EANS-News: Epigenomics AG Reports First Quarter 2010 Financial Results

Key Figures

* Revenue: EUR 0.62 million in Q1 2010 (Q1 2009: EUR
1.24 million)
* EBIT: EUR -2.61 million in Q1 2010 (Q1 2009: EUR
-2.31 million)
* Net loss: EUR -2.59 million in Q1 2010 (Q1 2009:
EUR -2.42 million)
* Liquid assets: Strengthened balance sheet by
financing transaction

Highlights of the First Quarter 2010

* Successfully completed prospective PRESEPT colorectal cancer
clinical study, presentation of results at Digestive Disease Week
*
Capital Increase secures funding
* Key financials according to plan
* Broadened availability of Epi proColon product in Germany and
Switzerland
* Received Notice of Allowance for patent in Japan for
HeavyMethyl? technology
* Introduced Epi proLung BL Reflex Assay at
major congress in Germany

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3-month report/Molecular diagnostics

Subtitle: Key Figures

* Revenue: EUR 0.62 million in Q1 2010 (Q1 2009: EUR 1.24 million)
* EBIT: EUR -2.61 million in Q1 2010 (Q1 2009: EUR -2.31 million)
* Net loss: EUR -2.59 million in Q1 2010 (Q1 2009: EUR -2.42 million)
* Liquid assets: Strengthened balance sheet by financing transaction

Highlights of the First Quarter 2010

* Successfully completed prospective PRESEPT colorectal cancer
clinical study, presentation of results at Digestive Disease Week *
Capital Increase secures funding * Key financials according to plan *
Broadened availability of Epi proColon product in Germany and
Switzerland * Received Notice of Allowance for patent in Japan for
HeavyMethyl? technology * Introduced Epi proLung BL Reflex Assay at
major congress in Germany

Press release, Berlin, Germany, and Seattle, WA, USA, May 11, 2010
(euro adhoc) - Epigenomics AG (Frankfurt Prime Standard: ECX), a
cancer molecular diagnostics company, today reported financial
results for the first quarter of 2010, which ended March 31, 2010.

"We are very pleased with the strong start we've had in 2010 and are
excited about the significant progress we have made in our product
development and commercial partnerships at the end of 2009 and during
the first quarter of 2010", commented Geert Nygaard, Chief Executive
Officer of Epigenomics. "With the additional 33.1 million Euro in
gross proceeds provided by the capital increase in March 2010 and our
continued financial discipline, we remain committed to delivering on
our business goals and product development as well as commercial
milestones. In 2010 our strategy will be dedicated to successfully
marketing our colorectal cancer blood test in Europe and the U.S. and
further continuing our reimbursement efforts for this test. Upon
successful completion of the development of our second IVD product
the Epi proLung BL Reflex Assay we expect to launch this test in
Europe as a CE marked test kit by midyear 2010", Geert Nygaard added.

Financial Review

Revenue in Q1 2010 decreased by 50% to EUR 0.6 million, from 1.2
million in the corresponding period of 2009. This is mainly the
result of the completion of work under several collaboration
agreements in particular with Abbott and our biomarker R&D services
in Q1 2009 with no equivalent activities in the reporting quarter.
Revenue in Q1 2010 was generated from continued collaborations and
licensing agreements in the form of R&D payments and licensing fees
as well as product sales from the Epi proColon product.

Cost of sales fell significantly to EUR 0.17 million in Q1 2010 (Q1
2009: EUR 0.95 million) and generated a gross profit of EUR 0.45
million (Q1 2009: EUR 0.29 million). R&D costs increased slightly
from EUR 1.76 million in the first three months of 2009 to EUR 1.86
million in Q1 2010.

Sales, general and administrative costs increased by 26% from EUR
1.05 million in Q1 2009 to EUR to EUR 1.32 million in Q1 2010 due to
intensified marketing, sales and technical sales support activities
for the Epi proColon colorectal cancer blood test. Other expenses
decreased considerably from EUR 47 thousand in Q1 2009 to EUR 6
thousand in Q1 2010 mainly due to lower foreign exchange rate losses.

In Q1 2010, EBIT was EUR -2.61 million, compared to Q1 2009 EBIT of
EUR -2.31 million. Net loss for the first three months 2010 grew by
7% from Q1 2009 (EUR 2.42 million) to EUR 2.59 million.

Epigenomics' balance sheet total increased from EUR 16.35 million as
of December 31, 2009, to a total of EUR 44.26 million as of March 31,
2010. This increase was due to a successful capital increase, which
significantly strengthened Epigenomics' cash flow and financial
position. In March 2010, the company successfully placed 14,697,361
new ordinary bearer shares within a rights offering representing the
entire authorized capital available. The new shares were placed at
the subscription price of EUR 2.25 per new share resulting in gross
proceeds of about EUR 33.1 million and in expected net proceeds of
about EUR 30.3 million. With the registration of the capital increase
on March 31 2010, the total issued share capital of Epigenomics has
increased from EUR 29,394,724.00 to EUR 44,092,085.00. Epigenomics
intends to use the proceeds from this transaction to complete the
transformation into an integrated molecular diagnostics industry
player. Focus will be on the commercial execution together with
partners and licensees as well as driving direct product sales in the
home markets. To that end Epigenomics in 2010 expects to grow the
marketing and sales team in Europe by a handful of key additions and
new hires.

In sum, the financial position has improved substantially with liquid
assets amounting to EUR 18.88 million as of March 31, 2010, compared
to EUR 6.14 million as of December 31, 2009. Total net cash flow in
Q1 2010 was positive at EUR 12.54 million, due to increased cash flow
of EUR 14.35 million resulting from the capital increase. Liquid
funds from the agio on the newly issued shares in the gross amount of
EUR 18.37 million were received on April 1, 2010. Cash outflow from
operating activities in Q1 2010 was EUR 1.58 million, a significant
improvement compared to Q1 of 2009 (EUR 2.27 million).

Operational Highlights

During the first quarter of 2010, Epigenomics focused on its strategy
of transforming the company into a product-driven company and further
pursuing its dual business model. Main goal was driving market
acceptance and sales for the company's Septin9 blood test Epi
proColon for colorectal cancer on the one hand, and of Epigenomics'
partners' colorectal cancer blood based tests based on Septin9 on the
other hand.

In January 2010 Epigenomics informed that its partner Quest
Diagnostics Inc., Madison, NJ, U.S.A. introduced its laboratory
developed blood test ColoVantage? for aiding in the detection of
colorectal cancer in the United States in December 2009. The
introduction followed the launch of Abbott's blood test for
colorectal cancer in Europe and Asia/Pacific under the brand name
Abbott RealTime mS9 in late 2009. Both tests are based on
Epigenomics' proprietary Septin9 biomarker and certain proprietary
technologies entitling Epigenomics to significant royalties on its
partners' future test sales. Therefore, Septin9 tests have been
commercially available since late 2009 in the U.S.A., Europe and in
the Asia/Pacific region.

Following the launch of Epi proColon as a CE-marked IVD product in
Europe Epigenomics has grown its laboratory customer base from a
handful in Q4-2009 to 18 customer laboratories in Germany and
Switzerland in the first quarter 2010, including synlab with its 55
German sites, one of Europe's largest laboratory networks.

During Q1 2010 Epigenomics received a Notice of Allowance by the
Japanese Patent Office stating that they intend to grant a patent for
Epigenomics' HeavyMethyl? technology. This notification is equivalent
to a "Rule 71(3) notification" by the European Patent Office. Patent
application 2002-571930 titled "Highly sensitive method for the
detection of cytosine methylation patterns", claims very broadly a
method for the detection of DNA methylation by means of amplification
that employs blockers to prevent the amplification of background DNA
while not affecting the amplification of target DNA. The patent is
already granted in the US, Europe, China, Russia, Australia, South
Korea, and New Zealand.

During the first quarter 2010, Epigenomics' R&D activities have
continued to finalize and evaluate the data from the PRESEPT Study.
After the release of preliminary data in January 2010, Epigenomics
reported updated top-line PRESEPT Study data on March 8, 2010 showing
that the Septin9 biomarker in this academic medicine study detected
colorectal cancer cases with a sensitivity of approximately 63% and a
specificity of around 89%. Since then final data from the PRESEPT
Study has been presented at the DDW conference in New Orleans, USA,
showing a sensitivity of 66.7% at a specificity of 88.4%.

In February 2010, Epigenomics introduced its novel lung cancer test
Epi proLung BL Reflex Assay at the German Cancer Congress in Berlin,
Germany. The diagnostic test is being developed as an aid in
diagnosis for lung cancer and may help pathologists to confirm the
diagnosis of malignant lung disease when current diagnostic
procedures fail to establish the presence of malignancy in patients
with suspected lung cancer.

Outlook

The Company anticipates traction of all Septin9-based tests that are
commercially available to increase sales gradually during 2010 and to
accelerate in 2011 and beyond. The management expects direct product
sales of the Epi proColon test in Germany, Switzerland and Austria as
well as distributor sales in other key European markets to add to
revenue growth. Furthermore Epigenomics expects to maintain a solid
base of R&D collaboration, licensing and partnering based revenue
generation at similar levels to the previous years, which assumes the
closing of one additional IVD partnership in 2010. Royalty income
from sales of Abbott's RealTime mS9 Colorectal Cancer product and
Quest's ColoVantage? testing service should also gradually start to
contribute in 2010 with accelerated growth expected in 2011 and
beyond. The expected launch of ARUP's Septin9 testing service in 2010
should add to the royalty income going forward.

On the product development and pipeline progress Epigenomics'
management awaits the launch of the CE marked Epi proLung BL Reflex
Assays by midyear 2010. In line with the commercial strategy in
colorectal cancer the company intends to market and sell directly in
home markets and work with distributors in other countries. It also
plans to initiate a clinical trial for regulatory approval of the Epi
proColon test using the PRESEPT cohort in 2010 with a view to
obtaining such regulatory approval in the USA ideally still in 2011.
Epigenomics also expect its partner Abbott to complete its clinical
trial for regulatory approval of the Abbott RealTime mS9 Colorectal
Cancer test and to seek such regulatory approval for the U.S. by
2011.

R&D going forward will focus on enhancement and expansion of Epi
proColon product. As an example, the company has recently launched an
updated version of the product which can now be used on two real-time
PCR devices, the Roche LightCycler? 480 and AB7500 Fast Real Time PCR
System. Further R&D in the colorectal cancer program focuses on
enhanced clinical characteristics for colorectal cancer early
detection as well as expansion of the clinical utility into disease
monitoring and adenoma detection. Lung cancer test development will
take second priority with prostate cancer taking third priority and
requiring current and future partners to commercialization.

Financials for the fiscal year 2010 are expected to be characterized
by continued fiscal discipline and focus on commercialization.
Epigenomics anticipates 2010 revenue of at least EUR 5 million, with
the potential to double in each of the following two years towards
achieving profitability by the end of 2012 at the earliest. This will
depend on successful commercialization of own products as well as
current and new partners being successful in their test
commercialization. 2010 EBIT is expected to be similar to 2009 with a
target of around EUR -10 million. Cash burn will be closely monitored
and is expected remain around EUR 10 million for 2010 despite the
completion of PRESEPT and the lung cancer IVD development, as
marketing and sales spending will increase. Further, the Company
expects to fund a clinical trial and a filing for regulatory approval
in the U.S. in 2010 and 2011 before eventually commercializing a
regulatory approved Epi proColon product in the U.S.

Further Information

The full 3-Months Report 2010 can be obtained from Epigenomics'
website at:
www.epigenomics.com/en/investor_relations/Financial_Information

About Epigenomics

Epigenomics is a molecular diagnostics company with a focus on the
development of novel products for cancer. Using DNA methylation
biomarkers, Epigenomics' tests on the market and in development aim
at diagnosing cancer at an early stage before symptoms occur and
thereby may reduce mortality from this dreaded disease.

Epigenomics' product portfolio contains the CE-marked IVD test Epi
proColon, the world's first regulatory cleared molecular diagnostic
test for the detection of colorectal cancer in blood that is based on
the biomarker Septin9, and further proprietary DNA methylation
biomarkers and IVD products at various stages of development for
colorectal, lung and prostate cancer. For development and global
commercialization of IVD test products, Epigenomics pursues a dual
business strategy in which direct commercialization of proprietary
diagnostic test products is combined with non-exclusive licensing to
diagnostic industry players with broad customer access. Strategic
diagnostics industry partners include Abbott Molecular, Sysmex
Corporation, Quest Diagnostics Incorporated, and ARUP Laboratories,
Inc. for diagnostics test products and services, and QIAGEN N.V. for
sample preparation solutions and research products. The company is
headquartered in Berlin, Germany, and has a wholly owned subsidiary,
Epigenomics Inc., in Seattle, WA, U.S.A. For more information, please
visit Epigenomics' website at www.epigenomics.com

Epigenomics legal disclaimers. This communication expressly or
implicitly contains certain forward-looking statements concerning
Epigenomics AG and its business. Such statements involve certain
known and unknown risks, uncertainties and other factors which could
cause the actual results, financial condition, performance or
achievements of Epigenomics AG to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements. Epigenomics AG is providing this
communication as of this date and does not undertake to update any
forward-looking statements contained herein as a result of new
information, future events or otherwise.

The information contained in this communication does not constitute
nor imply an offer to sell or transfer any product, and no product
based on this technology is currently available for sale in the
United States. The analytical and clinical performance
characteristics of any product based on this technology which may be
sold at some future time in the U.S. have not been established.

end of announcement euro adhoc
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ots Originaltext: Epigenomics AG
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:

Epigenomics AG

Dr. Achim Plum

Sen. VP Corporate Development

Tel: +49 30 24345 368

achim.plum@epigenomics.com

Branche: Biotechnology
ISIN: DE000A0BVT96
WKN: A0BVT9
Index: Prime All Share, Technology All Share
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