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Epigenomics AG Announces Q2 2015 and 6M 2015 Financial Results and Reports on Operational Highlights

• Q2 2015 revenue increased by 20%, mainly driven by an increase in product sales of 36%
• European Commission granted up to EUR 2.8 million to Epigenomics for development of blood-based Epi proLung(R) test
• Epigenomics significantly improved its financial situation by raising EUR 5.0 million in a capital increase
• Epigenomics reaches nearly 100% adherence for Epi proColon(R) in the ADMIT trial; results of the ADMIT trial have been submitted and discussed with the FDA; a decision on the approval is expected during the following few months
• Epigenomics’ proprietary blood-based Septin9 test included in the Chinese Guideline on Screening, Endoscopic Diagnosis and Treatment of Early Colorectal Cancer

Berlin (Germany), Germantown, MD (U.S.A.), August 6, 2015 – Epigenomics AG (Frankfurt Prime Standard: ECX, OTCQX: EPGNY), the German-American cancer molecular diagnostics company, today announced its financial results for the second quarter and the first six months of 2015 ending June 30.

“The first six months of 2015 were characterized by the final steps towards FDA premarket approval (PMA) application for Epi proColon(R) and the preparation of the commercialization progress in the U.S.A. and China. In the U.S.A. we are convinced that the exciting results of the ADMIT trial, a nearly 100% adherence rate, will support the U.S. approval for our convenient blood-based colorectal cancer (CRC) test Epi proColon(R). We have submitted the final data set to the FDA and are expecting their approval decision during the following few months. With regard to the commercialization in China, we are delighted that blood-based tests with our proprietary biomarker Septin9 have been included in the screening guidelines, which allows us to address CRC detection in this country with Epi proColon(R),” said Dr. Thomas Taapken, CEO/CFO of Epigenomics AG. “In addition we are also preparing for the future. Over recent years and together with our academic collaborators, we already have worked on a promising second product, Epi proLung(R), based on a proprietary biomarker – SHOX2 for the detection of lung cancer in tissue. However, recent studies showed that SHOX2 can also easily be detected in blood. In a project, funded by the European Union, we are currently working on the analytical and clinical validation of a convenient blood-based test as a reflex test for lung cancer diagnosis, following positive radiological findings. The planned development approach for our innovative lung cancer test will also serve as a blueprint for the standardized validation of future blood-based epigenetic biomarker tests.”

Q2/6M 2015 Financial Results

• Total Q2 2015 revenue was up 20% to EUR 487 thousand (Q2 2014: EUR 405 thousand); thereof, product revenue increased by 36% year-on-year (from EUR 212 thousand to EUR 289 thousand). For the first six months 2015, revenue grew by 5% to EUR 854 thousand (6M 2014: EUR 812 thousand).
• Operating costs in Q2 2015 amounted to EUR 3.1 million from EUR 2.1 million in Q2 2014. This increase was completely in line with the Company’s forecast and primarily attributable to significantly higher R&D costs of EUR 1.6 million (Q2 2014: EUR 0.9 million) covering expenses related to the protection of intellectual property and to an increase in provisions in conjunction with the phantom stock programs. SG&A costs increased to EUR 1.2 million (Q2 2014: EUR 1.0 million) mainly attributable to an increase in provisions relating to the phantom stock programs and to legal and consulting expenses. 6M 2015 operating costs increased to EUR 6.8 million (6M 2014: EUR 4.6 million).
• In line with the increase in operating costs, EBIT for Q2 2015 amounted to EUR -2.6 million (Q2 2014: EUR -1.6 million) and to EUR -5.7 million in 6M 2015 (6M 2014: EUR -3.6 million).
• Net loss of EUR 2.5 million was recognized in Q2 2015 (Q2 2014: EUR 1.8 million) which added up to EUR 5.6 million for 6M 2015 (6M 2014: EUR 4.1 million). Due to the increased number of shares outstanding at the end of Q2 2015, net loss per share increased only slightly to EUR 0.15 in Q2 2015 (Q2 2014: EUR 0.13) and to EUR 0.35 for the six month period 2015 (6M 2014: EUR 0.30).
• Cash outflow from operating activities was EUR 4.6 million in 6M 2015 – an increase of EUR 1.5 million compared to 6M 2014 (EUR 3.1 million) which was mainly attributable to the higher operating costs and to further building up our stock for expected product demand in months to come. Cash inflow from financing activities in 6M 2015 amounted to EUR 7.7 million (6M 2014: EUR 1.9 million) mainly attributable to the successful capital increase with pre-emptive rights in May 2015 (EUR 5.0 million in gross proceeds) and the conversion of five convertible notes issued in 2013 by their holders.
• Liquid assets amounted to EUR 10.6 million at the reporting date (Dec 31, 2014: EUR 7.5 million).

Summary of Operational Highlights

• ADMIT trial completed with nearly 100% adherence to Epi proColon(R): At the beginning of May, the Company successfully completed the ADMIT trial, which was originally requested by the U.S. Food and Drug Administration (FDA) in the context of the approval process for the Company’s blood-based test Epi proColon(R). The results demonstrated a staggering 99.5% rate of adherence to CRC screening for the blood test; significantly greater than to FIT, with an observed difference of 11.4%. Seeing adherence to Epi proColon(R) approaching 100%, the ADMIT trial clearly confirms the Company’s assumption that blood-based CRC screening has the potential to significantly lower the barrier for patients that have been historically non-compliant to participate in CRC screening programs. In May 2015, the Company has submitted the final data set to the FDA, which has meanwhile been presented and discussed with the FDA.
• Design of post-marketing study finalized and submitted to the FDA: The Company finalized the design of the proposed post-marketing study, aiming to show long-term benefit of blood-based CRC screening using Epi proColon(R) in a programmatic setting and submitted its study proposal to the FDA for approval.
• Strengthening manufacturing capabilities: To secure the commercialization progress of Epi proColon(R) following approval, Epigenomics significantly strengthened its manufacturing capabilities and mitigated potential supply chain risks by establishing a second source for product manufacturing. Furthermore, the Company is evaluating further steps to shorten manufacturing lead times and reduce production costs while building product inventory in preparation of the launch of Epi proColon(R) in the U.S.A. and China.
• Epigenomics’ proprietary blood-based Septin9 test added to the Chinese Guideline on Screening, Endoscopic Diagnosis and Treatment of Early Colorectal Cancer: End of June, the Chinese Society of Digestive Endoscopy of the Chinese Medical Association and the Oncologic Endoscopic Committee of the Chinese Anti-Cancer Association published their Guideline on Screening, Endoscopic Diagnosis and Treatment of Early Colorectal Cancer. In this guideline, Septin9-based tests, such as Epi proColon(R), were clearly stated as the method for early CRC screening.
• European Commission granted EUR 2.8 million to Epigenomics for development of blood-based Epi proLung(R) test: Beyond Epi proColon(R), the Company has accelerated its efforts towards the development of the next generation of product opportunities, building on the strong technological platform in DNA methylation and its leadership in the emerging field of liquid biopsies. A promising second product, Epi proLung(R), has shown a proven ability to detect another proprietary biomarker, SHOX2, in blood samples of patients rather than in bronchial fluid, which is the substrate for the current version of Epi proLung(R). Epigenomics received a grant in the amount of up to EUR 2.8 million from the European Commission within the framework of the Horizon 2020 program with the goal to develop the first ever convenient blood-based in-vitro diagnostic assay (IVD) for complementing systemic lung cancer diagnosis.
• Cash runway extended into second half of 2016 by raising EUR 5.0 million in a capital increase: In May 2015, the Company successfully completed a capital increase by way of a pre-emptive rights issue, which was significantly over-subscribed. All of the 976,562 new registered shares offered were taken up by existing shareholders of the Company. Based upon current projections, the gross proceeds in the total amount of EUR 5.0 million extend the cash runway of the Company at least into the second half of 2016, assuming complete conversion of all outstanding convertible bonds before the end of 2015.

Outlook

• Epigenomics confirms its prognosis for the fiscal year 2015 as outlined in the Group Management Report of its 2014 Annual Report. All business projections for 2015 are still based on the approval of Epi proColon(R) as an IVD product in the U.S. market in Q3 2015 and the generation of first product revenues following the commercialization start.
• The ADMIT trial has been completed within the expected time frame and the results of the study have been submitted and discussed with the FDA. The overall likelihood of a positive approval decision by the FDA and the expectations regarding the timing of this decision remain unchanged. Epigenomics expects revenue to increase in the second half of 2015 as soon as the approval is granted in the U.S.A. and important pricing and reimbursement decisions have been reached in China.
• The successful capital increase in the second quarter of 2015, together with the conversion of five convertible notes in 6M 2015, has improved the Company’s financial situation. Under the assumption of a conversion of the remaining convertible notes by their holders before their maturity at the end of 2015, the Company’s cash reach has been extended the second half of 2016. Epigenomics is still convinced that a positive FDA decision will open up further financing options to the Company on the capital markets and management is determined to exercise such options in the Company’s best interest.

Further Information

Conference call for press and analysts

The full 6-Month Financial Report 2015 can be obtained from Epigenomics’ website at:
https://www.epigenomics.com/en/news-investors/investors/financial-reports/2015.html

Epigenomics’ management will host a conference call with web presentation at 2:30 pm CET/ 8:30 am EDT today, Thursday, August 6, 2015. The conference call will be held in English.

The dial-in numbers for the conference call are:

Dial-in number (within Germany): +49 69 247 501 895
Dial-in number (within the UK): +44 203 367 9216
Dial-in number (within the U.S.): +1 408 916 9838
Participants are kindly requested to dial in 10 minutes prior to the start of the call.

The presentation accompanying the conference call and dial-in details for the web presentation will be available on Epigenomics’ website: https://www.epigenomics.com/en/news-investors.html

Both an audio replay of the conference call and a transcript of the conference call will be provided on Epigenomics’ website subsequently: https://www.epigenomics.com/en/news-investors.html

– Ends –

About Epigenomics

Epigenomics (www.epigenomics.com) is a molecular diagnostics company developing and commercializing innovative products for cancer. The Company’s products enable doctors to diagnose cancer earlier and more accurately, leading to improved outcomes for patients. Epigenomics’ lead product, Epi proColon(R), is a blood-based test for the early detection of colorectal cancer, which is currently marketed in Europe, has received approval by the Chinese Food and Drug Administration for China and is under regulatory review by the U.S. Food and Drug Administration (FDA). Additionally, the Company markets its tissue assay for use in lung cancer diagnosis, Epi proLung(R), in Europe. The Company’s technology and products have been validated through multiple partnerships with leading global diagnostic companies and testing laboratories. Epigenomics is an international company with operations in Europe and the U.S.A.

Contact Epigenomics

Antje Zeise, Manager IR | PR
Epigenomics AG
Geneststraße 5
10829 Berlin
Phone +49 (0) 30 24345 386
ir@epigenomics.com
www.epigenomics.com

For US press inquiries:

Epigenomics, Inc.
20271 Goldenrod Lane, Suite 2027
Germantown, Maryland 20876
pr@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 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 by Epigenomics in the United States or Canada. The analytical and clinical performance characteristics of any Epigenomics product based on this technology which may be sold at some future time in the U.S. have not been established.

Press release

Epigenomics and BioChain Announce the Inclusion of their Proprietary Blood-based Septin9 Test in the Chinese Screening Guideline for Colorectal Cancer

Berlin (Germany), Germantown, MD, and Newark, CA (U.S.A.), Beijing (China), July 15, 2015 – Epigenomics AG (Frankfurt Prime Standard: ECX, OTCQX: EPGNY), the German-American cancer molecular diagnostics company, and BioChain, an early cancer diagnostic company with operations in both USA and China and Epigenomics’ exclusive strategic commercialization partner in China, today announced that testing based on the proprietary Septin9 biomarker was included in the Chinese Guideline on Screening, Endoscopic Diagnosis and Treatment of Early Colorectal Cancer (CRC).

The guideline, recently officially published in the Chinese Journal of Digestive Endoscopy (2015, issue.6 Vol.32, page 341-360), is defined by the Chinese Society of Digestive Endoscopy of the Chinese Medical Association and the Oncologic Endoscopic Committee of the Chinese Anti-Cancer Association. The guideline recommends the ‘plasma Septin9 gene DNA methylation assay (mSEPT9)’ and the ‘fecal occult blood test’ as the standard tests for early CRC screening. It is clearly stated that ‘the Septin9 DNA methylation assay has obtained the approval from the China Food and Drug Administration (CFDA) with a sensitivity of 74.8% and a specificity of 97.5%, and it can be used for clinical early detection and diagnosis of CRC’. More than 50 experts from digestive endoscopy, surgery, oncology, pathological and other disciplines jointly compiled the guideline, which is supported by 161 publications.

As the first CE-marked and CFDA-approved product in clinical methylation gene detection in China, Epigenomics’ blood-based Septin9 test Epi proColon(R) has a strong level of patent protection in several jurisdictions globally, including China, where both the marker itself and the technology used for its detection are widely protected by granted and pending patents. Both parties, BioChain and Epigenomics remain highly committed to take all necessary steps to enforce these IP rights that will protect and strengthen BioChain’s market exclusivity in China.

Grace Tian, CEO of BioChain, commented: “We are delighted by the decision to include the Septin9 test in the screening guidelines, which allows us to address CRC detection in China with our blood-based Septin9 test Epi proColon(R). The guideline is defined by 50 renowned Chinese specialists and further emphasizes the importance of improving early cancer screening, diagnosis and intervention. This is a major milestone to reach a consensus on the strategy of CRC prevention and diagnosis, and to ensure effective screening and early diagnosis of CRC.”

“We are extremely pleased that the Septin9 test, the underlying principle of Epigenomics’ key blood-based product Epi proColon(R), has been included in the Chinese screening guideline”, added Epigenomics’ CEO/CFO Dr. Thomas Taapken. “We are convinced that an early detection of the disease through the Septin9 test will help to reduce the mortality and costs of care associated with CRC in China.”

In accordance with various international guidelines, nearly 290 million people are currently eligible for CRC screening in China and effective testing methods that are accepted by patients are needed. CRC is a rapidly growing medical problem. In a recently published report, the independent market research firm Decision Resources estimates that the number of incident cases of CRC in urban areas of China will almost double between 2012 and 2022. As this is demanding for better, simple to use and affordable screening methods, the Chinese government has elected CRC screening as one of its key focus areas in cancer prevention.

About Epigenomics

Epigenomics (www.epigenomics.com) is a molecular diagnostics company developing and commercializing innovative products for cancer. The Company’s products enable doctors to diagnose cancer earlier and more accurately, leading to improved outcomes for patients. Epigenomics’ lead product, Epi proColon(R), is a blood-based test for the early detection of colorectal cancer, which is currently marketed in Europe, has received approval by the Chinese Food and Drug Administration for China and is under regulatory review by the U.S. Food and Drug Administration (FDA). Additionally, the Company markets its tissue assay for use in lung cancer diagnosis, Epi proLung(R), in Europe. The Company’s technology and products have been validated through multiple partnerships with leading global diagnostic companies and testing laboratories. Epigenomics is an international company with operations in Europe and the U.S.A.

About BioChain

BioChain (www.biochain.com, www.biochainbj.com) is an international biotech company devoted to research in early stage cancer diagnosis and intervention for over 20 years, BioChain’s reagent and assay products used for cancer diagnosis and drug development are well known around the world. BioChain focuses on research and collaboration in early cancer diagnosis in digestive and respiratory systems.

BioChain (Beijing) 博尔诚, part of the BioChain Group, is a diagnostics company specializing in R&D, clinical application, production, and commercialization of cancer and hereditary diagnostic products targeted for the Chinese market. BioChain China is committed to provide accurate, simple and affordable products including DNA methylation and immunology blood tests for colorectal, gastric and lung cancer. In an exclusive partnership with Epigenomics, BioChain has introduced and localized a blood test for the early detection of colon cancer via methylated Septin9 DNA.

Contact Epigenomics

Antje Zeise, Manager IR | PR
Epigenomics AG
Geneststraße 5
10829 Berlin
Phone +49 (0) 30 24345 386
ir@epigenomics.com
www.epigenomics.com

For US press inquiries:

Epigenomics, Inc.
20271 Goldenrod Lane, Suite 2027
Germantown, Maryland 20876
pr@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 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 by Epigenomics in the United States or Canada. The analytical and clinical performance characteristics of any Epigenomics product based on this technology which may be sold at some future time in the U.S. have not been established.