Epigenomics AG (Frankfurt, Prime Standard: ECX), a cancer molecular diagnostics company developing based on DNA methylation, today reported financial results for the first quarter 2007 ending March 31, 2007.

Key financial results are in line with expectations with liquid assets amounting to EUR 13.7 million as of March 31, 2007, compared to EUR 17.3 million as of December 31, 2006. Epigenomics posted revenue of EUR 0.82 million for the first quarter of 2007, a significant increase of 75% over the same quarter last year (EUR 0.47 million). This revenue still results partly from the Roche Diagnostics collaboration, which officially ended March 14, 2007, as well as from the successful execution of several ongoing biomarker collaborations and the start of a new partnership with Centocor Inc. (Horsham, PA, U.S.A.) in January 2007. EBIT for the first quarter was EUR -3.4 million compared to EUR -4.0 million in Q1 2006, an improvement of 15%. Research and development expenses increased by 31% to EUR 2.5 million for the first quarter of 2007 from EUR 1.9 million in the reference period in 2006. This increase reflects the fact that after the termination of the collaboration with Roche Diagnostics all diagnostics products are now exclusively owned and developed by Epigenomics.

The costs for marketing and business development of EUR 474 thousand in Q1 2007 and the general and administrative costs of EUR 1,092 thousand in the same period showed no significant variance compared to Q1 2006 (EUR 595 thousand and EUR 1,023 thousand, respectively).
Net loss has been reduced by 16% from EUR 3.9 million (Q1 2006) to EUR 3.3 million in the reporting period, almost completely due to a decrease in operating costs and increase in revenue. The basic loss per share was EUR 0.19 compared to EUR 0.24 at the end of Q1 2006, an improvement of 20%.

Given that current liquidity is expected to reach into the first half of 2008, the company has initiated a concrete project in fall of 2006 to assess all tactical and strategic financing options. That project is still ongoing. As part of the overall corporate finance strategy, the management has propose to increase the Authorized Capital to the ordinary Annual General Shareholders’ Meeting on May 29, 2007

Operational Highlights in the First Quarter 2007 

• Geert Nygaard joined as new Chief Executive Officer (CEO) on February 1, 2007 from a position as Managing Director at Abbott in Germany bringing in more than 20 years of operational and commercial diagnostics industry experience and expertise.
  
• Heino von Prondzynski, former CEO of Roche Diagnostics and one of the recognized leaders in the global diagnostics industry, is standing for election to Epigenomics Supervisory Board at the upcoming Annual General Shareholders’ Meeting. 
  
• Epigenomics strategy has been reviewed and realigned:
  
• Product development pipeline now focuses even further on the clinically most advanced programs and blood-based colorectal cancer screening test development in particular 
• Heavy emphasis and resource focus have been placed on the development of a streamlined, simplified and routine-capable assay procedure for all blood (or urine)-based tests
• Commercialization strategy has been changed towards a non-exclusive partnering model; This is aimed at maximizing diagnostic platform access and ultimately market penetration and value to Epigenomics and it is also well aligned with standard practice in the diagnostics industry.
   
• The Clinical Solutions team started a new partnership with Centocor Inc., adding to several ongoing biomarker R&D partnerships in the first half of 2007 and a number of promising partnering negotiations as well as the strategic marketing partnership with Clinical Data’s Cogenics division signed in April 2007.
  
• Epigenomics presented newest clinical data on its colocectal cancer screening test as well as data on improvements of the assay procedure at major scientific conferences such as CHI’s conference “Epigenomics”, the G.O.T Summit, and the AACR annual meeting 2007, receiving excellent feedback by the scientific and medical community.
  

Commenting on the developments at Epigenomics in the first quarter 2007, Geert Nygaard, the company’s new CEO, said:

”Since I joined the firm in February together with my board colleagues we decided to focus on the execution of our key corporate objectives. We believe that the blood-based colorectal cancer screening test as well as the expected progress in the development of an improved assay procedure and workflow for body-fluid-based early detection of cancer are the key drivers for Epigenomics’ future product development. Our main priority in 2007 therefore is to prepare the colorectal cancer screening program for commercialization and make certain that the adapted assay procedure is suitable and ready for reference laboratories and routine clinical use.”


Outlook

Epigenomics anticipates to enter into a number of key strategic partnerships during the second half of 2007, including a reference laboratory partnership as well as a first IVD alliance for the development of its blood- and urine-based cancer screening tests.

Epigenomics’ strategy for development and commercialization of the molecular classification test for prostate cancer will focus on the fastest route to market and commercial proof of concept in a reference laboratory setting in the United States and also as a CE-marked kit in Europe. Further, Epigenomics expects the Clinical Solutions and licensing businesses to contribute significantly to 2007 revenue.

Management expects full-year 2007 revenue to be similar to 2006 revenue of EUR 3.5 million. EBIT for 2007 is also expected to be broadly in line with 2006 EBIT of EUR –15.8 million. Net cash consumption for 2007 is expected to be between EUR 11 and 12 million. Year-end liquidity for 2007 will be a function of timing, size and structure of any potential financing event.


Further Information

The full 3-Months Report 2007 can be obtained from Epigenomics’ website at:
http://www.epigenomics.com/en/investor_relations/Financial_Information/  

About Epigenomics AG

Epigenomics is a molecular diagnostics company with a focus on the development of novel products for cancer. Using DNA methylation biomarkers, Epigenomics’ tests can potentially diagnose disease at an early stage and help guide physicians to select an appropriate therapy. Epigenomics' defined business strategy covers two complementary core business areas:

In cooperation with industry partners, the company develops diagnostic screening tests for the early detection of cancer, mass-market products with huge potentials. Based on easily obtainable body fluid samples (e.g. blood and urine), these tests are aimed at finding cancer at an early stage before symptoms occur. Epigenomics’ product pipeline contains an extensively validated biomarker panel for the early detection of colorectal cancer in blood plasma, and further proprietary DNA methylation biomarkers at various stages of development for prostate and lung cancer detection in body fluids.
Epigenomics aims at giving patients and doctors early access to these biomarkers through reference laboratory testing services. For development and global commercialization as in vitro diagnostic test kits, Epigenomics pursues a non-exclusive partnering strategy with diagnostics industry players.

As a second core business area, Epigenomics develops specialty diagnostics for individuals at high risk for cancer and cancer patients. These tests include surveillance applications of our colorectal cancer biomarkers and a tissue-based prognostic cancer molecular classification test for prostate cancer patients. Our tissue-based prostate cancer application is developed in strategic partnerships with Qiagen (pre-analytics) and Affymetrix (diagnostic device platform). The biomarkers for cancer specialty diagnostic applications will be made available through testing services in centralized reference laboratories. Epigenomics retains the flexibility to decide on further commercialization as in vitro diagnostic test kits in Europe and eventually the US..

Pharma, diagnostics and biotech partners can access Epigenomics’ portfolio of proprietary DNA methylation technologies and biomarkers protected by more than 200 patent families through Biomarker Services, IVD Development Collaborations, and Licensing. The company is headquartered in Berlin, Germany, and has a wholly owned subsidiary in Seattle, WA, USA. For more information, please visit Epigenomics’ website at www.epigenomics.com.

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Disclaimer

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.