Gene Logic Reports Second Quarter 2005 Financial Results; Net Loss Narrows by 41%; Genomics Achieves Profitability for Second Co

Gene Logic Inc. (NASDAQ:GLGC) today reported financial
results for the second quarter ended June 30, 2005.
   Led by the second consecutive profitable quarter for its genomics
and toxicogenomics business, Gene Logic today announced several strong
second quarter achievements, including a 41% reduction in its
year-over-year net loss, no decline in its cash balance and continued
success in achieving business development and scientific goals in its
new drug repositioning business.
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Q2 Highlights

Genomics and Toxicogenomics Services

    --  The Company achieved its second consecutive profitable quarter
        for its Genomics business.

    --  The Company signed seven (7) new customers, including Imclone,
        CISRO and Neurocrine, bringing to sixteen (16) the total
        number of new customers signed in the first half of 2005.

    --  Shortly after the quarter end, the Company launched the
        SCIANTIS(TM) System, a new online gene expression reference
        database for use by academic, government and other non-profit
        research organizations. In connection with the launch of
        SCIANTIS, the Company signed a global distribution agreement
        with GE Healthcare whereby GE will distribute the System in 32
        countries and will be exclusive distributor in Japan.

Drug Repositioning and Selection Services

    --  The Company commenced work on an additional ten (10) drug
        candidates, all of which are candidates from discontinued
        clinical programs that were stalled for reasons other than
        toxicity. The current total number of drug candidates in Gene
        Logic's repositioning pipeline stands at seventeen (17) as of
        June 30, 2005.

    --  Two drug candidates currently under evaluation have now
        advanced to the next stage of development. In each case, the
        partner agreed that the repositioning platform had presented
        evidence compelling enough to warrant the performance of
        efficacy animal model validation.

    --  The Company generated promising data suggesting new possible
        indications for an additional two (2) candidates under
        evaluation, bringing to four (4) the current number of
        promising leads from the seventeen (17) drug candidates under
        evaluation.

Nonclinical Contract Research Services

    --  The Company completed the expansion and upgrade of its
        nonclinical services facilities, increasing its general
        toxicology testing capacity by more than 50% to meet growing
        industry demand for nonclinical testing.

Revenue

Second Quarter Ended June 30, 2005

                                  Q2 2005      Q2 2004     % Change
                                ------------ ------------ ------------
Genomics and toxicogenomics
 services                       $    14,166  $    12,663      12%
Nonclinical contract research
 services                             5,820        5,959      -2%
Drug repositioning and
 selection services                     147            -       NA
                                ------------ ------------ ------------
Total revenue                   $    20,133  $    18,622       8%
                                ------------ ------------ ------------
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   Total revenue for the second quarter of 2005 was $20.1 million
compared to $18.6 million for the second quarter of 2004, an increase
of 8%. Revenue for the Company's genomics and toxicogenomics business
increased $1.5 million, or 12%. Revenue for the second quarter of 2005
includes $2.9 million for the first deliverables of a $5.5 million
sale to an existing customer, for a perpetual license for data. The
balance of the $5.5 million will be recognized as data is delivered
through December 2006. The Company is currently broadening its
portfolio of genomics services and related distribution channels as
the Company continues its strategy of increasing its sales beyond
large, multiyear subscriptions. Revenue for the Company's nonclinical
contract research services business declined slightly in 2005.
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Six Months Ended June 30, 2005

                                 6 Months     6 Months
                                   2005         2004       % Change
                                ------------ ------------ ------------
Genomics and toxicogenomics
 services                       $    27,405  $    26,473       4%
Nonclinical contract research
 services                            12,254       12,370      -1%
Drug repositioning and
 selection services                     214            -       NA
                                ------------ ------------ ------------
Total revenue                   $    39,873  $    38,843       3%
                                ------------ ------------ ------------
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   Year-to-date total revenue was $39.9 million compared to $38.8
million for the prior year and reflects a 4% increase in genomics and
toxicogenomics revenue and essentially flat revenue for the Company's
nonclinical contract research services.

   Operating Income (Loss)
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Second Quarter Ended June 30, 2005

                                  Q2 2005      Q2 2004     % Change
                                ------------ ------------ ------------
Genomics and toxicogenomics
 services                       $     1,669  $    (1,895)     188%
Nonclinical contract research
 services                            (2,838)      (2,316)     -23%
Drug repositioning and
 selection services                  (2,460)           -       NA
                                ------------ ------------ ------------
Total operating income (loss)   $    (3,629) $    (4,211)     14%
                                ------------ ------------ ------------
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   Total operating loss for the second quarter of 2005 was $3.6
million, which included $2.5 million in losses from our investment in
our new drug repositioning and selection services business. This
compares to $4.2 million for the second quarter of 2004. This
improvement of 14% reflects the positive impact of increased sales
volume of $1.5 million and reduced database production expenses,
offset by higher facility, labor and support costs associated with
expansion of the Company's nonclinical contract research services
capacity, as well as the investment in the Company's new drug
repositioning and selection business.
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Six Months Ended June 30, 2005

                                 6 Months     6 Months
                                   2005         2004       % Change
                                ------------ ------------ ------------
Genomics and toxicogenomics
 services                       $     2,504  $    (4,560)     155%
Nonclinical contract research
 services                            (5,840)      (4,859)     -20%
Drug repositioning and
 selection services                  (4,919)           -       NA
                                ------------ ------------ ------------
Total operating income (loss)   $    (8,255) $    (9,419)     12%
                                ------------ ------------ ------------
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   Year-to-date total operating loss was $8.3 million, which included
$4.9 million related to our investment in our new drug repositioning
and selection services business. This compares to $9.4 million for the
first six months of 2004. This improvement of 12% reflects the
positive impact of reduced database production expenses and
achievement of other operational efficiencies, offset by increases in
cost of sales and research and development expenses, which now include
the development and commercialization of the Company's new drug
repositioning and selection business.
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    Note:  Management uses operating income to evaluate segment 
    performance. To arrive at operating income, the Company has 
    included all direct costs for providing its services and an 
    allocation for corporate overhead applied on a consistent and 
    reasonable basis. The Company has excluded the cost of income
    taxes and interest income or expense and could also exclude 
    certain unusual or corporate related costs in the future. In 
    addition, while the Company's consolidated results of operation 
    include adjustments to reflect the elimination of inter-company 
    transactions, individual segments may include these types of 
    transactions. The Company does not believe these transactions are
    material and believes that their inclusion would not impact either
    management's or shareholders' understanding of our various 
    segments. For the purpose of clarity, revenue is reported net of 
    inter-company transactions.
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   Operating Expenses

   Operating expenses, excluding the cost of nonclinical contract
research services, for the second quarter of 2005 were $17.1 million
compared to $16.7 million for the second quarter of 2004. These
results reflect the impact of lower costs associated with developing
additional database content, including costs for microarrays, tissues,
amortization and agreements with third parties, offset by $2.6 million
in increased expenses associated with the ongoing development and
commercialization of the Company's new drug repositioning and
selection services business.
   Year-to-date operating expenses, excluding the cost of nonclinical
contract research services, were $34.3 million, a decrease of $1.3
million or 4% when compared to $35.7 million for the prior comparative
period.

   Gross Margin

   The gross margin in the Company's nonclinical contract research
services business for the second quarter of 2005 was negative $0.8
million or negative 14%. Gross margins reflect the impact of higher
facility, labor and support charges largely associated with and in
advance of our recently announced 50% increase in nonclinical contract
research capacity. We expect margins to increase as we begin to
utilize this additional capacity.

   Income Tax Expense

   Income tax expense for the second quarter of 2005 was zero
compared to $0.5 million for the second quarter of 2004, reflecting
the impact of the implementation of a new income tax treaty between
the United States and Japan, effectively eliminating withholding taxes
on payments made between the countries after July 1, 2004.

   Net Loss

   The net loss for the second quarter of 2005 was $2.6 million, or
$0.08 per share, compared to $4.4 million, or $0.14 per share, for the
second quarter of 2004, and reflects an improvement of 41%.
   Year-to-date net loss was $6.7 million, or $0.21 per share,
compared to $9.9 million, or $0.32 per share, for the prior year, and
reflects an improvement of 32%.

   Backlog

   As of June 30, 2005, Gene Logic had a backlog for nonclinical
contract research services of approximately $15 million, which
comprises commitments under signed task orders (or other written firm
commitments), excluding any amounts thereunder recognized as revenue.

   Cash

   As of June 30, 2005, Gene Logic had approximately $98.0 million in
combined cash, cash equivalents and marketable securities
available-for-sale, which compares to $97.8 million as of March 31,
2005 and $102.9 million as of December 31, 2004.

   Gene Logic Guidance

   The Company is reaffirming its previous guidance issued on March
17, 2005.

   Conference Call and Webcast

   Gene Logic will host a conference call and webcast to discuss
these results on Wednesday, July 20 at 9:00 a.m. Eastern Time.
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Conference Call Details:

Dial-In:        800/322-2803 Domestic
                617/614-4925 International

Replay Dial-In: 888/286-8010 Domestic
                617/801-6888 International
                Passcode: 21115816

Webcast:        Please go to www.genelogic.com, Investors, within 15 
                minutes prior to the call and select the webcast link.
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   The conference call replay will be available through August 3,
2005. The webcast will be archived on Gene Logic's website.

   Gene Logic Overview

   Gene Logic is leading the transformation of pharmaceutical
research and development with its extensive gene expression databases,
pioneering efforts in toxicogenomics, sophisticated bioinformatics
expertise, specialty nonclinical testing capabilities and cutting edge
technology program for drug repositioning. Gene Logic technologies and
services are used by many of the world's top pharmaceutical and
biotechnology companies. Over 150 organizations and government
agencies have benefited from Gene Logic's diverse portfolio of drug
development services, enabling them to make more informed, more
reliable and more predictive decisions at each point in the highly
complex and costly drug development process. Founded in 1994, Gene
Logic is headquartered in Gaithersburg, Md., with additional research
and development facilities in Cambridge, Mass. and Berkeley, Calif.
The Company maintains customer support operations in Europe and Asia
and currently has about 450 employees worldwide. For more information,
visit www.genelogic.com or call toll-free - 1/800/GENELOGIC.

   Safe Harbor Statement

   This news release contains forward-looking statements that involve
significant risks and uncertainties, including those discussed below
and others that can be found in our Annual Report on Form 10-K for the
year ended December 31, 2004 (filed on March 16, 2005) and in
subsequent filings made with the Securities and Exchange Commission.
Gene Logic is providing this information as of the date of this news
release and does not undertake any obligation to update any
forward-looking statements contained in this document as a result of
new information, future events or otherwise.
   No forward-looking statement can be guaranteed and actual results
may differ materially from those we project. The Company's results may
be affected by: the extent of utilization of genomics, toxicogenomics,
bioinformatics, nonclinical contract research and drug repositioning
and selection by the pharmaceutical and biotechnology industry in
research and product development; our ability to retain existing and
obtain additional domestic and international customers in a timely
manner; capital markets and other economic conditions adversely
affecting the purchasing patterns of pharmaceutical and biotechnology
companies; levels of industry research and development spending; risks
relating to the development of genomics and toxicogenomics-based
services and their use by existing and potential customers; our
reliance on sole source suppliers; our ability to limit our losses and
become profitable; our ability to timely supply customers with
additional data as required under some of our genomics and
toxicogenomics services contracts; risks relating to the fact that our
contracts with our Japanese customers are payable in foreign currency
beginning in 2005 and may be subject to fluctuations due to changes in
currency exchange rates; our ability to continue to successfully
manage growth of our nonclinical contract research operations,
including increasing facility capacity and achieving optimal use of
facilities and facility capacity and adequate quality of studies; our
ability to comply with, and to provide studies that are compliant
with, regulatory requirements, including those of the FDA, DEA, and
AAALAC; our ability to attract and retain key employees; our continued
access to necessary human and animal tissue samples; the availability
of large animals for clinical testing; our ability to enforce our
intellectual property rights and the impact of intellectual property
rights of others; outsourcing trends in the pharmaceutical and
biotechnology industries; competition within the drug development
services outsourcing industry; our ability to limit losses from
certain fixed price contracts for nonclinical contract research
services; technological advances or alternative technologies,
methodologies and services that may make our genomics and
toxicogenomics services, nonclinical contract research services and/or
drug repositioning and selection services less competitive; risks
associated with valuation of assets representing acquired businesses;
our ability to successfully develop and commercialize the Horizon
technologies acquired from Millennium Pharmaceuticals, Inc., and our
related drug repositioning and selection services, and our ability to
successfully develop new indications for compounds, and to realize
value from such results of our services. Note: Gene Logic, BioExpress
and the Gene Logic logo are registered trademarks used by Gene Logic
Inc.

   Financial tables follow.
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                           Gene Logic Inc.
                       Statement of Operations
               (in thousands, except per share amounts)
                             (unaudited)


                            Three Months Ended     Six Months Ended
                                 June 30,              June 30,
                           --------------------- ---------------------
                             2005       2004       2005       2004
                           ---------- ---------- ---------- ----------

Revenue:
   Genomics and
    toxicogenomics
    services               $  14,166  $  12,663  $  27,405  $  26,473
   Nonclinical contract
    research services          5,820      5,959     12,254     12,370
   Drug repositioning and
    selection services           147          -        214          -
                           ---------- ---------- ---------- ----------
      Total revenue           20,133     18,622     39,873     38,843

Expenses:
   Cost of nonclinical
    contract research
    services                   6,618      6,115     13,808     12,605
   Database production         8,021     10,498     16,203     22,609
   Research and
    development                1,380        357      2,841        719
   Selling, general and
    administrative             7,743      5,863     15,276     12,329
                           ---------- ---------- ---------- ----------
      Total expenses          23,762     22,833     48,128     48,262
                           ---------- ---------- ---------- ----------
      Loss from operations    (3,629)    (4,211)    (8,255)    (9,419)
Interest (income), net          (617)      (308)    (1,117)      (618)
Other (income) expense          (402)         -       (427)         -
                           ---------- ---------- ---------- ----------
      Net loss before
       income tax expense     (2,610)    (3,903)    (6,711)    (8,801)
Income tax expense                 -        489          -      1,101
                           ---------- ---------- ---------- ----------
      Net loss             $  (2,610) $  (4,392) $  (6,711) $  (9,902)
                           ========== ========== ========== ==========
Basic and diluted net loss
 per share                 $   (0.08) $   (0.14) $   (0.21) $   (0.32)
                           ========== ========== ========== ==========
Shares used in computing
 basic and diluted net
 loss per share               31,742     31,449     31,725     31,358
                           ========== ========== ========== ==========


Note: Certain reclassifications have been made to the prior years'
financial statements to conform to the current year presentation.


                           Gene Logic Inc.
                Consolidated Condensed Balance Sheets
                            (in thousands)


                                               June 30,   December 31,
                                                2005         2004
                                             ------------ ------------
                                             (unaudited)
                   ASSETS
Current assets:
   Cash and cash equivalents                 $    68,981  $    53,237
   Marketable securities available-for-sale       29,002       49,678
   Accounts receivable, net                        7,828        4,953
   Unbilled services                               6,214        6,406
   Inventory, net                                  2,975        1,683
   Prepaid expenses                                2,439        2,210
   Other current assets                            1,576        2,185
                                             ------------ ------------
      Total current assets                       119,015      120,352
Property and equipment, net                       29,722       23,034
Long-term investments                              4,239        4,239
Goodwill                                          45,707       45,707
Intangibles and other assets, net                 11,387       13,749
                                             ------------ ------------
      Total assets                           $   210,070  $   207,081
                                             ============ ============
    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                          $     3,500  $     5,256
   Accrued compensation and employee
    benefits                                       6,152        3,990
   Other accrued expenses                          5,095        4,629
   Current portion of capital lease
    obligations                                      142          136
   Current portion of long-term debt                 495          494
   Acquired technologies payable                   3,419            -
   Deferred revenue                               16,623        9,788
                                             ------------ ------------
      Total current liabilities                   35,426       24,293
Deferred revenue                                   4,350        3,595
Capital lease obligations, net of current
 portion                                             132          204
Long-term debt, net of current portion               151          174
Acquired technologies payable                          -        3,347
Other noncurrent liabilities                       3,633        2,640
                                             ------------ ------------
      Total liabilities                           43,692       34,253
                                             ------------ ------------
Stockholders' equity:
   Common stock                                      318          317
   Additional paid-in capital                    385,499      385,313
   Accumulated other comprehensive loss              (62)        (136)
   Accumulated deficit                          (219,377)    (212,666)
                                             ------------ ------------
      Total stockholders' equity                 166,378      172,828
                                             ------------ ------------
      Total liabilities and stockholders'
       equity                                $   210,070  $   207,081
                                             ============ ============
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