracts by pharmaceutical and biotechnology
companies, as well as U.S. Government entities. Accordingly, our success will
depend directly upon customer demand for our drug discovery and
development services. Our
results of operations may fluctuate substantially due to reductions and/or
delays in research and development expenditures by companies in these
industries, in the U.S., Japan and other foreign countries, as well
as U.S. Government entities. These reductions and/or delays may result from factors such as:



| |  |  | changes in national and
international economic conditions;                                                                                            
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | changes in the regulatory environment, including health care reform,
affecting our information services or the products and services of our
customers;
|
| |  |  | pricing pressures and reimbursement policies;                                                                                                         
|
| |  |  | market-driven pressures on companies to consolidate, reduce costs and improve performance;                                                            
|
| |  |  | other factors affecting customer research and development spending;                                                                                   
|
| |  |  | issues related to our customers business conditions, budgetary resources, budgetary timing cycles and product sales delays;                          
|
| |  |  | additional regulation of the drug discovery and development process; and                                                                              
|
| |  |  | changes in technology resulting in new or improved alternatives.                                                                                      

None of these factors is within our control.

OUR INFORMATION SERVICES SALES CYCLE IS LENGTHY AND WE MAY SPEND CONSIDERABLE RESOURCES ON
UNSUCCESSFUL SALES EFFORTS OR MAY NOT BE ABLE TO COMPLETE DEALS ON THE SCHEDULE
WE ANTICIPATE.

Our ability to obtain new customers, retain existing customers through
subscription renewal, and sell additional services to existing information
services customers depends upon our existing and potential customers belief
that the content and capabilities of the GeneExpress System can increase
productivity for their drug discovery and development efforts. Our sales cycle
for multi-year subscriptions to our GeneExpress System is estimated at 12 to 15
months, and in certain circumstances could be longer. This is caused by a
number of factors, including our need to educate our existing and potential
customers and sell the benefits of our information services to a variety of
groups within such companies. In addition, each subscription agreement may
involve the negotiation of unique terms. We may expend substantial effort with
no assurance that a subscription agreement will result. Actual and proposed
consolidations of pharmaceutical and biotechnology companies have affected, and
may in the future affect, the timing and progress of our information services
sales efforts. Accordingly, our results will fluctuate due to the fact it is
not always possible to effectively time the initiation of new subscription
agreements, as well as predict the timing of any potential resulting revenue from such
subscription agreements.

WE RELY ON MICROARRAYS AND OTHER PRODUCTS SUPPLIED BY AFFYMETRIX TO BUILD OUR
GENEEXPRESS SYSTEM.

Our continuing ability to build and update the GeneExpress System and its
related information services will depend in part on the ability of Affymetrix
to supply adequate quantities of high quality microarrays and other products.
Affymetrix provides us with microarrays and related instrumentation and
software under an agreement that expires on December 31, 2005. This agreement
provides us with nonexclusive access to GeneChip microarrays and
instrumentation and software. We also purchase RNA labeling kits from
Affymetrix. Affymetrix or other providers may develop new or improved
technologies that may necessitate changes to the current GeneExpress System in
order to remain competitive, which could be costly and time consuming. If
Affymetrix is unable or unwilling to supply us with

21.



---



##### 



GeneChip microarrays and the related instrumentation, software and kits,
or if such products are not available or are defective, we may incur additional
database production costs and we may need to obtain alternative technologies.
Alternative technologies may not be available to us, or may only be available
to us on unfavorable terms. Restricted or curtailed access to such products
could cause our information services business to suffer by delaying or
increasing the cost to populate and maintain the GeneExpress System,
as well as causing us to be delayed or unable to meet content update obligations under
existing GeneExpress System subscription agreements.

IF OUR ACCESS TO NECESSARY TISSUE SAMPLES, INFORMATION OR LICENSED TECHNOLOGIES
IS RESTRICTED, WE MAY NOT BE ABLE TO CONTINUE TO DEVELOP OUR INFORMATION
SERVICES BUSINESS.

To continue to build our information services business, we need access to
normal and diseased human and animal tissue samples, other biological materials
and related clinical and other information. However, government regulation in
the United States and foreign countries could restrict access to, or use of,
human and other tissue samples and related data. If we lose access to
sufficient numbers or sources of tissue samples, or if tighter restrictions are
imposed on our use of the information generated from tissue samples and related
data, our information services business may suffer.

THE GENOMICS INDUSTRY IS COMPETITIVE AND EVOLVING RAPIDLY, AND OUR INFORMATION
SERVICES BUSINESS MAY BECOME OBSOLETE OR FAIL TO BE SUFFICIENTLY USEFUL.

Competition exists among entities attempting to identify genes associated
with specific diseases and to develop products and services based on these
discoveries. Our information services business directly competes in these
areas with pharmaceutical, biotechnology and diagnostic companies, academic and
non-profit institutions and government or other publicly funded agencies, both
in the United States and abroad. We are aware that certain entities are using
a variety of gene expression analysis methodologies, including the use of
microarrays, to attempt to identify disease-related genes. In addition,
certain pharmaceutical companies are developing genomic research programs,
either alone or in partnership with our competitors. To compete against
existing and future technologies, we will need to continue to be able to
demonstrate to potential and existing customers that the technologies and
capabilities supporting our information services business and, specifically the
GeneExpress System, are superior to competing technologies and/or information
resources.

Genomic technologies have undergone, and are expected to continue to
undergo, rapid and significant change. Our future success will depend in large
part on maintaining a competitive position in the genomics field and genomics
being shown to increase drug discovery and development productivity. Rapid
technological development by others or us may result in our information
services or technologies becoming obsolete before we recover the expenses
incurred in connection with the development of such information services or
technologies. Information services offered by us could become less competitive
compared to less expensive or more effective drug discovery technologies,
including technologies that may be unrelated to genomics. We may not be able
to make the enhancements to our technology necessary to compete successfully
with newly emerging technologies. Furthermore, our information services are
derived from the GeneExpress System, an information resource for drug discovery
and optimization that is based on the assumption that information about gene
expression and gene sequences may help scientists better understand complex
disease processes and drug toxicity. The roles of genes in human biology and
pathology are still being discovered. Few therapeutic products based on gene
discoveries have been developed and commercialized to date. If our customers
fail to find genomic information useful or such information becomes obsolete as
a viable drug discovery tool, our existing and potential customers may lose
confidence in our Company and our information services business and our
business may suffer as a result.

FAILURE TO COMPLY WITH EXISTING REGULATIONS
COULD RESULT IN A LOSS OF CONTRACT STUDY SERVICES REVENUE.

Any failure on our part to comply with
applicable regulations and agreed
protocols could result in the termination of ongoing study services or the
disqualification of data due to our error, for submission to regulatory
authorities, which would cause customers to not enter into or renew such
contract study services in the future. In addition, if we fail to follow the
contractually agreed upon study protocol, we may be obligated to repeat the
study at our cost or refund to the customer the total study cost.

WE MAY BEAR FINANCIAL LOSSES BECAUSE MOST OF OUR CONTRACT STUDY SERVICES ARE ON
A FIXED-FEE BASIS AND MAY BE DELAYED OR REDUCED IN SCOPE OR TERMINATED FOR
REASONS BEYOND OUR CONTROL.

Many of our contracts for study services provide for services on a
fixedfee basis and may be terminated or reduced in scope upon written notice.
Cancellations may occur for a variety of reasons, including:

22.



---



##### 





| |  |  | the failure of products to satisfy safety requirements;                                                  
| | - |  | ---------------------------------------------------------------------------------------------------------
|
| |  |  | unfavorable test results of the study services;                                                          
|
| |  |  | insufficient patient enrollment or investigator recruitment;                                             
|
| |  |  | the customers decision to terminate the development of a test compound or to end a particular study; and
|
| |  |  | our failure to perform properly our duties under the study services contract.                            

The delay, reduction in scope, termination or loss of study services
contracts could materially adversely affect our contract study services
business. Although our study services contracts may entitle us to receive the
costs of winding down the terminated projects, as well as all fees earned by us
up to the time of termination, it may be difficult to collect such amounts from
a customer who has decided to terminate a study.

WE OPERATE OUR CONTRACT STUDY SERVICES IN A HIGHLY COMPETITIVE INDUSTRY.

Competitors in the contract study services industry range from small,
limited-service providers to full service global contract research
organizations. Our main competition consists of in-house departments of
pharmaceutical companies, full-service contract research organizations, and, to
a lesser degree universities and teaching hospitals. We compete on a variety
of factors, including:



| |  |  | reputation for on-time quality performance;                                               
| | - |  | ------------------------------------------------------------------------------------------
|
| |  |  | expertise and experience in specific areas;                                               
|
| |  |  | scope of service offerings;                                                               
|
| |  |  | strengths in various geographic markets;                                                  
|
| |  |  | price;                                                                                    
|
| |  |  | technological expertise and efficient drug development processes;                         
|
| |  |  | ability to acquire, process, analyze and report data in a time-saving and accurate manner;
|
| |  |  | ability to manage clinical trials both domestically and internationally; and              
|
| |  |  | size.                                                                                     

CONTRACT STUDY SERVICES MAY EXPOSE US TO PRODUCT LIABILITY AND RELATED RISKS.

In contracting to work on drug development trials, we face a range of
potential liabilities. For example:



| |  |  | adverse events from contracted sites conducting clinical trials on
behalf of our customers that create harm during a trial to study
volunteers or after a trial to consumers of the drug after regulatory
approval of the drug;                                                                                                
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | risks that animals we receive from suppliers for purposes of a
specific study under a study services contract may be infected with
diseases that may be harmful and even lethal to themselves and humans
despite preventive measures contained in our company policies for the
quarantine and handling of imported animals; and
|
| |  |  | failure to properly design or comply with required protocols during
study trial that may undermine the usefulness of a study trial or
resulting data from the trial.                                                                                                                                                           

We also assist our customers to contract with medical and research
institutions and individual physicians to conduct the clinical trials for our
customers to test new drugs on human volunteers. These tests can create a risk
of liability for personal injury or death to volunteers, resulting from
negative reactions to the drugs administered or from professional malpractice
by such third parties, particularly to volunteers with life-threatening
illnesses. We believe that our risks in this area are generally reduced by the
following:



| |  |  | contract provisions entitling us to be indemnified or entitling us to a limitation of liability;
| | - |  | ------------------------------------------------------------------------------------------------
|
| |  |  | insurance maintained by our clients and investigators; and                                      
|
| |  |  | various regulatory requirements we must follow in connection with our business.                 

Contractual indemnifications generally do not protect us against liability
arising from certain of our own actions, such as negligence or misconduct. We
could be materially and adversely affected if we were required to pay damages
or bear the costs of defending any claim which is not covered by a contractual
indemnification provision and is outside of or exceeds our insurance
coverage or in the event that a party who must indemnify us
does not fulfill its indemnification obligations. Although our drug development services are only licensed for use in
research and development and are not designed to be the only methods used in
testing and evaluating drugs in development, even unsuccessful claims of
liability could require substantial expenses and time to resolve. While we
currently maintain professional liability insurance, our insurance coverage may
not be adequate to protect us against future claims. Furthermore, our
customers may not indemnify us against these types of claims or may not
themselves be adequately insured or, in the case of smaller companies, have a
net worth sufficient to satisfy any liability claims.

23.



---



##### 



ACTIONS OF ANIMAL RIGHTS EXTREMISTS MAY AFFECT OUR BUSINESS.

Certain aspects of our contract study services business requires the use
of animals (predominantly rodents) in preclinical testing of the safety and
efficacy of drugs. Acts of vandalism and other acts by animal rights
extremists who object to the use of animals in drug development could have a
material adverse effect on our business.

OUR ACTIVITIES INVOLVE HAZARDOUS MATERIALS AND MAY SUBJECT US TO ENVIROMENTAL LIABILITY.

Certain activities of our business involve the controlled use of limited
quantities of hazardous and radioactive materials and may generate biological
waste. We are subject to federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposal of these
materials and certain waste products. Although we believe that our safety
procedures for handling and disposing of these materials comply with prescribed
standards, we cannot completely eliminate the risk of accidental contamination
or injury from these materials. In the event of an accident, we could be held
liable for damages or penalized with fines, and such liabilities could deplete
our resources.

We believe that we comply in all material respects with currently
applicable environmental laws and regulations and do not expect near term
material additional capital expenditures for environmental control facilities.
However, we may have to incur significant costs in the future to comply with
environmental laws and regulations. At present, we also believe we have
appropriate insurance coverage against hazardous materials claims.

Item 6. Exhibits and Reports on Form 8-K



| |                
| | ---------------
| | A)    Exhibits:



| | 10.78 |  | Settlement and Nonexclusive License Agreement, dated January
10, 2001 between Registrant and Incyte Corporation.                                                                                 
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 10.79 |  | Lease Agreement, dated November 20, 1999 between
TherImmune Research Corporation and Rickman Firstfield
Associates.                                                                              
|
| | 10.80 |  | Lease Agreement, dated October 26, 2000 between
TherImmune Research Corporation and Oxbridge Development at
Crown Pointe, L.C.                                                                   
|
| | 10.81 |  | Lease Agreement, dated June 22, 2001 between
TherImmune Research Corporation and Oxbridge Development at
Crown Pointe, L.C., including amendments dated September 25, 2001 and
December 20, 2002.
|
| | 31    |  | Certifications pursuant to Rule 13a-14(a)/15d-14(a).                                                                                                                                             
|
| | 32    |  | Certifications pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.                                                                         



| |                           
| | --------------------------
| | B)    Reports on Form 8-K:



| |                                                                                      
| | -------------------------------------------------------------------------------------
| | During the three months ended June 30, 2003, the Company filed the
following reports:



| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | The Current Report on Form 8-K, filed on April 3, 2003, with respect
to the completion of the acquisition of TherImmune Research Corporation.



| |                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Current Report on Form 8-K, filed on April 25, 2003, with respect
to the establishment of a final purchase price regarding the acquisition
of TherImmune Research Corporation and with respect to information
contained in Certain Transactions included in the Companys proxy
statement in connection with its 2003 Annual Meeting of Stockholders.



| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | The Current Report on Form 8-K, filed on May 1, 2003, with respect to
the Companys financial results for the three months ended March 31, 2003.



| |                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Current Report on Form 8-K, filed on June 2, 2003, with respect
to financial statements and pro forma financial information as of December
31, 2002 related to the Companys acquisition of TherImmune Research
Corporation.

24.



---



##### 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                       |                               |                                                                                            |  | 
|---------------------- | ----------------------------- | ------------------------------------------------------------------------------------------ |  | 
|                       | GENE LOGIC INC                |                                                                                            | 
|                      
|Date:  August 14, 2003 | By: /s/ Philip L. Rohrer, Jr. |                                                                                            | 
|                       |                               |                                                                                            |  | 
|                       |                               | Philip L. Rohrer, Jr.
Chief Financial Officer
(Principal Financial and Accounting Officer) |  | 

25.