Epigenomics AG Reports First Quarter 2008 Financial Results

Key Figures

- Revenue: EUR 0.9 million in Q1 2008, up by 12% (Q1 2007: EUR 0.8
million)
- EBIT: EUR -3.0 million in Q1 2008, improved by 13% (Q1 2007: EUR
-3.4 million)
- Net loss: EUR -2.9 million in Q1 2008, improved by 12% (Q1 2007:
EUR -3.3 million)
- Liquid assets: Strengthened at EUR 21.2 million as of 31/03/2008
(31/12/2007: EUR 10.0 million)
Highlights of the First Quarter 2008
- All key financials within expectations: Revenue, EBIT and net loss
improved
- Successful capital increase secures funding and provides financial
framework for further strategy execution
- Launch of "Epi 2010", a management initiative to extend cash
resources: Focus entirely on cancer screening products and further
streamlining of organization
- Strategic partnership signed with Quest Diagnostics
- Licensed key technologies to OncoMethylome Sciences
- Launch of first RUO products with partner TIB MOLBIOL
- Optimized assay for colorectal cancer screening test clinically
validated and novel biomarkers in prostate cancer program identified
- Final preparation of major colorectal cancer screening study
PRESEPT to start in Q2 2008
Press Release, Berlin, Germany and Seattle, WA, U.S.A., May 6, 2008 -
Epigenomics AG (Frankfurt, Prime Standard: ECX), a cancer molecular
diagnostics company developing tests based on DNA methylation, today
reported financial results for the first quarter of 2008, which ended
March 31, 2008.

"We have started with great confidence into 2008 and are very excited
about the progress we made in our product development and our
commercial partnerships in the first quarter. With the additional
liquidity provided by the capital increase in early 2008 and
continued financial discipline, we remain committed to delivering on
our goals and milestones, and in the process, to building shareholder
value. This year will be dedicated to further speed up our key value
drivers and set the path for commercialization," commented Geert
Nygaard, Chief Executive Officer of Epigenomics, on the first quarter
2008.

Financial Review

Overall, all key financials for the reporting period were fully in
line with expectations.

Revenue in Q1 2008 increased by 12% to EUR 916 thousand from EUR 820
thousand in the comparable period of 2007. This increase was due to
higher licensing revenue and reimbursements, which are a result of
new partnerships, closed in Q1 2008 and successful execution of
several ongoing R&D collaborations. With EUR 620 thousand the
licensing business contributed 68 % to the total revenues,
significantly more than in the same period of the previous year (Q1
2007: EUR 61 thousand). The Diagnostics business contributed EUR 106
thousand (Q1 2007: EUR 498 thousand) to total revenues while the
contribution of Biomarker Solutions business amounted to EUR 190
thousand (Q1 2007: EUR 260 thousand) mainly through execution of
projects partnered with Centocor, Johnson & Johnson, Pharmion, and
Pfizer.

Cost of sales amounted to EUR 160 thousand in the reporting period
(Q1 2007: EUR 357 thousand) and a more than 63% higher gross profit
of EUR 756 thousand (Q1 2007: EUR 463 thousand) was generated. R&D
costs decreased from EUR 2.5 million in the first three months of
2007 to EUR 2.4 million in Q1 2008.

Marketing and business development costs decreased from EUR 474
thousand in Q1 2007 to EUR 225 thousand in Q1 2008, and general and
administrative costs of EUR 917 thousand by 16% compared to EUR 1,092
thousand in Q1 2007. Other expenses increased to EUR 303 thousand in
Q1 2008 from EUR 1 thousand in Q1 2007 mainly due to foreign exchange
rate effects.

In Q1 2008, EBIT amounted to EUR -3.0 million, 13% better than the Q1
2007 EBIT of EUR -3.4 million. Net loss for the first three months in
2008 has been reduced by 12% from Q1 2007 (EUR 3.3 million) to EUR
2.9 million in the reporting period. The improvement is mainly
explained by the decrease in operating costs, which resulted from the
continued strict financial discipline.

Epigenomics' balance sheet total increased from EUR 22.9 million as
of December 31, 2007, to a total of EUR 31.7 million as of March 31,
2008. This increase was due to a successful capital increase
completed in February 2008 strengthening Epigenomics' cash flow and
financial position and overcompensating the continued net cash
consumption from operations. In Q1 2008 Epigenomics successfully
completed a capital increase initiated in 2007 despite a very
difficult market environment. Epigenomics placed the maximum number
of 8,458,062 new shares at a price of EUR 1.60 each. As a result of
issuing the new shares Epigenomics' subscribed capital as of March
2008 amounted to EUR 26.7 million and the equity ratio rose from
77.8% to 82.8%.

In sum, the financial position has improved in line with expectations
with liquid assets amounting to EUR 21.2 million as of March 31,
2008, compared to EUR 10.0 million as of December 31, 2007. Total net
cash flow in Q1 2008 was positive at EUR 11.3 million, due to the
gross proceeds of EUR 13.5 million resulting from the capital
increase. Cash outflow from operating activities in Q1 2008 amounted
to EUR 1.7 million.

Operational Highlights

In the first quarter of 2008 Epigenomics successfully completed a
capital increase initiated in 2007. The resulting liquidity position
provides the financial framework for the years 2008 to 2010.
Consequently, Epigenomics' management will assign the highest
priority on the clinical development and commercialization of the
cancer screening tests as key value drivers and allocate resources
accordingly. To secure appropriate funding of the respective product
development programs, the management has launched the initiative "Epi
2010" with the goal of extending the Company's cash to reach well
into 2010. As a result of an initial review, immediate focus will be
set entirely on the development of body-fluid based cancer screening
tests, in particular the most advanced colorectal cancer blood test.
To reflect this focus, the Company has started to adapt its R&D
organization accordingly. Total staff was reduced to 104 at March 31,
2008 from 112 at year-end 2007 as responsibilities of positions
vacated mainly by natural fluctuation were reassigned to existing
staff. In the process, Christian Piepenbrock, formerly COO, has
decided to resign from his Executive Board position and to leave
Epigenomics to pursue other career opportunities, effective on April
30, 2008. Dr. Kurt Berlin, CSO, has assumed overall responsibility
for all R&D operations with immediate effect.

In line with its non-exclusive licensing and partnering model
Epigenomics entered into a further key strategic collaboration with a
diagnostics industry partner in Q1 2008. Quest Diagnostics Inc., the
leading provider of diagnostic testing, information, and services in
the U.S. has obtained the rights to commercialize Epigenomics' Septin
9 biomarker as a laboratory-developed test to aid in the early
detection of colorectal cancer. The agreement with Quest Diagnostics
complements Epigenomics' licensing agreement with Abbott Molecular,
Inc. closed in September 2007 for worldwide non-exclusive IVD rights
for colorectal cancer blood testing based on Septin 9.

Further, Epigenomics licensed certain non-exclusive rights to several
proprietary core technologies for body fluid and tissue testing to
OncoMethylome Sciences S.A. and entered into a strategic
cross-licensing agreement with DxS Ltd for their proprietary
Scorpions® technology. This licensing strategy provides Epigenomics
with revenues through down-payments and could provide mid to long
term upside through participation in the partners' commercial success
via significant royalties on product sales.

All R&D programs for Epigenomics' cancer test products progressed
with good success in the first quarter of 2008.

R&D efforts in the colorectal cancer screening test development in Q1
2008 focused on the clinical validation of the technically improved
assay and an enhanced testing algorithm for the detection of
colorectal cancer with Epigenomics' biomarker Septin 9 in two
independent clinical case control studies. The studies were
successfully completed in April 2008 and confirmed that the assay
optimized for routine molecular diagnostic laboratory use detects
colorectal cancer in blood plasma statistically equivalent to the
previously used research assay. The improved assay marks a
significant milestone towards the development and commercialization
of Septin 9 DNA methylation biomarker assays, as it provides a
reference for the development of Septin 9 based diagnostic products
for colorectal cancer.

As an important next step in the development of Epigenomics
colorectal cancer screening test, the Company is in preparation of
its PRESEPT study, a multi-center study that aims at demonstrating
that Septin 9-based colorectal cancer blood testing satisfies latest
U.S. screening guideline requirements and provides a health economic
benefit. In Q1 2008, the PRESEPT study protocol was finalized in
collaboration with Epigenomics' Medical Advisory Board that was
recently strengthened by the appointment of Richard Wender, M.D.,
Alumni Professor and Chair of the Department of Family and Community
Medicine at Thomas Jefferson University in Philadelphia, PA.

During Q1 2008, Epigenomics also made progress in its prostate and
lung cancer screening programs. As an interim result from
Epigenomics' prostate cancer development program the company reported
on the validation of 26 novel biomarkers in a tissue study. Clinical
results from further body fluid studies in prostate and lung cancer
are expected for the second half of 2008.

In addition, Epigenomics further leveraged its proprietary biomarker
and technology-portfolio in the research market in collaboration with
TIB MOLBIOL, a high quality German research products company. First
test kits were recently launched into the research market in order to
encourage ancillary studies by academic and clinical researchers
using Epigenomics proprietary biomarkers. Further product launches
are scheduled to follow throughout the year.

Outlook

Throughout the year 2008 Epigenomics' most advanced colorectal cancer
blood test and key value driver will remain the focus of the
Company's development and commercialization efforts.

Epigenomics expects doctors and patients in the U.S. to get first
access to Septin 9 blood testing for colorectal cancer through a
laboratory-developed test (LDT) to be launched by Quest Diagnostics
in the second half of 2008. In Europe, the Company expects to launch
a LightMix® research product for Septin 9 testing in collaboration
with TIB MOLBIOL in Q2 2008.

To further support the market introduction of Septin 9-based
colorectal cancer tests, Epigenomics now dedicates significant
resources to the PRESEPT study. The qualification of initial clinical
sites is already in progress with the recruitment of the first
participant scheduled for Q2 2008. First results of an interim
analysis may be available as early as Q1 2009 while the final results
are to be presented at major conferences later in 2009.

After the recent successful clinical validation of the optimized
blood assay for methylated Septin 9 DNA, detailed clinical
performance data will be presented at several conferences in Q2 2008.

Throughout 2008, additional clinical data on Epigenomics' test
development programs in prostate and lung cancer are expected.

As Epigenomics is in discussions with potential future IVD partners
it expects to close another IVD licensing and partnering deal in
2008. Apart from the company's focus on screening products it
anticipates closing further deals with biotechnology and
pharmaceutical partners throughout the year.

As part of its initiative "Epi 2010", the company will continue to
review operations and alternative options to leverage assets outside
its clear cancer screening focus and plans to implement potential
measures throughout 2008.

Epigenomics' management expects full-year 2008 revenue to grow to EUR
3 to EUR 4 million compared to 2007 revenue of EUR 2.6 million. EBIT
for 2008 is also expected to improve and range between EUR -11.5 to
EUR -12.5 million compared to 2007 EBIT of EUR -13.5 million. Net
cash consumption for 2008 is expected to stay below EUR 10 million
and thus be significantly better than the 2007 cash burn of EUR 12
million.

Further Information

The full 3-Months Report 2008 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 cancer at an
early stage and thereby may reduce mortality from this dreaded
disease.

The company develops diagnostic screening tests for the early
detection of cancer. Based on 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 a
validated biomarker 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. For development and global commercialization as in
vitro diagnostic test kits, Epigenomics pursues a non-exclusive
partnering strategy with diagnostics industry companies. As a first
strategic partner, Abbott Molecular Inc. licensed the worldwide
non-exclusive IVD rights to Epigenomics' proprietary Septin 9
biomarker for colorectal cancer. Epigenomics also aims at giving
patients and doctors early access to these biomarkers through
reference laboratory testing services. As a first reference
laboratory partner, Quest Diagnostics Inc., the leading provider of
diagnostic testing, information and services, obtained the license to
commercialize a laboratory-developed test (LDT) for Septin 9 in the
U.S.

Partners in the health care industry and the biomedical research
community can access Epigenomics' portfolio of proprietary DNA
methylation technologies and biomarkers protected by more than 150
patent families through research products, Biomarker Services, IVD
Development Collaborations, and Licensing. The company is
headquartered in Berlin, Germany, and has a wholly owned subsidiary
in Seattle, WA, U.S.A. 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.
Contact:

Epigenomics AG
Dr. Achim Plum
SVP Corporate Development
+49 30 24345 368 (phone)
+49 30 24345 555 (fax)
achim.plum@epigenomics.com
www.epigenomics.com