CLDA roth

1. Andrew Vaino, Ph.D. , (949) 720-7102
avaino@roth.com
Sales (800) 933-6830, Trading (800) 933-6820
FLASH NOTE | EQUITY RESEARCH | January 20, 2011
Biotechnology
Clinical 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 Vilazodone's 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 Forest's sales. Further, patents on Forest's Alzheimer's drug
YEAR 13.1A 14.3E 55.1E 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
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. Today's 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"): 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

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 CLDA's 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 CLDA's 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
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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
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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
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subject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actual
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express written permission of ROTH. Copyright 2011. Member: FINRA/SIPC.
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