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Epigenomics AG Reports First Half 2010 Results

Key Figures

  • Revenue: EUR 1.0 million in H1 2010 (H1 2009: EUR 2.1 million)
  • EBIT: EUR -5.4 million in H1 2010 (H1 2009: EUR -4.8 million)
  • Net loss: EUR 5.4 million in H1 2010 (H1 2009: EUR 4.8 million)
  • Liquid assets: EUR 32.3 million as of 30/06/2010 (31/12/2009: EUR 6.1 million)

Highlights of the First Half 2010 and year to date

  • Financial position improved significantly
  • Broadened availability of Epi proColon product in Europe
  • ARUP launches Septin9 testing for colorectal cancer in the U.S.A.
  • Septin9 colorectal cancer biomarker patent granted in the U.S.A.
  • Licensed Septin9 non-exclusively to Canadian Warnex Medical Laboratories
  • Presented final prospective PRESEPT colorectal cancer clinical study data at leading conference
  • Demonstrated 81% sensitivity at 95% specificity for SHOX2 lung cancer biomarker in EU pivotal clinical study
  • Launched Epi proLung BL Reflex Assay in Europe

Press release, Berlin, Germany, and Seattle, WA, U.S.A.,

10.08.2010

Epigenomics AG (Frankfurt Prime Standard: ECX), a cancer molecular diagnostics company, today reported financial results for the second quarter and first half of 2010, which ended June 30, 2010.



Financial Review

Revenue in H1 2010 decreased by 53% to EUR 1.0 million, from 2.1 million in the corresponding period of 2009. The main reason for this decrease was revenue recognition from non-recurring service projects that had been initiated in 2008 as well as revenue from sample collection under the Abbott collaboration agreement, which were both included in revenue in the first half of 2009. H1 2010 revenue was generated from product sales of the Epi proColon kits as well as from continued collaboration and licensing agreements in the form of R&D payments and licensing income.

R&D costs increased from EUR 3.4 million in the first half of 2009 to EUR 3.6 million in the current reporting period. Cost of sales fell significantly to EUR 0.3 million compared to EUR 1.5 million in H1 2009, mainly due to the completion of the clinical sample collection within the collaboration with Abbott, which strongly affected cost of sales in 2009. Furthermore, the completion of some work packages within partnerships led to a drop of collaboration-driven product development expenses at the end of H1 2010. This resulted in an improved gross margin for H1 2010 compared to H1 2009.

Selling, general and administrative costs increased from EUR 2.1 million in H1 2009 to EUR to EUR 2.8 million in H1 2010 due to intensified marketing, sales and technical sales support activities for the
Epi proColon colorectal cancer screening test as well as preparation activities for the launch of the second IVD product, the Epi proLung BL Reflex Assay.

EBIT for H1 2010 decreased to EUR -5.4 million, compared to EUR -4.8 million for the corresponding period in 2009.

Net loss for the current reporting period amounted to EUR 5.4 million, compared to EUR 4.8 million in H1 2009. Basic loss per share improved from EUR 0.17 in H1 2009 to EUR 0.15 in H1 2010.



Operational Highlights

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In the second quarter of 2010, Epigenomics has further strengthened its market presence in Germany through the 55 German sites of the European laboratory network synlab starting to offer the Epi proColon test. This additional laboratory network offering Septin9 testing makes this innovative product even more broadly available to doctors and patients in Europe.



Epigenomics intellectual property position has been strengthened by the United States Patent and Trademark Office granting a patent for the Septin9 DNA methylation biomarker in U.S.A. on July 6, 2010.



In July, Epigenomics has launched its second CE-marked in vitro diagnostic product Epi proLung BL Reflex Assay in Europe. The launch followed the successful completion of a pivotal performance evaluation study for the product. The diagnostic test is being developed as an aid in the diagnosis of lung cancer and may help pathologists confirm the diagnosis of malignant lung disease when current diagnostic procedures fail to establish the presence of malignancy in patients with suspected lung cancer. With a demonstrated sensitivity of 81% at a specificity of 95%, the study confirmed previous research studies showing that methylated SHOX2 DNA is a sensitive and highly specific biomarker for the detection of lung cancer in bronchial lavage specimens.

Outlook H2 2010

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Epigenomics markets and sells its Epi proLung test directly in its home markets (Germany, Austria, and Switzerland) and intends to work with distributors in other countries. The Company also plans to initiate its own campaign for regulatory approval of the Epi proColon test in the USA, using additional patient samples collected as part of PRESEPT in H2 2010. To that end, Epigenomics has retained the services of DOCRO, Inc., a leading regulatory affairs group and contract research organization with a proven track record of successful client submissions for both 510k clearance and PMA approvals of molecular diagnostics and oncology products. The management also expects Abbott to progress their clinical trial for regulatory approval of their RealTime mS9 colorectal cancer test and to file for regulatory approval for the United States by 2011.

In-house R&D efforts in the area of colorectal cancer biomarkers will focus on enhanced clinical characteristics for colorectal cancer early detection as well as on expansion of the clinical utility into disease monitoring and adenoma detection. Also, Epigenomics will continue to develop a next generation biomarker discovery tool based on its proprietary DMH (differential methylation hybridization) array. This new generation technology will provide significant improvements in terms of number of features analyzed as well as sensitivity for subtle methylation differences, paving the way to address unmet clinical questions.

Financials for H2 2010 are expected to be characterized by continued fiscal discipline and ongoing focus on commercialization. Epigenomics now anticipates 2010 revenue to be below 2009 revenue, and as a consequence, EBIT is expected to be lower than 2009 at around EUR -12 million. Cash consumption is expected to be around EUR 11 to 12 million for the full year 2010.

Further Information

www.epigenomics.com/en/investor_relations/Financial_Information/  



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