Refer to important disclosure information and rating System Definition on pages 3 - 4 of this report. Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Roth Capital Partners, LLC | 24 Corporate Plaza | Newport Beach CA 92660 | 949 720 5700 | Member FINRA/SIPC Biotechnology Clinical Data, Inc. | CLDA - $15.60 - NASDAQ | Buy Stock Data 52 Week Low - High $10.87 - $22.39 Shares Out. (mil) 29.95 Mkt. Cap.(mil) $467.3 3-Mo. Avg. Vol. 201,492 12-Mo.Price Target $28.00 Cash (mil) $47.0 Tot. Debt (mil) NA Est. 3Yr. EPS Growth NM EPS ($) Yr Mar 2010 —2011E— —2012E— Curr Curr 1Q (0.67)A (0.51)A — 2Q (0.79)A (0.56)A — 3Q (0.63)A (0.55)E — 4Q (1.44)A (0.65)E — YEAR (3.57)A (2.26)E (0.69)E P/E NM NM NM 2009 Annual: EPS excludes a $(0.40) impact from discontinued operations. Revenue ($ millions) Yr Mar 2010 —2011E— —2012E— Curr Curr 1Q 3.7A 5.4A — 2Q 3.0A 3.4A — 3Q 3.1A 4.5E — 4Q 3.2A 0.9E — YEAR 13.1A 14.3E 55.1E Q1 Q2 Q3 Q1 6 9 12 15 18 21 24 2010 2011 1 Year Price History/Ave. Daily Vol for CLDA Created by BlueMatrix CLDA: Phase 3 Failure Of Forest Anti-Depressant Could Improve Partnership Odds ■ Levomilnacipran no better than placebo in Phase 3 clinical study . Forest Laboratories announced that a Phase 3 (362 patients) clinical study of Levomilnacipran (F2695 SR, single optical isomer version of Savella: approved to treat fibromyalgia) was not effective in treating depression. The primary endpoint of this study was change in the MADRS scale (a marker of depression) after 8 weeks. Forest is conducting two other Phase 3 studies of Levomilnacipran to treat depression, using the same primary endpoint: results of these studies are expected later in 2011: these studies could be positive, but the negative result announced today does not strongly support that hypothesis. Milnacipran, an optically impure version of Levomilnacipran, is approved to treat depression in Europe and Japan. ■ Vilazodone showed efficacy in same measure. CLDA has a PDUFA date for its depression treatment, Vilazodone, on January 22. We note that the Levomilnacipran Phase 3 study used the same endpoint that CLDA used in its Phase 3 clinical studies of Vilazodone. In two Phase 3 depression studies, Vilazodone demonstrated a statistically significant benefit of ~3 points over placebo in the MADRS, a result that was statistically significant (p < 0.01 in both studies). Our take is that this provides further validation of Vilazodone's utility. ■ Other implications for CLDA. Composition of matter patents for Lexapro, an anti-depressant sold by Forest, expire in March 2012 (presumably Levomilnacipran was intended as a replacement). In 2010, Lexapro sales were 58% of Forest's sales. Further, patents on Forest's Alzheimer's drug Namenda (which accounts for 29% of the company's sales) expired in 2010. Losing these revenue streams to generics could present an issue for Forest. We have speculated previously that Forest, with a sales force already in place to sell anti-depressants, would be an ideal partner for Vilazodone. Today's result could make a partnership more likely. ■ Overall take positive for CLDA. We continue to believe that odds of approval for Vilazodone are 75%, and we believe that a partnership (with FRX or another major pharmaceutical firm) could well emerge post-approval. [Intraday price: $14.96 (2:06 PM EST)] Andrew Vaino, Ph.D. , (949) 720-7102 [email protected]Sales (800) 933-6830, Trading (800) 933-6820 FLASH NOTE | EQUITY RESEARCH | January 20, 2011
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Refer to important disclosure information and rating System Definition on pages 3 - 4 of this report. Regulation Analyst Certification ("Reg AC"): Theresearch analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this reportaccurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is orwill be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Roth Capital Partners, LLC | 24 Corporate Plaza | Newport Beach CA 92660 | 949 720 5700 | Member FINRA/SIPC
2009 Annual: EPS excludes a $(0.40) impact from discontinuedoperations.
Revenue ($ millions)
Yr Mar 2010 —2011E— —2012E—
Curr Curr
1Q 3.7A 5.4A —
2Q 3.0A 3.4A —
3Q 3.1A 4.5E —
4Q 3.2A 0.9E —
YEAR 13.1A 14.3E 55.1E
Q1 Q2 Q3 Q1691215182124
2010 2011
1 Year Price History/Ave. Daily Vol for CLDA
Created by BlueMatrix
CLDA: Phase 3 Failure Of ForestAnti-Depressant Could Improve PartnershipOdds
■ Levomilnacipran no better than placebo in Phase 3 clinical study.Forest Laboratories announced that a Phase 3 (362 patients) clinical studyof Levomilnacipran (F2695 SR, single optical isomer version of Savella:approved to treat fibromyalgia) was not effective in treating depression.The primary endpoint of this study was change in the MADRS scale (amarker of depression) after 8 weeks. Forest is conducting two other Phase3 studies of Levomilnacipran to treat depression, using the same primaryendpoint: results of these studies are expected later in 2011: these studiescould be positive, but the negative result announced today does notstrongly support that hypothesis. Milnacipran, an optically impure version ofLevomilnacipran, is approved to treat depression in Europe and Japan.
■ Vilazodone showed efficacy in same measure. CLDA has a PDUFAdate for its depression treatment, Vilazodone, on January 22. We note thatthe Levomilnacipran Phase 3 study used the same endpoint that CLDAused in its Phase 3 clinical studies of Vilazodone. In two Phase 3depression studies, Vilazodone demonstrated a statistically significantbenefit of ~3 points over placebo in the MADRS, a result that wasstatistically significant (p < 0.01 in both studies). Our take is that thisprovides further validation of Vilazodone's utility.
■ Other implications for CLDA. Composition of matter patents for Lexapro,an anti-depressant sold by Forest, expire in March 2012 (presumablyLevomilnacipran was intended as a replacement). In 2010, Lexapro saleswere 58% of Forest's sales. Further, patents on Forest's Alzheimer's drugNamenda (which accounts for 29% of the company's sales) expired in2010. Losing these revenue streams to generics could present an issue forForest. We have speculated previously that Forest, with a sales forcealready in place to sell anti-depressants, would be an ideal partner forVilazodone. Today's result could make a partnership more likely.
■ Overall take positive for CLDA. We continue to believe that odds ofapproval for Vilazodone are 75%, and we believe that a partnership (withFRX or another major pharmaceutical firm) could well emergepost-approval.
We maintain our BUY rating for Clinical Data inc, and our 12-month target price of $28/share. The price targetis based on a 20x multiple of our risk-adjusted estimated FY14 EPS of $2.46 (fully diluted) discounted at 20%annually.
Factors that could impede CLDA shares from reaching our price target include delays or rejection of theVilazodone NDA filing, risk of further dilutive financing, and a general downturn in market conditions.
RISKS
Company specific risks for CLDA are listed below. An investment in Clinical Data inc. should be consideredspeculative.■ Regulatory risk - CLDA filed an NDA for Vilazodone in 1Q10. Failure of this filing to gain acceptance by the
FDA could have a material adverse impact on company shares.■ Intellectual property risk - Patent protection for CLDA's tests appears less than bullet-proof, and there is a
chance competition could emerge for some tests.■ Demand risk - Viladozone will compete for market share against a number of currently available therapies
for depression. Failure to achieve estimated sales could have a material adverse impact on stock price. Aswell, sales of CLDA's genetic tests could also disappoint, which would also materially effect stock price.
■ Financing risk - CLDA will likely have to raise additional finds from investors prior to product launch. If thecompany is unable to raise these funds on favorable terms this could have a material adverse impact onshare price.
COMPANY DESCRIPTION
Clinical Data, Inc. provides molecular and pharmacogenomics services, as well as clinical diagnostics for theimprovement of patient care worldwide. The PGxHealth division focuses on biomarkers and related testdevelopment, validation, and commercialization activities designed to improve the efficacy and safety of drugsfor patients. It markets these genetic tests to providers, payers, and consumers. This division is also seekingto develop and commercialize Vilazodone, a novel dual-serotonergic antidepressant compound being studiedfor the treatment of depression along with a potential companion pharmacogenetic test. The Cogenics divisionoffers a range of genomics services for both research and regulated projects, including services to supportpharmacogenomics discovery and validation, and biomarker research and development. Its services includesequencing, genotyping, gene expression, and bio-banking in both regulated and unregulated markets forpharmaceutical, biotechnology, academic, agricultural, and government clients. The company was founded in1969 and is headquartered in Newton, Massachusetts.
MENTIONED COMPANIES
Page 3 of 4
Clinical Data, Inc. Flash Note - January 20, 2011
Disclosures:
Within the last twelve months, ROTH has received compensation for investment banking services from Clinical Data, Inc.
ROTH makes a market in shares of Clinical Data, Inc. and as such, buys and sells from customers on a principal basis.
Within the last twelve months, ROTH has managed or co-managed a public offering for Clinical Data, Inc.
On September 28, 2010, ROTH changed its rating system in order to replace the Hold rating with Neutral.
Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q14
8
12
16
20
24
2008 2009 2010 2011
09/30/08
I:B:$21
08/11/09
B:$24
01/21/10
B:$28
Rating and Price Target History for: Clinical Data, Inc. (CLDA) as of 01-19-2011
Created by BlueMatrix
Each box on the Rating and Price Target History chart above represents a date on which an analyst made a change to arating or price target, except for the first box, which may only represent the first note written during the past three years.Distribution Ratings/IB Services shows the number of companies in each rating category from which Roth or an affiliatereceived compensation for investment banking services in the past 12 month.
Distribution of IB Services Firmwide
IB Serv./Past 12 Mos.as of 01/20/11
Rating Count Percent Count Percent
Buy [B] 202 72.1 43 21.3
Neutral [N] 72 25.7 4 5.6
Sell [S] 6 2.1 0 0
Not Rated [NR] 0 0.0 0 0
Our rating system attempts to incorporate industry, company and/or overall market risk and volatility. Consequently, at anygiven point in time, our investment rating on a stock and its implied price movement may not correspond to the stated12-month price target.
Ratings System Definitions - ROTH employs a rating system based on the following:
Buy: A security, which at the time the rating is instituted and or reiterated, indicates an expectation of a total return of atleast 10% over the next 12 months.
Neutral: A security, which at the time the rating is instituted and or reiterated, indicates an expectation of a total returnbetween negative 10% and 10% over the next 12 months.
Sell: A security, which at the time the rating is instituted and or reiterated, indicates an expectation that the price will declineby more than 10% over the next 12 months.
Not Rated: A security which at the time the rating is instituted and or reiterated, indicates that we have no opinion orexpectations as to the price of the security over the next 12 months.
Not Covered (NC): ROTH does not publish research or have an opinion about the security.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business
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Clinical Data, Inc. Flash Note - January 20, 2011
relationships with the covered companies mentioned in this report in the next three months.The material, information andfacts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are fromsources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used asa complete analysis of the company, industry or security discussed in the report. Additional information is available uponrequest. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report aresubject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actualresults to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a highdegree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without theexpress written permission of ROTH. Copyright 2011. Member: FINRA/SIPC.
