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Epigenomics Posts 30 Percent Rise in Q3 Revenues

NEW YORK — Epigenomics on Thursday reported a 30 percent year-over-year increase in revenues for the third quarter of 2020, but the firm continues to face uncertainty following a recent negative reimbursement decision in the US for its flagship colon cancer screening test.

For the three-month period ended Sept. 30, Epigenomics' revenues increased to €219,000 ($258,367) from €168,000 the year before. Revenues for the first nine months of the year, however, were down 36 percent to €541,000 from €847,000 as the ongoing SARS-CoV-2 pandemic prompted patients eligible for its cancer diagnostics to delay their checkups.

Epigenomics' net loss for the third quarter was €2.8 million, or €.06 per share, versus €2.6 million, or €.07 per share, in the year-ago period.

Its R&D spending in the quarter dropped 63 percent to €658,000 from €1.8 million as the SARS-CoV-2 pandemic forced the German firm to put almost all clinical activity on hold. Its SG&A costs, meanwhile, fell 23 percent to €1.5 million from €2.0 million due to a pandemic-related reduction in sales and marketing activities in the US.

At the end of September, Epigenomics had cash, cash equivalents, and marketable securities totaling €6.6 million, which the company said would sustain operations only through the first quarter of 2021.

In October, the US Centers for Medicare and Medicaid Services released a preliminary determination that Epigenomics' Epi proColon blood-based colon cancer screening test would not be covered for Medicare-eligible patients, driving the company's stock below €1. A final CMS ruling is expected mid-January.

In a letter to shareholders, Epigenomics CEO Greg Hamilton said that the company believes CMS may change course on Epi proColon but noted that the company's current cash runway "limits our ability to maximize our chances of reversing CMS's decision … and identifying and executing strategic alternatives that would maximize shareholder value."

Therefore, Epigenomics is planning a shareholder meeting at which it will seek authorization to issue convertible bonds with a nominal value of up to €5.5 million.

"The convertible bonds, which include a so-called back-stop agreement of up to €4 million from our largest shareholder Deutsche Balaton Aktiengesellschaft, are an important bridge financing for the company," Hamilton said in a statement. "We ask all shareholders to register for the [meeting] and to follow our proposals when voting in order to maximize our opportunity for success."

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