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  1. 1. Andrew Vaino, Ph.D. , (949) 720-7102 Sales (800) 933-6830, Trading (800) 933-6820 FLASH NOTE | EQUITY RESEARCH | January 20, 2011BiotechnologyClinical Data, Inc. | CLDA - $15.60 - NASDAQ | Buy Stock Data CLDA: Phase 3 Failure Of Forest 52 Week Low - High $10.87 - $22.39 Anti-Depressant Could Improve Partnership Shares Out. (mil) 29.95 Mkt. Cap.(mil) $467.3 Odds 3-Mo. Avg. Vol. 201,492 12-Mo.Price Target $28.00 s Levomilnacipran no better than placebo in Phase 3 clinical study. Cash (mil) $47.0 Forest Laboratories announced that a Phase 3 (362 patients) clinical study Tot. Debt (mil) NA of Levomilnacipran (F2695 SR, single optical isomer version of Savella: Est. 3Yr. EPS Growth NM approved to treat fibromyalgia) was not effective in treating depression. The primary endpoint of this study was change in the MADRS scale (a EPS ($) marker of depression) after 8 weeks. Forest is conducting two other Phase Yr Mar 2010 —2011E— —2012E— 3 studies of Levomilnacipran to treat depression, using the same primary Curr Curr endpoint: results of these studies are expected later in 2011: these studies 1Q (0.67)A (0.51)A — could be positive, but the negative result announced today does not strongly support that hypothesis. Milnacipran, an optically impure version of 2Q (0.79)A (0.56)A — Levomilnacipran, is approved to treat depression in Europe and Japan. 3Q (0.63)A (0.55)E — 4Q (1.44)A (0.65)E — s Vilazodone showed efficacy in same measure. CLDA has a PDUFA YEAR (3.57)A (2.26)E (0.69)E date for its depression treatment, Vilazodone, on January 22. We note that P/E NM NM NM the Levomilnacipran Phase 3 study used the same endpoint that CLDA 2009 Annual: EPS excludes a $(0.40) impact from discontinued used in its Phase 3 clinical studies of Vilazodone. In two Phase 3 operations. depression studies, Vilazodone demonstrated a statistically significant Revenue ($ millions) 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 Yr Mar 2010 —2011E— —2012E— provides further validation of Vilazodones utility. Curr Curr 1Q 3.7A 5.4A — s Other implications for CLDA. Composition of matter patents for Lexapro, 2Q 3.0A 3.4A — an anti-depressant sold by Forest, expire in March 2012 (presumably 3Q 3.1A 4.5E — Levomilnacipran was intended as a replacement). In 2010, Lexapro sales 4Q 3.2A 0.9E — were 58% of Forests sales. Further, patents on Forests Alzheimers drug YEAR 13.1A 14.3E 55.1E Namenda (which accounts for 29% of the companys 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 1 Year Price History/Ave. Daily Vol for CLDA already in place to sell anti-depressants, would be an ideal partner for 24 21 Vilazodone. Todays result could make a partnership more likely. 18 15 12 s Overall take positive for CLDA. We continue to believe that odds of 9 6 approval for Vilazodone are 75%, and we believe that a partnership (with Q1 Q2 Q3 Q1 FRX or another major pharmaceutical firm) could well emerge 2010 2011 post-approval. Created by BlueMatrix [Intraday price: $14.96 (2:06 PM EST)]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
  2. 2. Clinical Data, Inc. Flash Note - January 20, 2011 VALUATION We maintain our BUY rating for Clinical Data inc, and our 12-month target price of $28/share. The price target is 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 the Vilazodone 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 considered speculative. s 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. s Intellectual property risk - Patent protection for CLDAs tests appears less than bullet-proof, and there is a chance competition could emerge for some tests. s 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. As well, sales of CLDAs genetic tests could also disappoint, which would also materially effect stock price. s Financing risk - CLDA will likely have to raise additional finds from investors prior to product launch. If the company is unable to raise these funds on favorable terms this could have a material adverse impact on share price. COMPANY DESCRIPTION Clinical Data, Inc. provides molecular and pharmacogenomics services, as well as clinical diagnostics for the improvement of patient care worldwide. The PGxHealth division focuses on biomarkers and related test development, validation, and commercialization activities designed to improve the efficacy and safety of drugs for patients. It markets these genetic tests to providers, payers, and consumers. This division is also seeking to develop and commercialize Vilazodone, a novel dual-serotonergic antidepressant compound being studied for the treatment of depression along with a potential companion pharmacogenetic test. The Cogenics division offers a range of genomics services for both research and regulated projects, including services to support pharmacogenomics discovery and validation, and biomarker research and development. Its services include sequencing, genotyping, gene expression, and bio-banking in both regulated and unregulated markets for pharmaceutical, biotechnology, academic, agricultural, and government clients. The company was founded in 1969 and is headquartered in Newton, Massachusetts. MENTIONED COMPANIES Page 2 of 4
  3. 3. 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. Rating and Price Target History for: Clinical Data, Inc. (CLDA) as of 01-19-2011 09/30/08 08/11/09 01/21/10 I:B:$21 B:$24 B:$28 24 20 16 12 8 4 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 2008 2009 2010 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 a rating 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 affiliate received 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 any given point in time, our investment rating on a stock and its implied price movement may not correspond to the stated 12-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 at least 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 return between 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 decline by 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 or expectations 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 Page 3 of 4
  4. 4. 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 and facts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are from sources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used as a complete analysis of the company, industry or security discussed in the report. Additional information is available upon request. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without the express written permission of ROTH. Copyright 2011. Member: FINRA/SIPC. Page 4 of 4