EANS-News: Epigenomics AG Presents Mid-Year Results and Announces Restructuring Plan Heightening Focus on the Key U.S. Market

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Restructuring & Recapitalisations/6-month report/molecular diagnostic

Subtitle: Focus to be on near term product opportunities and key
markets; streamlining of operations

Berlin, Germany, and Seattle, WA, U.S.A., August 10, 2011 (euro
adhoc) - Epigenomics AG (Frankfurt Prime Standard: ECX), the cancer
molecular diagnostic company, today announced financial results for
the second quarter and first half of 2011 ending June 30, 2011. The
Company also released plans to restructure its organization, with the
goal of maximizing shareholder value through an increased focus on
the key U.S. market.

Epigenomics´ second generation blood test for colorectal cancer
("CRC") detection, Epi proColon® 2.0, remains on track to be
submitted to the U.S. Food and Drug Administration ("FDA") for
Premarket Approval ("PMA") in Q4 2011. Epi proColon® 2.0 is
specifically designed to meet FDA requirements and show improved
clinical performance, simplified handling and better automation
capabilities compared to the currently marketed version of the
product. Crucially, Epi proColon® 2.0 prototypes demonstrated higher
test sensitivity at comparable specificity compared to earlier
versions, which is a key differentiator and should underpin a
successful launch in the U.S.

Following a strategic review of the opportunity presented by Epi
proColon® 2.0, plans for developing a commercial operation in the
U.S. are being accelerated. The Company will relocate its U.S.
headquarters from Seattle, WA, to the East Coast in 2012 and step up
efforts to prepare for a commercial launch. Early stage product and
technology research will be discontinued and clinical research scaled
down. Going forward, European commercialization will be mainly
focused on key accounts. Epigenomics will reduce its total workforce
by approximately 39 employees targeting a company size of 45
employees by year-end 2011.

Geert Nygaard, Chief Executive Officer of Epigenomics said: "Given
the significant opportunity with the improved test, our efforts are
now focused squarely on the approval and launch of our second
generation Epi proColon® product, particularly in the U.S. As a
result, we have brought forward the necessary operational changes to
prepare for our U.S. product launch and focus the resources of the
company on this key goal."

Key Financials H1 2011
H1 2011 (unaudited)| H1 2010 (unaudited)| % change

Revenue |in mill. EUR| 0.99 | 0.97 | 1% |
EBIT |in mill. EUR| (5.7) | (5.4) | -5% |
Net Loss|in mill. EUR| (5.9) | (5.4) | -10% |

At Jun 30, 2011 (unaudited)| At Dec 31, 2010(audited)|
Liquid Assets|in mill. EUR| 20.7 | 26.4 |
Employees | 84 | 82 |

• Revenue for the half year of EUR 0.99 million (2010: EUR 0.97 million)
generated from out-licensing and partnering activities and increasingly, from
product sales

• Costs of sales amounted to EUR 0.25 million (H1 2010: EUR 0.31
million); gross margin improved to 75% from 68% in H1 2010 •
Operating cost of EUR 6.6 million comparable to H1 2010 (EUR 6.6
million) • R&D costs significantly decreased from EUR 3.6 million in
H1 2010 to EUR 3.0 million in the reporting period • Operating (EBIT)
loss increased marginally by 5% to EUR 5.7 million (H1 2010: loss of
EUR 5.4 million) • Net loss for H1 2011 amounted to EUR 5.9 million
(H1 2010: EUR 5.4 million) • Cash consumption increased from EUR 4.4
million in H1 2010 to EUR 5.7 million in the reporting period due to
a significant non-recurrent cash inflow from a collaboration partner
in H1 2010 with no comparable inflow in H1 2011 • Cash and cash
equivalents at June 30, 2011 were EUR 20.7 million (December 31,
2010: EUR 26.4 million)

Update on Products

Patient preference for a blood-based test for CRC is confirmed by the
continued fast adoption of ColoVantage™, a laboratory-developed
Septin9 blood test aiding the detection of CRC, which is offered in
the U.S. by Epigenomics´ partner, Quest Diagnostics. ColoVantage™
testing volume continued to show strong growth during Q2 2011. With
this positive backdrop, Epigenomics is increasingly excited by the
potential for an FDA-approved IVD version of the test with broader
claims for more widespread adoption.

The development of the Company´s second generation blood test for
CRC, Epi proColon® 2.0 for the U.S. and European markets remains on
track. The Company has planned two key studies: a case control study
with about 200 patient samples for CE-marking of the product in
Europe followed by the pivotal clinical trial for FDA approval with
prospectively collected blood samples of a screening cohort of about
8,000 subjects. The studies are expected to be finalized in Q4 2011.
The launch of the CE-marked version of the product in Europe and a
submission to the FDA for PMA review are planned before year-end
2011. In parallel, Epigenomics´ licensee Abbott is working towards
U.S. regulatory approval of their Septin9-based blood test for CRC
screening.

For the European market, Epigenomics´ second generation test is being
validated for use with the Roche "LightCycler® 480" and Life
Technologies´ "AB 7500 Fast" real-time PCR systems. For the U.S.
market, Epi proColon 2.0 is designed for use with Life Technologies´
"AB7500 Fast Dx" real-time PCR instrument. An agreement with Life
Technologies granting Epigenomics access to this FDA-cleared,
real-time PCR instrument for the U.S. market was signed in July 2011.

With the U.S. being Epigenomics´ key strategic market for CRC
screening based on Septin9 blood tests going forward, the Company and
its partners have intensified the dialogue with health care
providers, payers and further stakeholders. Guided by this dialogue,
Epigenomics and its partners have embarked on numerous activities
targeting the timely provision of evidence demonstrating the test´s
accurate clinical performance, cost-effectiveness, and ability to
increase screening compliance.

Based on already generated data with prototype tests, the planned
clinical validation studies with Epi proColon® 2.0 are expected to
provide improved performance data. Already, cost-effectiveness has
been clearly demonstrated in a recent study presented at this year´s
"Digestive Disease Week" conference in Chicago. The study concluded
that screening for CRC using Septin9 tests was a medically beneficial
and cost-effective strategy from the health economical perspective
when addressing the currently unscreened population in the U.S.

Results from several surveys on patient behavior in the U.S. and
Europe have demonstrated that blood tests for CRC screening have the
potential to encourage more people to participate in screening.
Sponsored by Epigenomics or its U.S. partners ARUP Laboratories and
Quest Diagnostics, the studies were conducted by the University of
Utah and the Huntsman Cancer Institute, The Colorectal Cancer
Alliance, and europacolon. In these surveys, more than two out of
three participating screening-eligible patients indicated that they
would prefer a blood test and would be more likely to adhere to
screening guidelines if such a test was offered as a screening
method.

To further strengthen its position in the U.S. market, Epigenomics
has started building a dedicated commercial team. This effort is
being headed up by Noel Doheny, who recently joined Epigenomics as
CEO of the Company´s U.S. subsidiary Epigenomics Inc.

European market penetration of Epi proColon®, which currently
addresses the self-payer segment in selected EU countries, continues
to make progress, albeit at a moderate pace. Revenue derived from the
first generation Epi proColon® test in the German and Swiss
self-payer market remained on a low level and developed slower than
expected. The slow market adoption emphasizes the importance of
obtaining reimbursement of the test in key markets going forward,
which is also a focus of the Company´s accelerated U.S. market
development plans.

Epigenomics continues working towards establishing its second
product, Epi proLung®, as an aid in the diagnosis of lung cancer. To
this end, Epigenomics is sponsoring investigator-driven studies
directed at demonstrating the benefits of Epi proLung® in clinical
practice. These studies are progressing as planned and are a key
prerequisite for generating meaningful revenues from this product in
the years to come.

Organizational Development & Restructuring

With the U.S. product development of Epi proColon® 2.0 fully on
track, the Company will increase its focus on this key market. As
European sales in the self-payer segment are ramping up slower than
expected, the Company will adapt its marketing and sales strategy to
a key account approach. The Company - directly and increasingly
through distributors - will mainly target payers and large
institutional customers with deep reach into the healthcare system in
select markets in Europe and beyond. At the same time, R&D efforts
will be concentrated on existing and near term product opportunities.
The planned restructuring measures are expected to further sharpen
the focus of the organization. Specifically, the Company will
implement the following key changes to the organization:

• From 2012 onwards, the U.S. headquarters will be relocated to a new
business site, strategically located on the East Coast, as the
nucleus for building and growing the U.S. commercial operations while
retaining key Seattle staff in a satellite office. • Direct
commercialization in the European self-payer segment will be
de-emphasized and a key account approach for Epi proColon® and Epi
proLung® directed towards institutions such as healthcare providers,
health insurers and further large institutional customers will be
implemented to generate sustainable revenues in the mid to long term.
The European sales and marketing team will be adjusted accordingly. •
Early stage product and technology research will be discontinued and
clinical research scaled down and remaining R&D resources will be
concentrated on second generation product development and support of
existing products. • Biomarker discovery and development capabilities
will be maintained for collaborations with pharmaceutical companies
in the area of personalized medicine. • Further cost savings will be
realized through scaling down administration and management in
proportion to new company structure.

These measures are expected to be fully implemented by the end of
2011 and to be mainly reflected in the annual accounts of 2011. The
Company intends to reduce its total workforce from 84 employees at
the end of H1 2011 to approximately 45 employees by year-end 2011.
Starting in 2012, the company expects to further grow its U.S.
commercial operations to prepare for an Epi proColon® 2.0 product
launch after the potential Premarket Approval by the FDA. Going
forward, Epigenomics expects to realize annual savings on a
comparable operational cost basis of approximately EUR 3.5-4.0
million. One-time restructuring costs are expected to be in the range
of EUR 3 million, of which approximately EUR 0.7 million will not
affect liquidity. The measures in connection with the restructuring
plan will accelerate cash outflows in 2011 and the Company expects to
end the year with around EUR 13 million in liquid assets. However,
net cash outflows in 2012 will decrease accordingly. The management
estimates that the existing liquid assets will fund the Company´s
operations well into 2013.

An updated financial guidance reflecting the full effects of the
restructuring and cost saving measures will be provided at the time
of the 9-Months Financial Report.

-Ends-

Contact Epigenomics AG

Dr. Achim Plum
Sen. VP Corporate Development
Epigenomics AG
Tel +49 (0) 30 24345 368
pr@Epigenomics.com
www.epigenomics.com

Media inquiries can also be directed at:
Dr. Robert Mayer
Account Manager
Tel +49 (0)89 5238 8030
robert.mayer@collegehill.com

Conference call for press and analysts

The full 6-Months Financial Report 2011 can be obtained from
Epigenomics´ website at: http://www.epigenomics.com/en/news-investors
/investors/financial-reports.html

Epigenomics´ management will host a conference call and an audio
webcast at 3pm CET/9am ET today, Wednesday 10th August 2011. The
dial-in numbers for the conference call are:

Dial-in number (within Germany): +49 30 86871428
Dial-in number (within the UK): +44 203 3679216
Dial-in number (within the U.S.): +1 408 9169838

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 audio webcast will be available on Epigenomics´ website:
http://www.epigenomics.com/en/news-investors.html

A webcast of the conference call will be provided on Epigenomics´
website subsequently:
http://www.epigenomics.com/en/news-investors.html

About Epigenomics

Epigenomics (www.epigenomics.com) is a molecular diagnostics company
developing and commercializing a pipeline of proprietary 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®, is a blood-based
test for the early detection of colorectal cancer, which is currently
marketed in Europe and is in development for the U.S.A. The Company´s
technology and products have been validated through multiple
partnerships with leading global diagnostic companies including
Abbott, QIAGEN, Sysmex, and Quest Diagnostics. Epigenomics is an
international company with operations in Europe and the U.S.A.

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.

Further inquiry note:
Dr. Achim Plum
Sen. VP Corporate Development
Epigenomics AG
Tel: +49 30 24345 368
achim.plum@epigenomics.com

end of announcement euro adhoc
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company: Epigenomics AG
Kleine Präsidentenstraße 1
D-10178 Berlin
phone: +49 30 24345-0
FAX: +49 30 24345-555
mail: ir@epigenomics.com
WWW: www.epigenomics.com
sector: Biotechnology
ISIN: DE000A0BVT96, DE000A0XFWF2
indexes: Prime All Share, Technology All Share
stockmarkets: regulated dealing/prime standard: Frankfurt, free trade: Berlin,
Hamburg, Stuttgart, Düsseldorf, München
language: English