---

UNITED
  STATES
  SECURITIES AND EXCHANGE COMMISSION
  Washington, D.C. 20549

FORM
  10-Q

|(Mark
      One)
|----------------
|                
|þ               
|                
|                
|                
|o               

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
incorporation or organization) |  |  | (I.R.S. Employer
Identification No.)

610
  Professional Drive
  Gaithersburg, Maryland 20879
  (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 þNO o

Indicate by check mark whether the  registrant  is an  accelerated
filer (as defined in Rule 12b-2 of the Exchange Act). YESþNO o

The  number  of
shares  outstanding  of the  Registrants  Common  Stock, $.01 par value, was
31,752,629 as of July 31, 2005.

---



---



GENE
  LOGIC INC.

TABLE
  OF CONTENTS

|PART
      I                                                                                          |  | FINANCIAL
      INFORMATION                                                                 |  |    | 
|----------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | -- | 
|                                                                                                      |  |                                                                                             |  |    | 
|Item
      1.                                                                                         |  | Financial
      Statements                                                                  |  | 3  | 
|                                                                                                      |  |                                                                                             | 
|Consolidated
      Balance Sheets at June 30, 2005 and December 31, 2004                              |  | 3                                                                                           | 
|Consolidated
      Statements of Operations for the Three and Six Months Ended June 30, 2005 and 2004 |  | 4                                                                                           | 
|Consolidated
      Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004           |  | 5                                                                                           | 
|Notes
      to Consolidated Financial Statements                                                      |  | 6                                                                                           | 
|                                                                                                      |  |                                                                                             |  |    | 
|Item
      2.                                                                                         |  | Managements
      Discussion and Analysis of Results of Operations and Financial Condition |  | 10 | 
|                                                                                                      |  |                                                                                             |  |    | 
|Item
      3.                                                                                         |  | Quantitative
      and Qualitative Disclosure About Market Risk                             |  | 16 | 
|                                                                                                      |  |                                                                                             |  |    | 
|Item
      4.                                                                                         |  | Controls
      and Procedures                                                               |  | 17 | 
|                                                                                                      |  |                                                                                             | 
|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                                                      |  | 19 | 
|                                                                                                      |  |                                                                                             |  |    | 
|Signatures                                                                                            |  |                                                                                             |  | 20 | 

2.

---



PART I
FINANCIAL INFORMATION

Item 1.
Financial Statements

GENE LOGIC
INC.

CONSOLIDATED
BALANCE SHEETS (in thousands, except share data)

|                                                                                                         |  |  | June
      30,
      2005 |          | December
      31,
      2004 |  
|-------------------------------------------------------------------------------------------------------- |  |  | ------------------------- | -------- | ----------------------------- | -
|                                                                                                         |  |  |                           |          |                               |  
|                                                                                                         |  |  | (Unaudited)               |          |                               |  
|ASSETS                                                                                                   |  |  |                           |          |                               |  
|Current
      assets:                                                                                    |  | 
|Cash
      and cash equivalents                                                                          |  |  | $                         | 68,981   |                               | $
|Marketable
      securities available-for-sale                                                           |  |  |                           | 29,002   |                               |  
|Accounts
      receivable, net of allowance of $190 and $436 as of June 30, 2005 and                     |  |  |                           |          |                               |  
|December
      31, 2004, respectively                                                                    |  |  |                           | 7,828    |                               |  
|Unbilled
      services                                                                                  |  |  |                           | 6,214    |                               |  
|Inventory,
      net                                                                                     |  |  |                           | 2,975    |                               |  
|Prepaid
      expenses                                                                                   |  |  |                           | 2,439    |                               |  
|Other
      current assets                                                                               |  |  |                           | 1,576    |                               |  
|                                                                                                         |  |  |                           |          |                               |  
|Total
      current assets                                                                               |  |  |                           | 119,015  |                               |  
|Property
      and equipment, net                                                                        |  |  |                           | 29,722   |                               |  
|Long-term
      investments                                                                              |  |  |                           | 4,239    |                               |  
|Goodwill                                                                                                 |  |  |                           | 45,707   |                               |  
|Intangibles,
      net                                                                                   |  |  |                           | 11,333   |                               |  
|Other
      assets                                                                                       |  |  |                           | 54       |                               |  
|                                                                                                         |  |  |                           |          |                               |  
|Total
      assets                                                                                       |  |  | $                         | 210,070  |                               | $
|                                                                                                         |  |  |                           |          |                               |  
|LIABILITIES
      AND STOCKHOLDERS' EQUITY                                                               |  | 
|Current
      liabilities:                                                                               |  | 
|Accounts
      payable                                                                                   |  |  | $                         | 3,500    |                               | $
|Accrued
      compensation and employee benefits                                                         |  |  |                           | 6,152    |                               |  
|Other
      accrued expenses                                                                             |  |  |                           | 5,095    |                               |  
|Current
      portion of capital lease obligations                                                       |  |  |                           | 142      |                               |  
|Current
      portion of long-term debt                                                                  |  |  |                           | 495      |                               |  
|Current
      portion of acquired technologies payable                                                   |  |  |                           | 3,419    |                               |  
|Deferred
      revenue                                                                                   |  |  |                           | 16,623   |                               |  
|                                                                                                         |  |  |                           |          |                               |  
|Total
      current liabilities                                                                          |  |  |                           | 35,426   |                               |  
|Deferred
      revenue                                                                                   |  |  |                           | 4,350    |                               |  
|Capital
      lease obligations, net of current portion                                                  |  |  |                           | 132      |                               |  
|Long-term
      debt, net of current portion                                                             |  |  |                           | 151      |                               |  
|Acquired
      technologies payable                                                                      |  |  |                           | --       |                               |  
|Other
      noncurrent liabilities                                                                       |  |  |                           | 3,633    |                               |  
|                                                                                                         |  |  |                           |          |                               |  
|Total
      liabilities                                                                                  |  |  |                           | 43,692   |                               |  
|                                                                                                         |  |  |                           |          |                               |  
|Commitments
      and contingencies                                                                      |  |  |                           | --       |                               |  
|Stockholders'
      equity:                                                                              |  | 
|Preferred
      stock, $.01 par value; 10,000,000 shares authorized; and no shares issued
      and      |  | 
|outstanding
      as of June 30, 2005 and December 31, 2004                                              |  |  |                           | --       |                               |  
|Common
      stock, $.01 par value; 60,000,000 shares authorized; 31,749,453 and 31,654,413
      shares |  | 
|issued
      and outstanding as of June 30, 2005 and December 31, 2004, respectively                     |  |  |                           | 318      |                               |  
|Additional
      paid-in-capital                                                                         |  |  |                           | 385,499  |                               |  
|Accumulated
      other comprehensive loss                                                               |  |  |                           | (62      | )                             |  
|Accumulated
      deficit                                                                                |  |  |                           | (219,377 | )                             |  
|                                                                                                         |  |  |                           |          |                               |  
|Total
      stockholders' equity                                                                         |  |  |                           | 166,378  |                               |  
|                                                                                                         |  |  |                           |          |                               |  
|Total
      liabilities and stockholders' equity                                                         |  |  | $                         | 210,070  |                               | $
|                                                                                                         |  |  |                           |          |                               |  

See
accompanying notes.

3.

---



GENE LOGIC
INC.

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

|                                                     |  |  | Three Months Ended
      June 30, |        | Six Months Ended
      June 30, |  
|---------------------------------------------------- |  |  | --------------------------------- | ------ | ------------------------------- | -
|                                                     |  |  |                                   |        |                                 |  
|                                                     |  |  | 2005                              |        | 2004                            |  
|                                                     |  |  |                                   |        |                                 |  
|Revenue:                                             |  |  |                                   |        |                                 |  
|Genomics
      and toxicogenomics services           |  |  | $                                 | 14,166 |                                 | $
|Nonclinical
      contract research services         |  |  |                                   | 5,820  |                                 |  
|Drug
      repositioning and selection services      |  |  |                                   | 147    |                                 |  
|                                                     |  |  |                                   |        |                                 |  
|Total
      revenue                                  |  |  |                                   | 20,133 |                                 |  
|Expenses:                                            |  | 
|Cost
      of nonclinical contract research services |  |  |                                   | 6,618  |                                 |  
|Database
      production                            |  |  |                                   | 8,021  |                                 |  
|Research
      and development                       |  |  |                                   | 1,380  |                                 |  
|Selling,
      general and administrative            |  |  |                                   | 7,743  |                                 |  
|                                                     |  |  |                                   |        |                                 |  
|Total
      expenses                                 |  |  |                                   | 23,762 |                                 |  
|                                                     |  |  |                                   |        |                                 |  
|Loss
      from operations                           |  |  |                                   | (3,629 | )                               |  
|Interest
      (income), net                         |  |  |                                   | (617   | )                               |  
|Other
      (income) expense                         |  |  |                                   | (402   | )                               |  
|                                                     |  |  |                                   |        |                                 |  
|Net
      loss before income tax expense             |  |  |                                   | (2,610 | )                               |  
|Income
      tax expense                             |  |  |                                   | --     |                                 |  
|                                                     |  |  |                                   |        |                                 |  
|Net
      loss                                       |  |  | $                                 | (2,610 | )                               | $
|                                                     |  |  |                                   |        |                                 |  
|Basic
      and diluted net loss per share           |  |  | $                                 | (0.08  | )                               | $
|                                                     |  |  |                                   |        |                                 |  
|Shares
      used in computing basic and diluted     |  |  |                                   |        |                                 |  
|net
      loss per share                             |  |  |                                   | 31,742 |                                 |  
|                                                     |  |  |                                   |        |                                 |  

See
accompanying notes.

4.

---



GENE LOGIC
INC.

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

|                                                                                     |  |  | Six Months Ended
      June 30, |       
|------------------------------------------------------------------------------------ |  |  | ------------------------------- | ------
|                                                                                     |  |  |                                 |       
|                                                                                     |  |  | 2005                            |       
|                                                                                     |  |  |                                 |       
|Cash
      flows from operating activities:                                          |  |  |                                 |       
|Net loss                                                                             |  |  | $                               | (6,711
|Adjustments
      to reconcile net loss to net cash flows from operating activities: |  | 
|Depreciation
      and amortization                                                  |  |  |                                 | 7,443 
|Loss
      on abandonment of patents                                                 |  |  |                                 | 18    
|Loss
      on disposal of property and equipment                                     |  |  |                                 | 50    
|Accrued
      interest relating to acquired technologies payable                     |  |  |                                 | 72    
|Changes
      in operating assets and liabilities:                                   |  | 
|Accounts
      receivable and unbilled services                                      |  |  |                                 | (2,683
|Inventory                                                                            |  |  |                                 | (1,292
|Prepaids
      and other assets                                                      |  |  |                                 | 380   
|Accounts
      payable                                                               |  |  |                                 | (1,756
|Accrued
      expenses and other noncurrent liabilities                              |  |  |                                 | 3,621 
|Deferred
      revenue                                                               |  |  |                                 | 7,590 
|                                                                                     |  |  |                                 |       
|Net
      cash flows from operating activities                                       |  |  |                                 | 6,732 
|                                                                                     |  |  |                                 |       
|Cash
      flows from investing activities:                                          |  | 
|Purchases
      of property and equipment                                            |  |  |                                 | (9,992
|Purchases
      of licenses and patent costs                                         |  |  |                                 | (236  
|Software
      development costs                                                     |  |  |                                 | (889  
|Database
      upgrade costs                                                         |  |  |                                 | (720  
|Purchase
      of marketable securities available-for-sale                           |  |  |                                 | (5,944
|Proceeds
      from sale and maturity of marketable securities available-for-sale    |  |  |                                 | 26,694
|                                                                                     |  |  |                                 |       
|Net
      cash flows from investing activities                                       |  |  |                                 | 8,913 
|                                                                                     |  |  |                                 |       
|Cash
      flows from financing activities:                                          |  | 
|Proceeds
      from issuance of common stock to employees                            |  |  |                                 | 187   
|Repayments
      of capital lease obligations and equipment loan                     |  |  |                                 | (88   
|                                                                                     |  |  |                                 |       
|Net
      cash flows from financing activities                                       |  |  |                                 | 99    
|                                                                                     |  |  |                                 |       
|Net increase
      (decrease) in cash and cash equivalents                           |  |  |                                 | 15,744
|                                                                                     |  |  |                                 |       
|Cash
      and cash equivalents, beginning of period                                 |  |  |                                 | 53,237
|                                                                                     |  |  |                                 |       
|Cash
      and cash equivalents, end of period                                       |  |  | $                               | 68,981
|                                                                                     |  |  |                                 |       
|Supplemental
      disclosure:                                                       |  | 
|Taxes
      paid                                                                     |  |  | $                               | --    
|                                                                                     |  |  |                                 |       
|Interest
      paid                                                                  |  |  | $                               | 19    
|                                                                                     |  |  |                                 |       

See
accompanying notes.

5.

---



GENE LOGIC
INC.

Notes to
Consolidated Financial Statements June 30, 2005 (in thousands, except share and per
share data) (Unaudited)

Note 1  Organization
and summary of significant accounting policies

Description of
Business

Gene Logic
Inc.,  including  its wholly  owned  subsidiaries,  Gene Logic  Laboratories Inc.
(formerly  TherImmune  Research  Corporation),  Gene Logic  Ltd.  (United  Kingdom
subsidiary)  and Gene Logic K.K. (Japan  subsidiary),  (collectively  Gene  Logic or
the  Company),  provides  drug  discovery  and  development  services  to
pharmaceutical  and  biotechnology  companies  worldwide and U.S. Government  entities,
to assist  in  the  development  of  therapeutic  compounds  in  a  more  timely,
efficient and  cost-effective  manner.  From April 1,  2003  to  December  31,  2004,
the  Companys  services  were  organized  into  two  business  segments:  genomics
and  toxicogenomics  services  and  preclinical  contract  research  services  (recently
renamed  nonclinical  contract  research  services).  Beginning  in  2005,  the  Company
added  a third  business  segment:  drug  repositioning  and  selection  services.  The
genomics and  toxicogenomics  services business  consists of proprietary  reference gene
expression  and  toxicogenomics  databases,  software tools,  various  toxicogenomics
reports,  data  generation and other  professional  services and smaller solutions.  These  services
are designed to help  customers  discover and  prioritize  drug  targets,  identify
biomarkers and predict  toxicity  and  provide  insights  into  efficacy  of  specific
compounds.  The  nonclinical  contract  research  services  business  consists  of in vivo testing  research  studies  and  related  laboratory  services  to help  customers
assess  the  safety and pharmacologic  effects of candidate  compounds with  the
intention of gaining  regulatory  approval to proceed with  human  trials  on
prioritized  compounds.  The  drug  repositioning  and  selection  services  business,
which  resulted  from the  acquisition  of  certain  technologies  in  2004 that
continue to be  developed,  consists of services to  assist  customers in (i) identifying
alternative  indications  for  failed,  stalled  or  deprioritized  compounds;  (ii)
expanding  indications  for  currently  marketed  drugs;  and  (iii)  prioritizing and
identifying  indications for compounds  entering preclinical development.

Basis of
Presentation

The
accompanying  unaudited  consolidated financial statements  have  been  prepared  in
accordance  with  U.S.  Generally  Accepted  Accounting  Principles  (GAAP)
for  interim  financial  information  and the  instructions to Form 10-Q and  Article  10
of  Regulation  S-X.  The  consolidated  balance  sheet  as  of  June  30,  2005,
consolidated  statements  of  operations  for the three and six months  ended June 30,
2005  and 2004 and the  consolidated  statements  of cash  flows for  the six  months
ended June 30,  2005 and 2004 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,
respectively,  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 GAAP have  been
condensed  or  omitted  pursuant  to  the  rules  and  regulations  of the U.S.
Securities  and Exchange  Commission  (SEC). All material  intercompany
accounts and transactions  have been eliminated in consolidation.

Results  for
any  interim  period  are  not  necessarily  indicative  of results  for any future
interim  period or for  the  entire  year.  The  accompanying  unaudited  consolidated
financial  statements  should be read in conjunction  with the  consolidated  financial
statements and notes thereto included  in the  Companys  Annual  Report  on Form
10-K  for the year  ended December 31, 2004.

Use of Estimates

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

Reclassifications

Certain
reclassifications  have  been  made  to  the  prior  periods  financial  statements
and  segment  information  to  conform to the current period presentation.

6.

---



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 and cost for tissue
samples  is  determined  using the average cost method.  All  inventory  is  reviewed
for  impairment  and  appropriate  reserves  are  recorded.  All  inventory  is
classified  as  raw  materials.  The  following  table  sets  forth  information  on  the
composition  of the  Companys  inventory as of the  indicated  periods:

|                                   |  |  |   | June
      30,
      2005 |   |   | December
      31,
      2004 |  
|---------------------------------- |  |  | - | ------------------------- | - | - | ----------------------------- | -
|                                   |  |  |   |                           |   |   |                               |  
|Microarrays                        |  |  | $ | 1,371                     |   | $ | 501                           |  
|Laboratory
      reagents          |  |  |   | 576                       |   |   | 306                           |  
|Tissue
      samples               |  |  |   | 2,617                     |   |   | 2,365                         |  
|                                   |  |  |   |                           |   |   |                               |  
|                                   |  |  |   | 4,564                     |   |   | 3,172                         |  
|                                   |  |  |   |                           |   |   |                               |  
|Less:
      tissue sample reserves |  |  |   | (1,589                    | ) |   | (1,489                        | )
|                                   |  |  |   |                           |   |   |                               |  
|Inventory,
      net               |  |  | $ | 2,975                     |   | $ | 1,683                         |  
|                                   |  |  |   |                           |   |   |                               |  

Foreign
Currency Transactions

Foreign
currency  transaction  gains and losses are  included  in the  Consolidated  Statements
of  Operations.  During  the  three and six months  ended June 30,  2005,  foreign
currency  gains totaled $402 and $427, respectively.

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  distribution
to  owners.  Total  comprehensive  loss,  which  includes  unrealized  gains  or  losses
in  the  Companys  marketable  securities  available-for-sale,  was  $2,552  and
$4,620  for  the  three  months  ended  June  30,  2005  and  2004,  respectively,  and
$6,637  and  $10,091  for the six months  ended June 30,  2005  and 2004, respectively.

Stock-Based
Compensation Plans

At  June  30,
2005,  the  Company  has  three  stock-based  compensation  plans:  1997 Equity
Incentive  Plan (the Stock  Plan),  1997  Non-Employee  Directors Stock
Option Plan (the  Directors Plan)  and  Employee  Stock  Purchase  Plan
(the  ESPP).  The  Company  accounts  for  these  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  for  grants that
are  compensatory  are  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  Stock  Plan and  Directors Plan are considered
compensatory  and are granted  with an  exercise  price  equal to the fair value on the
grant  date.  Common  stock  issued  under  the  ESPP  is  considered  non-compensatory
under APB 25 and is  purchased at 85% of the  lesser  of the  market  price  of the
shares  at the  time of  purchase  or the  market  price  on the  beginning  date of an
offering,  as defined  under the plan (or, if later,  the date  during the offering  when
the  employee was first  eligible to  participate).  In  2005,  the  ESPP was  suspended
after  the  January  31,  2005  purchase,  as a  result  of the  Companys  pending
adoption  of  Statement  of  Financial  Accounting  Standards  (SFAS) No.  123(R),  Share-Based
Payment.

7.

---



The  following
table  illustrates  the effect on net loss and  net 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,
to stock-based  employee  compensation for the  three and six months ended June 30:

|                                                                   |  |  | Three Months Ended
      June 30, |        | Six Months Ended
      June 30, |  
|------------------------------------------------------------------ |  |  | --------------------------------- | ------ | ------------------------------- | -
|                                                                   |  |  |                                   |        |                                 |  
|                                                                   |  |  | 2005                              |        | 2004                            |  
|                                                                   |  |  |                                   |        |                                 |  
|Net loss,
      as reported                                        |  |  | $                                 | (2,610 | )                               | $
|Add:
      Stock-based employee compensation expense included      |  | 
|in
      reported net loss                                         |  |  |                                   | --     |                                 |  
|Deduct:
      Stock-based employee compensation expense determined |  | 
|under
      fair value-based method for all awards                 |  |  |                                   | (530   | )                               |  
|                                                                   |  |  |                                   |        |                                 |  
|Pro forma
      net loss                                           |  |  | $                                 | (3,140 | )                               | $
|                                                                   |  |  |                                   |        |                                 |  
|Basic
      and diluted net loss per share:                        |  | 
|As
      reported                                                  |  |  | $                                 | (0.08  | )                               | $
|Pro
      forma                                                    |  |  | $                                 | (0.10  | )                               | $

New Accounting
Pronouncements

In 2004,  the
Financial  Accounting  Standards  Board  issued  SFAS No. 123(R),  Share-Based
Payment, (SFAS 123(R)) and in  2005,  the SEC  approved  a new  rule  that  will
require  an  adoption  date of  January  1, 2006 for the  Company.  The new  statement
will require all  share-based  payments to employees  to be recognized in the  financial
statements  based on their  fair  values.  Currently,  the  Company  accounts  for  its
share-based  payments to employees  under the intrinsic  value  method  of  accounting
set  forth  in  Accounting  Principles  Board  Opinion  No.  25,  Accounting  for
Stock  Issued  to  Employees. Additionally,  the  Company  complies  with  the
stock-based employee compensation  disclosure  requirements of  SFAS  No.  148,  Accounting
for  Stock-Based  Compensation-Transition and Disclosure.

SFAS  123(R)
permits  companies  to  adopt  its  requirements  using one of two methods:

- A  modified  prospective method
in  which  compensation  cost is  recognized  beginning  with the  effective  date  (a)
based on the  requirements  of  SFAS  123(R)  for  all  share-based  payments  granted
after  the  effective  date  and  (b)  based  on  the  requirements  of SFAS  123(R) for
all awards  granted  to  employees  prior  to  the  effective  date of SFAS  123(R)  that
remain  unvested on the effective date.
- A  modified  retrospective method
which  includes  the  requirements  of  the  modified  prospective  method  described
above,  but  also permits  companies to restate  based on  the  amounts  previously
recognized  under  SFAS  123(R)  for  purposes  of  pro  forma  disclosures  for  either
(a)  all  prior  periods  presented  or  (b)  prior  interim  periods of the year of
adoption.

The  Company
plans  to  adopt  SFAS  123(R)  using  the  modified-prospective  method.  While  the
Company  has  not  estimated  the financial  statement  impact of adoption as the
Company has not yet  completed its  evaluation,  the impact is  expected to be
significant.

Note 2  Segment
information

Beginning in
2005,  the  Companys  operations  are  organized  into three  business  segments:
genomics  and  toxicogenomics  services,  nonclinical  contract  research  services  and
drug  repositioning  and selection  services,  all of which are more  fully  described
in Note 1. From  April 1,  2003 to  December  31,  2004,  the  Company  operated as two
business  segments:  genomics  and  toxicogenomics  services  and  preclinical  contract
research services (recently renamed  nonclinical  contract  research  services).  The prior
periods  segment  information  has  been  restated  to  conform  to  the  current
period  presentation.

The following
table  presents  revenue and  operating  income  (loss)  for  each of these  segments.
Management  uses  these  measures  to  evaluate  segment  performance.  To  arrive  at
operating  income  (loss)  for each  segment,  management  has  included  all  direct
costs  for  providing  the  segments  services  and  an  allocation  for  corporate
overhead  on  a  consistent  and  reasonable  basis.  Management  has  excluded  interest
(income)  expense  and income tax  expense and could  also exclude  certain  unusual or
corporate-related  costs in  the future.  In  addition,  while the  Companys
Consolidated  Statements of Operations  include  adjustments  to reflect the  elimination
of  inter-segment  transactions,  individual  segments  may  include  these  types  of
transactions.  Management  does not believe these  transactions  are material  and
believes  that their  inclusion  would not impact  either  managements  or
shareholders understanding  of  the  operations  of the segments.  For purpose of
clarity,  revenue  is reported  net of  inter-segment  transactions.  The Company  does
not identify or allocate,  nor does management  evaluate,  assets  by  segment.
Amortization  and  depreciation  is  allocated by segment as shown below.

8.

---



The  following
table sets  forth  information  on  reportable  segments for the three and six months
ended June 30:

|                                                |  |  | Three Months Ended
      June 30, |        | Six Months Ended
      June 30, |  
|----------------------------------------------- |  |  | --------------------------------- | ------ | ------------------------------- | -
|                                                |  |  |                                   |        |                                 |  
|                                                |  |  | 2005                              |        | 2004                            |  
|                                                |  |  |                                   |        |                                 |  
|Genomics
      and Toxicogenomics Services      |  |  |                                   |        |                                 |  
|Revenue                                         |  |  | $                                 | 14,166 |                                 | $
|Operating
      income (loss)                   |  |  |                                   | 1,669  |                                 |  
|Depreciation
      and amortization expense     |  |  |                                   | 2,601  |                                 |  
|Nonclinical
      Contract Research Services    |  | 
|Revenue                                         |  |  | $                                 | 5,820  |                                 | $
|Operating
      income (loss)                   |  |  |                                   | (2,838 | )                               |  
|Depreciation
      and amortization expense     |  |  |                                   | 782    |                                 |  
|Drug
      Repositioning and Selection Services |  | 
|Revenue                                         |  |  | $                                 | 147    |                                 | $
|Operating
      income (loss)                   |  |  |                                   | (2,460 | )                               |  
|Depreciation
      and amortization expense     |  |  |                                   | 146    |                                 |  

A
reconciliation  of segment  operating  income (loss) to net  loss  before  income tax
expense for the three and six months  ended June 30 is as follows:

|                                                |  |  | Three Months Ended
      June 30, |        | Six Months Ended
      June 30, |  
|----------------------------------------------- |  |  | --------------------------------- | ------ | ------------------------------- | -
|                                                |  |  |                                   |        |                                 |  
|                                                |  |  | 2005                              |        | 2004                            |  
|                                                |  |  |                                   |        |                                 |  
|Segment
      Operating Income (Loss)           |  |  |                                   |        |                                 |  
|Genomics
      and toxicogenomics services      |  |  | $                                 | 1,669  |                                 | $
|Nonclinical
      contract research services    |  |  |                                   | (2,838 | )                               |  
|Drug
      repositioning and selection services |  |  |                                   | (2,460 | )                               |  
|                                                |  |  |                                   |        |                                 |  
|                                                |  |  |                                   | (3,629 | )                               |  
|Interest
      (income), net                    |  |  |                                   | (617   | )                               |  
|Other
      (income) expense                    |  |  |                                   | (402   | )                               |  
|                                                |  |  |                                   |        |                                 |  
|Net loss
      before income tax expense        |  |  | $                                 | (2,610 | )                               | $
|                                                |  |  |                                   |        |                                 |  

During  the
three and six  months  ended  June 30,  2005,  one  customer  accounted  for  greater
than  10% of the  Companys  total  revenue and such  revenue is  included in the
genomics  and  toxicogenomics  services  business  segment.  During  the  three  and  six
months  ended  June  30,  2004,  no  customer  accounted  for  10% or more of the  Companys
total  revenue.  The  following  table  sets  forth  information  on  the  composition
of the  Companys  total  revenue  by  geographic  region:

|                                  |  |  |  | Geographic Region   | 
|--------------------------------- |  |  |  | ------------------- | 
|                                  |  |  |  |                     | 
|                                  |  |  |  | North
      America | 
|                                  |  |  |  |                     | 
|For the
      three months ended: |  |  |  |                     | 
|June
      30 , 2005              |  |  |  | 49%                 | 
|June
      30, 2004               |  |  |  | 53%                 | 
|For the
      three months ended: |  |  |  |                     | 
|June
      30 , 2005              |  |  |  | 51%                 | 
|June
      30, 2004               |  |  |  | 52%                 | 

9.

---



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

This Quarterly
Report on Form 10-Q (Form 10-Q) contains forward-looking statements
regarding future events and the future results of Gene Logic Inc. (Gene Logic)
that are based on current expectations, estimates, forecasts and projections
about the industries in which Gene Logic operates and the beliefs and
assumptions of the management of Gene Logic. Words such as expects, anticipates, targets, goals, projects, intends, plans, believes, seeks, estimates, variations
of such words, and similar expressions are intended to identify such
forward-looking statements. These forward-looking statements are only predictions and
are subject to risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual results may differ materially and adversely from those
expressed in any forward-looking statements. Factors that might cause or contribute
to such differences include those discussed in the Companys Annual Report on
Form 10-K for the year ended December 31, 2004 under the section entitled
Risks Related to Our Business and Industry. Gene Logic undertakes no
obligation to revise or update publicly any forward-looking statements to reflect
any change in managements expectations with regard thereto or any change in
events, conditions, or circumstances on which any such statements are based.

Unless the
context  otherwise  requires,  references  in this  Form 10-Q to Gene  Logic, Gene
Logic  Laboratories  Inc., Gene Logic  Ltd., Gene Logic  K.K., the
Company, we, us, and our refer to Gene
Logic Inc.  and its wholly owned  subsidiaries.  GeneExpress®,  BioExpress®,
ToxExpress® and  ASCENTA® are  registered  trademarks  of Gene Logic.  Genesis
Enterprise  System,  ToxShield and SCIANTIS are trademarks  of  Gene
Logic.  GeneChip® is  a  registered  trademark  of  Affymetrix, Inc.

Overview

We provide
drug  discovery  and  development  services to the  pharmaceutical  and  biotechnology
industries,  for  use  throughout  the  drug  development  process.  Our  goal  is to
assist in the  development of therapeutic  compounds in a more  timely, efficient and
cost-effective manner.

Our solutions
consist of:

- Genomics and Toxicogenomics
    Services: we help customers to discover and prioritize drug targets, identify
    biomarkers and predict toxicity and provide insights into efficacy of specific
    compounds through the use of proprietary reference gene expression and toxicogenomics
    databases, software tools, various toxicogenomics reports, data generation
    and other professional services and smaller solutions.
- Nonclinical  Contract  Research
Services:  we enable  customers  to assess  the  safety  and  pharmacologic  effects of
candidate  compounds  with the  intention  of  gaining  regulatory  approval  to  proceed
with  human trials on  prioritized  compounds,  through the  use of in vivo
testing  research  studies and  related laboratory services.
- Drug  Repositioning  and
Selection  Services:  we can  assist  customers  in  (i)  identifying  alternative
indications  for  customers failed,  stalled  or  deprioritized  compounds;  (ii)
expanding indications  for customers currently  marketed drugs;  and (iii)
prioritizing  and  identifying  indications  for  customers compounds  entering
preclinical  development.

Although we
expect  that a large  percentage  of our  genomics  and  toxicogenomics  services
revenue  will  continue  to  be  derived from subscription  agreements with
pharmaceutical and  biotechnology  companies  for all or parts  of our  BioExpress
System and/or ToxExpress  System databases,  we have initiated  a  strategy  to  increase
revenue  beyond  multi-year  subscriptions  to  our  larger  databases  by  broadening
our  portfolio  of  genomics  and  toxicogenomics-derived  services  and  expanding our
potential  customer  base. As a result,  we  derive a small,  but growing,  percentage
of our revenue from  providing other services, including  various  toxicogenomics  reports,  data  generation
and other  professional  services  and  subscriptions  to smaller  solutions,
such as our ASCENTA  System and  SCIANTIS System.  We have  also granted to some customers  perpetual
licenses to certain  data  from  our  BioExpress  System  and  ToxExpress  System
databases for a fixed fee.

Typically,  our
customers  enter into  multi-year  agreements  for  non-exclusive  access to our larger
databases and annual  or multi-year  agreements  for our smaller  databases/solutions.
Some of our  subscription  agreements  contain periodic update  requirements  that,  if
not met,  could  result in a reduction  in  license  fees  or  possible  breach  of  the
respective  agreement.  Certain  customers  also  have  an  option,  for  additional
consideration,  upon  expiration  of  their  subscription, to elect to retain and use
certain data.

Pricing for
subscriptions  is generally  dependent  upon such  issues as the solution  being  offered,  the  extent  and type of use by the  customer,  the number of
users  at  the  customer  site,  the  scope  of  installation  at the  customers
site,  requirements for customization,  any content  requirements  and  whether we
provide  any custom  analysis or  data  management  services.  Contracts  under  these
subscription  agreements  may be terminated by either party if  the  other  party
breaches  the  agreement  and fails to cure  such  breach  within  any  applicable  cure
period  or in the  event of a bankruptcy  of either party.  In addition,  certain
subscription  agreements  include  a  right  of  early  termination,  which  in  some
instances  is  subject  to  conditions,  by a customer  without  penalty,  on a
specified  date prior to the  normal  expiration  of the term.  Contracts  with our
customers,  other than our Japanese  customers,  are  dollar-denominated.  Contracts
with our  Japanese  customers,  beginning  in 2005,  are  now denominated in  Japanese  Yen and
may be  subject to  fluctuations  due to changes in currency  exchange  rates.

10.

---



For  our
various  toxicogenomics  reports and data  generation  and  other  professional
services,  the  scope  of  services  provided is based on the customers  needs.
Pricing  for these  services is  generally  dependent  upon such issues  as the number of
samples or  compounds  analyzed,  the type of  analysis  performed,  the  starting
material  provided by the  customer,  the type and  source of  GeneChip  microarray  used
for  the  services  and  requirements  for  customization.  Generally,  contracts  for such
services  may  be  terminated  by  either  party if the other party  breaches the
agreement  and  fails to cure such breach  within any  applicable  cure period  or in the
event of a bankruptcy of either party.

Our
nonclinical  contract  research  services  revenue  is  primarily  derived  from fixed
price  contracts.  In addition,  we derive  revenue  from cost  plus  contracts,  most of
which  are  with  U.S.  Government  entities.  Under  fixed  price  contracts,  we bear
the cost of  overruns,  but we  benefit if  the costs  are lower  than  anticipated.
Cost plus  contracts  contain a budget  for the study  based on labor and other cost
estimates.  We are reimbursed  for our costs within  specified  limits,  subject to
periodic  audit,  and receive a fixed fee.  If our costs are  lower  than  anticipated,
the  savings  are  realized  by our  customers.  If our  costs  are  higher  than
estimated,  we are  required  to work  only up to the  maximum  contract  value.  Our
costs are  subject  to audit by the U.S.  Government  and if such costs are reduced  upon
audit,  we may  have to  refund  amounts  paid to us.  Contracts  may range in  duration
from a few weeks to  several  years.  For most fixed  price  contracts,  a portion of the
contract  price is due at  the time the study starts,  with the balance  payable upon the
achievement  of milestones  over the studys  duration.  Costs  under cost plus
contracts are  reimbursed  monthly along with  a  pro  rata  portion  of  the  fixed
fee.  Most  of  our  nonclinical  contract  research  services  contracts  may  be
terminated  by the  customer  at any time,  subject to payment  to us of any  direct
costs  plus  applicable  indirect  costs  incurred  prior  to  termination,  plus  direct
and  indirect  costs  incurred to  terminate a study and, in some  instances,  a portion
of our profit or fixed fee, or a cancellation fee.

Prior to 2005,
we did not  derive  any  revenue  from our new  drug  repositioning  and  selection
services,  which  are  currently under further development.

We have
incurred  operating  losses  in each  year  since our  inception,  including  losses of
$28.5 million in 2004,  $24.8  million  in 2003  and  $24.1  million  in  2002.  At June
30,  2005, we had an  accumulated  deficit of $219.4  million.  Our  losses have resulted
principally  from costs  incurred in the  development,  marketing  and  sale  of  our
genomics  and  toxicogenomics  services.  These  costs  have  exceeded  our  revenue  and
we expect to incur  additional  operating  losses  in the future.

Results of
Operations

Three Months
Ended June 30, 2005 and 2004

Total Revenue.
Total revenue increased $1.5 million, or 8%, to $20.1 million for the three months
ended June 30, 2005 from $18.6 million for the same period in 2004. During the
three months ended June 30, 2005, one customer accounted for greater than 10% of our
total revenue and such revenue is included in the genomics and toxicogenomics
services business segment. During the three months ended June 30, 2004, no
customer accounted for greater than 10% of our total revenue. Five customers
accounted for approximately 37% and 32% of our total revenue for the three months
ended June 30, 2005 and 2004, respectively. During the three months ended
June 30, 2005 and 2004, 24% and 33% of our total revenue, respectively, was
from customers in the Pacific Rim, and 27% and 14% of our total revenue,
respectively, was from customers in Europe.

Genomics and
Toxicogenomics Services Revenue.Revenue from our genomics and toxicogenomics
services, which consist primarily of fees from subscription agreements to our
BioExpress System and ToxExpress System databases, was $14.2 million for the three
months ended June 30, 2005, an increase of $1.5 million, or 12%, from $12.7
million for the same period in 2004. The increase includes $2.9 million of a fee
from a customer to whom we granted a perpetual license to certain data to be
delivered through 2006 and $0.6 million in fees for subscriptions primarily
from new customers. These increases were partially offset by reduced revenue of
$1.3 million from the extensions of certain agreements at reduced service
levels and $0.5 million in subscription fees from agreements that have expired.
In 2005, subscription agreements for all or part of our BioExpress System
and/or ToxExpress System databases with ten customers are subject to agreement
extension discussions. These customers accounted for 31% of our total 2004 revenue
and 46% of our 2004 genomics and toxicogenomics revenue. Since the beginning of
2005, five of these agreements have been the subject of renegotiations. Of
these, one agreement was renegotiated on similar terms as the prior agreement and
one small agreement terminated. Two agreements were renegotiated at reduced
services levels and will result in lower future revenue than under the prior
agreements. One agreement will terminate at the end of 2005 and we granted
that customer, for an additional fee of $5.5 million, a perpetual license to data to
be delivered through 2006, of which a portion of the fee has been recorded as
revenue as noted above. Negotiations are either under way or will commence during
the year for the remaining five agreements. There is no assurance that these
remaining agreements will be extended or that any agreements resulting from these
discussions will be on terms comparable to, or as favorable to us as, the existing
subscription agreements. For 2005, we expect modest revenue growth in our genomics
and toxicogenomics services.

Nonclinical
Contract Research Services Revenue.Revenue from our nonclinical contract research
services, which consist of fees from nonclinical safety and pharmacology studies
and related laboratory services, decreased slightly to $5.8 million for the three
months ended June 30, 2005 compared to $6.0 million for the same period in
2004. We expect gradually improving revenue during 2005, as we begin to
realize the impact of ongoing facilities renovations and increased capacity.

11.

---



Cost of
Nonclinical Contract Research Services Revenue. Cost of nonclinical contract
research services revenue, which consists of direct and indirect costs related to
conducting nonclinical safety and pharmacology studies and related laboratory
services, including direct and indirect labor, study materials and facility
costs and depreciation, increased to $6.6 million for the three months ended June
30, 2005 from $6.1 million for the same period in 2004. The increase reflects a $0.5
million increase in employee and facility costs associated with our current
capacity expansion. As a result, our gross margins decreased to negative 14%
for the three months ended June 30, 2005 from negative 3% in the same period in
2004. We expect gradual improvements in our gross margins by the end of
2005, resulting from anticipated operational efficiencies and increasing revenue
from our expanded capacity.

Database
Production Expense. Database production expenses, which consist primarily of costs
related to the acquisition and processing of tissues and overhead expenses needed
to generate the content of the BioExpress System and ToxExpress System databases,
decreased to $8.0 million for the three months ended June 30, 2005 from $10.5
million for the same period in 2004. The decrease consisted primarily of a $1.4
million reduction in database content generation expenses, including lower costs
for acquiring tissues and certain agreements with third parties, and a
decrease of $1.0 million in depreciation and amortization expense. For 2005, we
expect database production expenses to decrease modestly, reflecting our continuing
efforts to reduce the costs of adding new content to our databases.

Research and
Development Expense. Research and development expenses, which now consist
primarily of costs associated with the ongoing development of our drug
repositioning and selection technologies, increased to $1.4 million for the three
months ended June 30, 2005 from $0.4 million for the same period in 2004. The
increase was primarily a result of development efforts relating to our drug
repositioning and selection technologies, which began in mid-2004. For the
remainder of 2005, we expect research and development expenses to increase
modestly from the first half of 2005 as we continue to develop our drug repositioning
and selection technologies (see Liquidity and Capital Resources).

Selling,
General and Administrative Expense. Selling, general and administrative expenses,
which consist primarily of sales, marketing, accounting, legal, human resources and
other general corporate expenses, increased to $7.7 million for the three months
ended June 30, 2005 from $5.9 million for the same period in 2004. The increase is
largely due to an increase in our investment in our new drug repositioning and
selection services and accrued costs under our employee incentive compensation plan.
For 2005, we expect selling, general and administrative expenses to increase due
to increases in expenses related to efforts to commercialize our drug
repositioning and selection services and employee costs.

Net Interest
Income. Net interest income increased to $0.6 million for the three months ended
June 30, 2005 from $0.3 million for the same period in 2004, due primarily to
increases in our rates of return.

Other Income.
Other income increased to $0.4 million for the three months ended June 30, 2005
from zero for the same period in 2004, due to foreign currency transaction gains
relating to our subscription agreements with our Japanese customers. As a result
of changing our distribution arrangements in Japan, beginning in 2005, agreements
with our Japanese customers are now denominated in Japanese Yen.

Income Tax
Expense. Income tax expense historically consisted of a 10% withholding tax on
certain payments by our Japanese customers. The withholding tax was eliminated
effective July 1, 2004, as a result of the new tax treaty between the U.S. and
Japan.

Six Months
Ended June 30, 2005 and 2004

Total Revenue.
Total revenue increased $1.0 million, or 3%, to $39.9 million for the six months
ended June 30, 2005 from $38.8 million for the same period in 2004. During the six
months ended June 30, 2005, one customer accounted for greater than 10% of our
total revenue and such revenue is included in the genomics and toxicogenomics
services business segment. During the six months ended June 30, 2004, no
customer accounted for 10% or more of our total revenue. Five customers accounted
for approximately 36% and 30% of our total revenue for the six months ended June
30, 2005 and 2004, respectively. During the six months ended June 30, 2005 and
2004, 30% and 32% of our total revenue, respectively, was from customers in the
Pacific Rim, and 19% and 16% of our total revenue, respectively, was from
customers in Europe.

Genomics and
Toxicogenomics Services Revenue.Revenue from our genomics and toxicogenomics
services, which consist primarily of fees from subscription agreements to our
BioExpress System and ToxExpress System databases, was $27.4 million for the six
months ended June 30, 2005, an increase of $0.9 million, or 4%, from $26.5
million for the same period in 2004. The increase includes $4.2 million in fees
from customers granted perpetual licenses to certain data and $1.3 million in
fees for subscriptions primarily from new customers. These increases were
partially offset by reduced revenue of $2.1 million from the extensions of
certain agreements at reduced service levels, $1.7 million in subscription
fees from agreements that expired and $0.7 million in lower sales for our software and related support services.

Nonclinical
Contract Research Services Revenue.Revenue from our nonclinical contract research
services, which consist of fees from nonclinical safety and pharmacology studies
and related laboratory services, remained essentially unchanged at $12.3 million
for the six months ended June 30, 2005 compared to $12.4 million for the same
period in 2004.

12.

---



Cost of
Nonclinical Contract Research Services Revenue. Cost of nonclinical contract
research services revenue, which consists of direct and indirect costs related to
conducting nonclinical safety and pharmacology studies and related laboratory
services, including direct and indirect labor, study materials and facility
costs and depreciation, increased to $13.8 million for the six months ended June 30,
2005 from $12.6 million for the same period in 2004. The increase reflects a $1.3
million increase in employee and facility costs associated with our current
capacity expansion. As a result, our gross margins decreased to negative 13%
for the six months ended June 30, 2005 from negative 2% in the same period in 2004.

Database
Production Expense. Database production expenses, which consist primarily of costs
related to the acquisition and processing of tissues and overhead expenses needed
to generate the content of the BioExpress System and ToxExpress System databases,
decreased to $16.2 million for the six months ended June 30, 2005 from $22.6
million for the same period in 2004. The decrease consisted primarily of a $3.7
million reduction in database content generation expenses, including lower costs
for acquiring tissues and certain agreements with third parties, and a
decrease of $1.9 million in depreciation and amortization expense.

Research and
Development Expense. Research and development expenses, which now consist
primarily of costs associated with our ongoing development of our drug
repositioning and selection technologies, increased to $2.8 million for the six
months ended June 30, 2005 from $0.7 million for the same period in 2004. The
increase was primarily a result of development efforts relating to our drug
repositioning and selection technologies, which began in mid-2004.

Selling,
General and Administrative Expense. Selling, general and administrative expenses,
which consisted primarily of sales, marketing, accounting, legal, human
resources and other general corporate expenses, increased to $15.3 million for the
six months ended June 30, 2005 from $12.3 million for the same period in 2004. The
increase is largely due to an increase in our investment in our new drug
repositioning and selection services and accrued costs under our employee incentive
compensation plan.

Net Interest
Income. Net interest income increased to $1.1 million for the six months ended
June 30, 2005 from $0.6 million for the same period in 2004, due primarily to
increases in our rates of return.

Other Income.
Other income increased to $0.4 million for the six months ended June 30, 2005 from
zero for the same period in 2004, due to foreign currency transaction gains relating
to our subscription agreements with our Japanese customers. As a result of changing
our distribution arrangements in Japan, beginning in 2005, agreements with our
Japanese customers are now denominated in Japanese Yen.

Income Tax
Expense. Income tax expense historically consisted of a 10% withholding tax on
certain payments by our Japanese customers. The withholding tax was eliminated
effective July 1, 2004, as a result of the new tax treaty between the U.S. and
Japan.

LIQUIDITY AND
CAPITAL RESOURCES

From  inception
through June 30, 2005,  we have  financed our  operations and  acquisitions  through the
issuance and sale of  equity  securities  and payments  from  customers.  As of June  30,
2005, we had  approximately  $98.0  million in cash,  cash  equivalents  and  marketable
securities  available-for-sale,  compared to $102.9 million as of December 31, 2004.

Net cash from
operating  activities  increased  to a positive  $6.7  million  for the six months  ended
June 30,  2005 from a  negative  $7.1 million for the same period in 2004,  primarily
due  to  the  timing  of  customer  payments  (including  prepayments)    for
our services  and, to a lesser  extent, an improvement in operations.

During  the six
months  ended  June 30,  2005 and  2004,  our  investing activities  consisted primarily
of purchases,  sales  and  maturities  of  available-for-sale  securities,  capital
expenditures  and software  development  and database  upgrade  costs.  Capital
expenditures  for the six  months  ended June  30,  2005 and  2004  were  $10.0  million
and  $2.3  million,  respectively.  The  increase  in  capital  expenditures  was
primarily  due to costs to increase our  nonclinical  contract  research  capacity  and
other  facility  renovations.  For the  remainder  of 2005,  we expect to incur  capital
expenditures  of  approximately  $5  million  (including  $0.8  million  committed  at
June  30,  2005),  for  additional  equipment  purchases.

We  have
capitalized  software  development  costs  of  $0.9  million  and $1.8  million  for the
six months  ended June 30,  2005 and 2004,  respectively.  These  costs  relate to
ongoing  efforts to enhance the  software  platform  of our  BioExpress  System  and
ToxExpress  System  databases.  The  decrease  in  software  development  costs was due
to  increased  efforts on  software  projects  not  subject  to  capitalization  and  a
reduction in our  software  development  work force.  Software  development  costs are
being  amortized  over  their  expected  useful life of three  years.  Software
development  costs are  expected  to  continue in 2005,  but at a reduced  rate,  as a
result of  ongoing  efforts to further  enhance  the  software  platform  of  our
BioExpress  System  and  ToxExpress  System  databases.  In  addition,  in  2005  we
expect  to  incur  approximately  $5.5 million of database  upgrade costs,  as we
enhance the content of our  BioExpress  System  database using  the latest  commercially
available  microarray  platform from  Affymetrix.  Database  upgrade  costs  have  been,
and  will  continue to be,  amortized  over their  estimated  useful life  of two years.

13.

---



Our  financing
activities,  other  than  the  repayment  of  capital  lease  obligations  and  an
equipment  loan,  have  primarily  consisted  of the  exercise  of stock  options  and
participation in our Employee Stock Purchase Plan.

In July 2004,
we purchased  certain  technologies and hired an  associated  research  team  from
Millennium  Pharmaceuticals,  Inc.  (Millennium).  We  contractually  agreed
to  spend at  least $8.5 million over the first  eighteen  months  following  the
purchase  to  develop  and  commercialize  these  technologies;  however,  we  currently
expect  to  invest  substantially  more.  Since  the  purchase  of  these  technologies,
we have recorded  $6.3 million in  expenditures  related  to  this  commitment.  In
addition,  subject  to  achieving  certain  performance  milestones  by the end of the
first  eighteen  months  and  depending  upon  the  level  of  spending in prior
periods,  we may be required  contractually  to  invest  up  to  an  additional  $6.0
million  over  the  subsequent  twelve months.  As part of the  consideration,  we
agreed  to  pay  $3.5  million  in  cash  or  stock,  at  our  election, to Millennium in
the first quarter of 2006.

To  generate
our  gene  expression  data,  we use  Affymetrix  microarrays,  instrumentation  and
software.  Under the terms  of the agreement,  we pay Affymetrix annual  subscription
fees  for  access to their  microarrays  and a license  to use their  technology.  We
purchase  microarrays and related  instrumentation  and  software  and,  beginning  in
2005,  pay  royalties  based on a percentage of revenue from  subscription  agreements  to
our  BioExpress  System and  ToxExpress  System  databases.  For  2005,  we  agreed to
purchase  a minimum  of  $9.5  million in products  and services  from  Affymetrix.  As
of June 30, 2005, we have  purchased  $4.1 million in products  and services related to
this commitment.

The  following
table  sets  forth  information  as to minimum  payments we anticipate  regarding
specific  future  financial  commitments as of June 30, 2005:

|                                            |  |  | Total |        | Within 6 
Months |   | 2006 & 2007 |  | 2008 & 2009 |        | Beyond 2009 |  
|------------------------------------------- |  |  | ----- | ------ | ---------------- | - | ----------- |  | ----------- | ------ | ----------- | -
|                                            |  |  |       |        |                  |   |             |  |             |        |             |  
|Capital
      lease obligations             |  |  | $     | 299    |                  | $ | 80          |  | $           | 219    |             | $
|Long-term
      debt                        |  |  |       | 668    |                  |   | 477         |  |             | 109    |             |  
|Facility
      renovations and              |  | 
|equipment
      purchases                   |  |  |       | 791    |                  |   | 791         |  |             | --     |             |  
|Technology
      program funding commitment |  |  |       | 2,234  |                  |   | 2,234       |  |             | --     |             |  
|Acquired
      technologies payable         |  |  |       | 3,500  |                  |   | --          |  |             | 3,500  |             |  
|Payment
      obligations to Affymetrix     |  |  |       | 5,876  |                  |   | 5,876       |  |             | --     |             |  
|Operating
      leases                      |  |  |       | 29,376 |                  |   | 3,025       |  |             | 12,285 |             |  
|                                            |  |  |       |        |                  |   |             |  |             |        |             |  
|Total                                       |  |  | $     | 42,744 |                  | $ | 12,483      |  | $           | 16,113 |             | $
|                                            |  |  |       |        |                  |   |             |  |             |        |             |  

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  under Risks Related to  Our Business and
Industry in our Annual  Report on Form 10-K  for the year ended December 31, 2004.

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  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

Revenue
  is recognized in accordance with the SECs Staff Accounting Bulletin No.
  104, Revenue Recognition (SAB 104). SAB 104 requires
  that 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.
  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 any 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.

14.

---



Revenue
recognized  for  any  multiple  element  contract  is  allocated  to each  element  of
the  arrangement  based on the  relative  fair  value of the  element.  The
determination  of  fair  value  of each  element  is  based  on our  analysis  of
objective  evidence from  comparable  sales of the  individual  element.  If we are
unable  to  determine  evidence  of  fair  value  for  any  undelivered  element  of  the
arrangement,  revenue for the  arrangement is deferred and recognized  using  the
revenue  recognition  method  appropriate  to  the  predominant element.

Genomics and
Toxicogenomics Services Revenue. Genomics and toxicogenomics services revenue
consists primarily of fees earned under subscription agreements for all or parts of
our gene expression reference databases, the BioExpress System and ToxExpress
System. We have also granted to some customers perpetual licenses to certain
data from our BioExpress System and ToxExpress System databases. In addition,
we derive a smaller, but growing, percentage of revenue from providing other
services, including various toxicogenomics reports, data generation and
other professional services and subscriptions to smaller solutions. Each of the
subscription agreements for our BioExpress System and ToxExpress System customers
is typically for a specific multi-year term. Revenue from such subscription
agreements is recognized ratably over the period during which the customer has
access to the BioExpress System and/or ToxExpress System databases. Certain
subscription agreements include a right of early termination (which, in some
instances, is subject to conditions) by the customer, without penalty, on a
specified date prior to the normal expiration of the term. If an agreement has
a right of early termination, revenue is recognized ratably over the
subscription term up to the possible date of early termination, based on
subscription fees earned under the agreement through the possible date of early
termination. If such early termination does not occur, the balance of the
subscription fees earned under the agreement is recognized as revenue ratably over
the remaining term of the agreement. Revenue from perpetual licenses to data is
recognized when the data has been delivered. Revenue from other services is
recognized when the services are performed. Our agreements generally provide for
termination in the event of a breach of the agreement by either party or a
bankruptcy or insolvency of either party.

Nonclinical
Contract Research Services Revenue. Nonclinical contract research services revenue
is primarily derived from fixed price contracts with pharmaceutical and biotechnology
companies. In addition, we derive revenue from cost plus contracts with U.S.
Government entities. Revenue is recognized on fixed price contracts as services
are performed, based primarily upon the percentage of hours worked (including
subcontractor hours) compared to the total estimated hours for the contract. We
believe that hours worked is the best measure of proportional performance under
fixed price contracts. 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. 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 U.S. 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.

GOODWILL AND
INTANGIBLE ASSETS IMPAIRMENT

In 2003,  we
recorded  goodwill  of $43.0  million as a result  of  the  acquisition  of  TherImmune.
In  addition,  weve  previously  recorded  goodwill  and other  intangible  assets,
including  licenses to technologies or data,  patent costs and  software  development
and  database  upgrade  costs.  The  determination  of  whether  or  not  these  other
intangible  assets are impaired involves significant  judgment,  including  the
following:  (i) our  licenses  and  internally  developed  intellectual  property  may
not provide  valid and  economical  competitive  advantage;  and (ii) services may become
obsolete  before  we  recover  the costs  incurred  in  connection  with  their
development.

Under
Statement of Financial  Accounting  Standards  No. 142,  Goodwill  and Other
Intangible  Assets,  we are required to  perform  an  annual  impairment  test  of
our  goodwill  and  periodic  reviews of our intangible  assets.  In addition,  we  are
required to test for  impairment  at any point we have an  indication  that  impairment
may  exist.  We have  elected to  perform our annual  impairment  test of goodwill as of
October  1.  The  goodwill  impairment  test  that  we  have  selected  consists  of  a
ten-year  discounted  cash  flow  analysis,  including  the  determination  of  a
terminal  value,  and  requires  management  to  make  various  judgments  and
assumptions,  including  revenue  growth  rates  and  discount  rates,  which management
believes are reasonable.  Our annual  impairment  test as of  October  1, 2004 did not
indicate  an  impairment  of our  goodwill.  There can be no guarantee  that  changing
conditions  in future  years  would not  result in a  different conclusion.

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 for our services be  made in advance,
based upon the  achievement of milestones or  in accordance with  predetermined  payment
schedules.  In the  past, we have  generally  not had a history of  collectability
problems  with our  customers;  however,  we have an allowance  for  doubtful  accounts
based  on our  estimate  of  accounts  receivable  that are at risk of  collection.  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.

---



INVENTORY

We maintain an
inventory  of tissue  samples  collected  from  various  commercial  and  academic  sites
that  are  used  to  expand the  content of our  databases.  We  assess  the  quality  and  supply  of  samples in excess of our
current  requirements  in determining  appropriate  reserves.  Our  methods  for
calculating  these  reserves  are  based  both  on  historical  performance  and
management  estimates.  Inventory  reserves  are  reviewed for  adjustment  on an ongoing
basis.  Changes  in tissue  quality  and/or  our  requirements  for  their  use  could
potentially  cause adjustments to these reserves in future periods.

EQUITY
INVESTMENTS

We  hold
equity  investments  in  several  companies  whose  businesses  may be  complementary  to
our business.  We record  an  investment  impairment  charge when it is believed that an
investment  has  experienced  a decline in value that is other  than temporary.  Future
adverse  changes in market  conditions  or poor  operating  results of the  underlying
investee could  result in our  inability  to  recover  the  carrying  value of  these
investments  that  may  not  be  reflected  in  an  investments  current  carrying
value,  thereby  possibly  requiring an impairment charge in the future.

RECENTLY ISSUED
ACCOUNTING PRONOUNCEMENTS

In 2004,  the
Financial  Accounting  Standards  Board issued a  revised Statement of Financial
Accounting  Standards (SFAS)  No.  123(R),  Share-Based  Payment, (SFAS
123(R))  and  in  2005,  the SEC  approved  a new rule that will  require  us to  adopt
the  statement  on January 1,  2006.  The new  statement  will  require  all  share-based
payments to  employees  to be  recognized  in the  financial  statements  based on their
fair  values.  Currently,  we account for our  share-based  payments  to employees  under
the  intrinsic  value method of accounting  set forth in  Accounting  Principles  Board
Opinion  No.  25,  Accounting for Stock Issued to Employees. Additionally,
we  comply with the stock-based employee  compensation  disclosure  requirements  of SFAS
No.  148,  Accounting  for  Stock-Based  Compensation-Transition and Disclosure.

SFAS  123(R)
permits  companies  to  adopt  its  requirements  using one of two methods:

- A  modified  prospective method
in  which  compensation  cost is  recognized  beginning  with the  effective  date  (a)
based on the  requirements  of  SFAS  123(R)  for  all  share-based  payments  granted
after  the  effective  date  and  (b)  based  on  the  requirements  of SFAS  123(R) for
all awards  granted  to  employees  prior  to  the  effective  date of SFAS  123(R)  that
remain  unvested on the effective date.
- A  modified  retrospective method
which  includes  the  requirements  of  the  modified  prospective  method  described
above,  but  also permits  companies to restate  based on  the  amounts  previously
recognized  under  SFAS  123(R)  for  purposes  of  pro  forma  disclosures  either  (a)
all  prior  periods  presented  or (b) prior  interim  periods of  the year of adoption.

We plan to
adopt SFAS  123(R)  using the  modified-prospective  method.  While we have not estimated
the financial  statement  impact  of  adoption  as  we  have  not  yet  completed  our
evaluation, the impact is expected to be significant.

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,  2005,  we  had cash and cash equivalents of  approximately  $69.0 million
and  marketable  securities  available-for-sale  of  an  additional  $29.0  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,
2005,  a  hypothetical  100 basis point  adverse  movement in interest  rates would have
resulted in an  increase  in the net loss of  approximately  $0.5  million for  the six
months  ended June 30, 2005.  Actual  changes in rates  may  differ  from  the
hypothetical  assumptions  used  in  computing this exposure.

16.

---



As a result of
changing our distribution arrangements in Japan, beginning in 2005, we are
subject to risk from changes in foreign exchange rates relating to revenue from
our subscription agreements with our Japanese customers, as such agreements are now
denominated in Japanese Yen. Such changes could result in foreign currency exchange
gains or losses. Revenue derived from the Pacific Rim as a percentage of
total revenue was 24% and 30% for the three and six months ended June 30, 2005,
respectively, and was primarily derived from our customers in Japan. Exchange
rate fluctuations between the U.S. dollar and the currencies of these countries
could result in positive or negative fluctuations in the amounts relating to
revenue reported in our consolidated financial statements. A hypothetical 10%
adverse change in average foreign currency movements would have resulted in an
increase in the net loss of approximately $0.8 million for the
six months ended June 30, 2005. There can be no assurance that losses related to
this currency risk will not occur.

Item 4.
Controls and Procedures

EVALUATION OF
DISCLOSURE CONTROLS AND PROCEDURES

As of June 30,
2005,  an evaluation  was  performed  under the  supervision  and with  the
participation  of our  management,  including  the  Chief  Executive  Officer  (CEO)
and  Chief  Financial  Officer  (CFO),  of  the  effectiveness  of  the
design  and  operation  of  our  disclosure  controls  and  procedures (Disclosure
Controls).  These are controls and  procedures  designed to  reasonably  assure
that  information  required  to be  disclosed  in our  reports  filed  under  the
Exchange  Act,  such  as  this  Form  10-Q,  is  recorded,  processed,  summarized  and
reported  within the time periods  specified in the U.S.  Securities  and  Exchange
Commissions  (SECs)  rules  and  forms.  Disclosure  Controls  are  also
designed  to  reasonably  assure  that  such  information  is  accumulated  and
communicated  to our  management,  including  the CEO and CFO,  as  appropriate  to allow
timely  decisions  regarding  required  disclosure.  Based  on  that  evaluation,  our
CEO and CFO,  have  concluded  that,  as of June 30, 2005,  our  disclosure  controls
and  procedures  were  effective to  provide reasonable  assurance that information
required to be  disclosed  in  our  Exchange  Act  reports  is  recorded,  processed,
summarized  and  reported  within the time periods  specified by the SEC, and that
material  information  relating  to Gene Logic is made known to  management,  including
the CEO  and CFO,  particularly  during  the period  when our  periodic  reports are
being prepared.

Our
management,  including  the CEO and CFO,  does not expect  that our  Disclosure  Controls
or our  internal  control  over  financial  reporting  will prevent or detect all error
and all  fraud.  A control  system,  no matter  how well  designed  and  operated,  can
provide  only  reasonable,  not  absolute,  assurance that the control  systems
objectives  will be met.  The  design of a control  system  must  reflect  the fact that
there are resource  constraints,  and the benefits of controls  must  be  considered
relative  to  their  costs.  Further,  because of the inherent  limitations  in all
control  systems,  no  evaluation  of  controls  can provide  absolute  assurance  that
misstatements  due to error or fraud  will not  occur or  that all  control  issues  and
instances  of  fraud,  if any,  within  the  company  have  been  detected.  These
inherent  limitations  include  the  realities  that  judgments  in  decision-making  can
be faulty and that  breakdowns  can occur  because  of  simple  error or  mistake.
Controls  can also be  circumvented  by the  individual  acts  of  some  persons,  by
collusion of two or more  people,  or by  management  override  of the  controls.  The
design of any  system of  controls  is  based in part on certain  assumptions  about the
likelihood of  future  events,  and there can be no assurance that any design  will
succeed  in  achieving  its  stated  goals  under  all  potential  future  conditions.
Projections  of any evaluation  of  controls  effectiveness  to future  periods are
subject to  risks. Over time,  controls may become  inadequate  because of  changes  in
conditions  or  deterioration  in the  degree  of  compliance with policies or procedures.

CHANGES IN
INTERNAL CONTROL OVER FINANCIAL REPORTING

There  were  no
changes  in  our  internal  controls  over  financial  reporting  during the  second
quarter of 2005 that  materially  affected or are  reasonably  likely to  materially
affect our internal controls over financial reporting.

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

None.

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  2,  2005  (Annual  Meeting).
At  the  Annual  Meeting,  the  Companys  stockholders  elected  three  directors
to  the  Companys  Board  of  Directors,  approved  an  amended  and  restated 1997
Non-Employee  Directors Stock Option Plan and  ratified  the  selection  of  our
independent  auditors,  as  described  below.  At the Annual Meeting,  27,475,232
shares,  out  of  a  total  of  31,739,454  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        |  | Withheld  |  |  | 
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------- |  | --------- |  |  | 
|  |  |                                                                                                                                                                                                              |  |            |  |           |  |  | 
|1 |  | To
      elect three directors to hold office until the 2008 Annual Meeting
      of Stockholders or his earlier resignation or removal..                                                                    |  |            |  |           |  |  | 
|  |  |                                                                                                                                                                                                             
|  |  |                                                                                                                                                                                                              |  |            |  |           |  |  | 
|  |  | Frank L. Douglas,
      M.D., Ph.D                                                                                                                                                                           |  | 22,337,126 |  | 5,138,106 |  |  | 
|  |  | Mark D. Gessler                                                                                                                                                                                              |  | 21,474,996 |  | 6,000,236 |  |  | 
|  |  | J. Stark Thompson,
      Ph.D                                                                                                                                                                                |  | 22,368,178 |  | 5,107,054 |  |  | 
|  |  |                                                                                                                                                                                                              |  |            |  |           |  |  | 
|  |  | The following
      individuals' term of office as a director continue after
      the meeting: Charles L. Dimmler III; G. Anthony Gorry, Ph.D.;
    Jules Blake, Ph.D.; and Michael J. Brennan, M.D., Ph.D. |  |            |  |           |  |  | 

|  |  |                                                                                                                                                                                                                                                                                                                                                                                        |  | For        |  | Against   |  | Abstain | 
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  | --------- |  | ------- | 
|  |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |            |  |           |  |         | 
|2 |  | To
      approve an amended and restated 1997 Non-Employee Directors'
      Stock Option Plan, including to increase the aggregate number of
      shares of common stock authorized for issuance under such plan
      by 325,000 shares, to provide for specific option grants to the
      non-executive Chairman of the Board of Directors and to extend
    the term of the plan. |  | 10,706,504 |  | 6,704,952 |  | 109,857 | 
|  |  |                                                                                                                                                                                                                                                                                                                                                                                       

|  |  |                                                                                                                                                    |  | For        |  | Against   |  | Abstain | 
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  | --------- |  | ------- | 
|  |  |                                                                                                                                                    |  |            |  |           |  |         | 
|3 |  | To ratify the selection of Ernst & Young LLP as the Companys
independent registered public accounting firm for the year ending
December 31, 2005. |  | 26,232,696 |  | 1,193,654 |  | 48,882  | 
|  |  |                                                                                                                                                   

Item 5. Other
Information

None.

18.

---



Item 6.
Exhibits and Reports on Form 8-K

|A) |                | Exhibits:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | -------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                | 10.6                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                | 31                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                | 32                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | ______________ |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                | (1) Filed
      as an exhibit to Registrants Current Report on Form 8-K, filed on
      June 6, 2005, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|B) |                | Reports
      on Form 8-K:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                | During
      the three months ended June 30, 2005, the Company filed the following reports:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                | The Current Report on Form 8-K, filed on April 22, 2005, with respect to the Companys financial results for the three months ended March 31, 2005.
        The Current Report on Form 8-K, filed on May 25, 2005, with respect to the Companys proposed further amendment to the 1997 Non-Employee Directors' Stock Option Plan limiting option repricing.
        The Current Report on Form 8-K, filed on June 6, 2005, with respect to the approval by the Companys shareholders of the 1997 Non-Employee Directors' Stock Option Plan and the two other proposals at the Companys 2005 Annual Meeting of Stockholders.

19.

---



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 8, 2005 | By:                  
|      |                |                      
|      |                |                      
|      |                |                      

20.

---