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NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, JAPAN AND AUSTRALIA.

Epigenomics AG: Capital increase through rights issue with subscription rights of existing shareholders

– Issuance of up to 12,007,180 new shares

– Shareholders granted subscription rights at a ratio of 2:1

– Subscription price will be announced during the subscription period

– Subscription period will last from October 9 to October 22, 2018

Berlin, October 8, 2018 – The Executive Board of Epigenomics AG (Frankfurt Prime Standard: ECX, OTCQX: EPGNY) resolved on October 7, 2018, with approval of the Supervisory Board, a capital increase with subscription rights for existing shareholders in accordance with the Authorized Capital 2018/I and the Authorized Capital 2018/II. The Company’s share capital shall be increased from 24,014,360 EUR to up to 36,021,540 EUR by issuing up to 12,007,180 new registered shares of the Company against contribution in cash and partly in kind. The subscription price of the new shares will be announced during the subscription period, presumably at or around October 17, 2018.

The new shares will be offered to shareholders of the Company as part of a public offering in Germany by means of indirect subscription rights during the subscription period from October 9 until October 22, 2018. The subscription ratio is 2:1. This means that for each two existing shares in the Company a subscription right for one new share is allocated. The record date for the allocation of subscription rights on the basis of the number of shares held by shareholders on that date is the end of October 8, 2018. Any new shares that are not subscribed for during the subscription period shall be offered to selected qualified investors as part of an international private placement. Quirin Privatbank AG is European Bookrunner and the sole underwriter of this transaction. Raymond James & Associates, Inc. is the sole placement agent for the private placement in the United States of America.

Cathay Fortune International Company Limited (CFICL), a major shareholder of Epigenomics, has committed to participate subject to certain conditions in the planned capital increase in proportion to its current share in the Company. Such participation shall occur against contribution in kind through partial contribution of its redemption claim under convertible bond subscribed by CFICL in 2017.

The public offering of the new shares is purely based on the prospectus, approved by the German Federal Financial Supervisory Authority (BaFin – Bundesanstalt für Finanzdienstleistungsaufsicht) on October 8, 2018. The prospectus is available on the Company’s website at www.epigenomics.com.

Epigenomics plans to use the net proceeds of the offering primarily to repay the above-mentioned convertible bond, to satisfy the payment obligations that will fall due within the next twelve months and for general business purposes, including, in particular, to achieve reimbursement for Epi proColon in the U.S. and subsequently to further commercialize the product and to focus on developing our liver cancer blood test.

Contact:
Peter Vogt, VP Corporate Communications & Investor Relations, Geneststrasse 5, 10829 Berlin, Tel: +49 (0) 30 24345 386, Fax: +49 (0) 30 24345 555, E-Mail: ir@epigenomics.com

Important Notice

This publication does not constitute or form part of, and should not be construed as an offer or an invitation to sell, or issue or the solicitation of any offer to buy or subscribe for, any securities. The shares will be solely offered on the basis of the published subscription offer and the prospectus approved by BaFin.

This publication does, in particular, not constitute an offer to sell or a solicitation of an offer to purchase any securities in the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or the laws of any state within the U.S., and may not be offered or sold in the United States or to or for the account or benefit of U.S. persons, except that the offered shares may be offered or sold to qualified institutional buyers in reliance on certain exemptions from the registration requirements of the Securities Act and applicable state securities laws. This publication and the information contained herein may not be distributed or sent into the United States, or in any other jurisdiction in which offers or sales of the securities described herein would be prohibited by applicable laws and should not be distributed to United States persons or publications with a general circulation in the United States. No public offering of the shares is being made in the United States.

Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan. The securities referred to herein have not been and will not be registered under the applicable securities laws of Australia, Canada or Japan.

Forward-Looking Statements

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 expected 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.

Publication of Inside Information according to Article 17 MAR

Epigenomics AG plans to increase share capital with subscription rights for existing shareholders / Commitment of major shareholder to participate in planned capital increase

Berlin, October 3, 2018 – The Executive Board of Epigenomics AG (FSE: ECX; OTCQX: EPGNY) (“Company”) plans to execute a capital increase against contribution in cash and partly in kind with subscription rights for existing shareholders of up to 50% of the outstanding shares in accordance with the Authorized Capitals approved by the 2018 Annual General Meeting. The subscription price of the new shares will be announced during the subscription period.

The planned public offering of the new shares is conditional to and purely based on a prospectus yet to be approved by the German Federal Financial Supervisory Authority (BaFin – Bundesanstalt für Finanzdienstleistungsaufsicht) which is currently expected for October 8, 2018.

Cathay Fortune International Company Limited (CFICL), a major shareholder of Epigenomics, has committed to participate subject to certain conditions in the planned capital increase in proportion to its current share in the Company. Such participation shall occur against contribution in kind through partial contribution of its redemption claim under convertible bond subscribed by CFICL in 2017.

Contact:
Peter Vogt, VP Corporate Communications & Investor Relations, Geneststrasse 5, 10829 Berlin, Tel +49 (0) 30 24345 386, Fax +49 (0) 30 24345 555, E-Mail: ir@epigenomics.com

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, JAPAN AND AUSTRALIA.

Important Notice

This publication does not constitute or form part of, and should not be construed as an offer or an invitation to sell, or issue or the solicitation of any offer to buy or subscribe for, any securities. The shares will be solely offered on the basis of a yet to be published subscription offer and the prospectus yet to be approved by BaFin.

This publication does, in particular, not constitute an offer to sell or a solicitation of an offer to purchase any securities in the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or the laws of any state within the U.S., and may not be offered or sold in the United States or to or for the account or benefit of U.S. persons, except that the offered shares may be offered or sold to qualified institutional buyers in reliance on certain exemptions from the registration requirements of the Securities Act and applicable state securities laws. This publication and the information contained herein may not be distributed or sent into the United States, or in any other jurisdiction in which offers or sales of the securities described herein would be prohibited by applicable laws and should not be distributed to United States persons or publications with a general circulation in the United States. No public offering of the shares is being made in the United States.

Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan. The securities referred to herein have not been and will not be registered under the applicable securities laws of Australia, Canada or Japan.

Forward-Looking Statements

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 expected 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.

Press release

Epigenomics AG: U.S. Congress supports CMS coverage of colorectal cancer screening blood tests

Berlin (Germany) and San Diego, CA (U.S.A.), October 2, 2018 – Epigenomics AG (Frankfurt Prime Standard: ECX, OTCQX: EPGNY) today announced that the U.S. Congress urges the Centers of Medicare & Medicaid Services (CMS) to consider coverage of colorectal cancer screening blood tests as part of the approved 2019 Health and Human Services (HHS) Appropriations Bill.

According to the Appropriations report issued in concert with the Appropriations Bill signed into law on September 28, 2018 the U.S. Congress stated its intent by urging CMS to provide “…coverage of blood tests…(which) could serve to deter or immediately recommend the need for colonoscopy so as to increase the number of patients that go in for testing and decrease the amount of late-stage colon cancer diagnoses.”

“We are very pleased that the U.S. Congress has urged CMS to cover FDA approved blood tests for colorectal cancer screening. We believe this is a positive step towards legislative approval,” said Greg Hamilton, Chief Executive Officer of Epigenomics AG. “Colorectal cancer remains the second-leading cause of cancer death in the United States as still 1 in 3 or approximately 30 million Americans are not screened. CMS coverage of blood tests could help to increase screening participation rates and ultimately save lives.”

In March 2018, Senators Shelley Moore Capito (R -WV) and Martin Heinrich (D – NM) introduced the “Colorectal Cancer Detection Act of 2018” to the United States Senate in Washington D.C. This Senate Bill (S. 2523) is parallel to House Bill (H.R. 1578) “Donald Payne Sr. Colorectal Cancer Detection Act” introduced by Congressman Donald M. Payne, Jr. (D – NJ) in 2017. These bipartisan initiatives aim to provide payment and coverage under the Medicare program for FDA-approved qualifying colorectal cancer screening blood tests.

About colorectal cancer (CRC)

The American Cancer Society projects there will be over 140,000 new diagnosed cases of colorectal cancer, and over 50,000 deaths, from colorectal cancer in 2018 in the United States. Colorectal cancer remains the second-leading cause of cancer death in the United States. Although screening and early detection of colorectal cancer can save lives, about 35 percent of eligible U.S. patients are not being regularly screened. While the 5-year survival rate for early colorectal cancer (stage I) is 90%, only four- out-of-ten cases are diagnosed at this early stage. According to the American Cancer Society, this is in part due to the underuse of screening.

About Epi proColon(R)

Epi proColon is indicated for colorectal cancer screening in average-risk patients who are unwilling or unable to perform colorectal cancer screening by colonoscopy and stool-based methods.

For patients, the test only requires a simple blood sample drawn as part of routine healthcare provider visits. There are no dietary restrictions or alterations in medication required for the test. The sample will be analyzed at a national or regional diagnostic laboratory.

For more information on Epi proColon, visit www.epiprocolon.com.

About Epigenomics

Epigenomics is a molecular diagnostics company focused on blood-based detection of cancers using its proprietary DNA methylation biomarker technology. The company develops and commercializes diagnostic products across multiple cancer indications with high medical need. Epigenomics’ lead product, Epi proColon, is a blood-based screening test for the detection of colorectal cancer. Epi proColon has received approval from the U.S. Food and Drug Administration (FDA) and is currently marketed in the United States, Europe, and China and selected other countries. Epi proLung(R), a blood-based test for lung cancer detection, has received CE mark in Europe.

For more information, visit www.epigenomics.com.

Contact in the U.S.
David Bull
Director of Marketing
Phone: 240.912.6430
David.Bull@Epigenomics.com

Contact Epigenomics AG
Peter Vogt
Vice President Corporate Communication & Investor Relations
Epigenomics AG
Geneststraße 5
10829 Berlin
Phone +49 (0) 30 24345 386
ir@epigenomics.com

Epigenomics legal 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 expected 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.

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Epigenomics (ECX-DE): Liver boost – less dependency on epiColon
Recommendation: OUTPERFORM
Target Price: EUR6.82
Current Price: EUR2.36 (cob on 9^th August 2018)

KEY TAKEAWAY

The financial results were slightly better than we expected with disciplined cost management in R&D and SG&A. The main value of Epigenomics lies within the health economic value of its two main tests. We feel that investors are under appreciating the significant value to healthcare systems world-wide. The reimbursement is hinging on robust data and the demonstration of real cost savings. While the concept of avoiding metastatic liver and colon cancer by testing is clear, we believe. Thus, current trading levels represent an attractive value proposition over a two to three-year period.

Results and Guidance – Epigenomics has maintained its guidance for the full year with revenues to come in between EUR2.0m and EUR4m. Management expects EBITDA before share-based payment expenses to be in a range EUR-11.5m and EUR-14.0m in 2018

Pricing of the test – Price increase in the US remains a positive – CMS published preliminary rate for Epi proColon screening test. The proposed reimbursement rate is $192 per Epi proColon test. Based on the proposed preliminary rate, CMS will determine the final rate. The publication of the final rate is expected in November 2018 – As a reminder, on 22nd September 2017 the US CMS published their decision on test code and reimbursement price for Epi proColon, which was cross walked to a different test code. The newly determined payments rates according to PAMA see the price increasing to $124 (from $83), a 50% upside.

Liver – the new kid on the block – We are excited by the company’s new liver test. we see a double benefit coming from this test. Firstly, the most obvious upside on population health by catching a significant number of cancer risk patients early. Secondly, we believe that reimbursement could be supported by a significant decrease of redundant MRI/CT scan following an inaccurate ultrasound (“US”) test, which leads to many false positives. The significant higher specificity and sensitivity of US combined with EpiLiver will reduce diagnostic tests for liver cancer significantly. We have seen plenty of examples in Europe, where new test has arrived to national guidelines after showing cost benefits on the diagnostics level.

Commercialisation of EpiLiver – Epigenomics, will aim to obtain the CE mark for its liver cancer detection by year-end 2018 for detecting liver cancer of cirrhosis patients. There will be a prospective clinical trial in the U.S. commencing in early 2019 to support its submission to the FDA. Epigenomics is evaluating a go to market strategy in China. The liver cirrhosis cancer testing market could yield up to ten million tests per annum. This would result in a multibillion market potential.

Decreased dependency on epiColon – The test still needs to progress through the US national coverage determination following inclusion into medical guidelines. Epi proColon is the first blood-based biomarker test approved by the US FDA for CRC screening. It improves on convenience, acceptance, is less embarrassing and avoids the need for multiple tests. Epi proColon is in the process of being incorporated into US medical guidelines and now the price for reimbursement is set.

Valuation – ECX share price became undemanding, in our view. Guidance was maintained and diversification if its tests is the right strategy. However, the variables of national coverage determination and medical guideline incorporation still need to be met. The commercial potential of Epi proColon and proLiver is highly attractive. Despite the near-term revenue visibility is not clear over the next 12 months, we believe that the value of such a test for a third party is significantly above the current trading price. Although, shares will come under pressure if there is a negative reimbursement decision, the potential takeout scenario provides a valuation floor and future upside to today’s trading levels. We maintain and reiterate both our OUTPERFORM recommendation and DCF-derived target price of EUR6.82.

Kind regards,

Martin Brunninger | Analyst
goetzpartners Healthcare Research Team | Research Team

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