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New test fulfills promise of liquid biopsies to cost effectively monitor patients

NEW HAVEN, CT, (February 15th, 2018) – Specialty cancer diagnostics company Precipio, Inc. (NASDAQ: PRPO), announced today its launch of the first lung cancer treatment resistance panel specifically for the critical mutations T790M and C797S in the EGFR gene. The test will use Precipio’s patented ICE-COLD PCR™ liquid biopsy enrichment technology to enable better cancer outcomes by identifying treatment resistance mutations in non-small cell lung cancer (NSCLC).

Precipio’s TKI chemotherapy resistance test is designed to detect these critical lung cancer mutations at a fraction of the cost of competitor’s existing, broader panels. This focused, cost effective test allows for more frequent testing, and a quicker identification of a patient’s resistance to various therapies.

Better cancer treatment outcomes are the intended result from the increased monitoring frequency, enabled by these low cost test with results delivered as quick as 24 hours.

Precipio’s lung cancer test is the first of its kind on the market, detecting mutations with a sensitivity of 99.9%, which equates to a single cancer cell within 1,000 normal cells.

Clinical Value

The primary application for this test is to enable physicians to monitor lung cancer patients who are currently on a type of chemotherapy termed TKI (Tyrosine-kinase inhibitor).

Lung cancer patients identified to have a mutation in the EGFR gene are treated with a TKI therapy. During the course of treatment, some patients will develop resistance to that treatment, thus rendering it ineffective.

Therefore, there is a need for a test that can be used to monitor the patient on an ongoing basis to identify the existence of these mutations as early as possible. The presence of either the T790M or C797S mutations may indicate the patient has developed a resistance, information necessary to determine whether to continue TKI or switch to a different therapy.

Competitive Advantage

Currently, there are several laboratories offering tests with the same genes and mutations, but they are included within an expansive and expensive broad panel.

As an initial diagnostic panel run upon disease onset, these large panels may be suitable for broad characterization of the tumor’s biology. However, there are two major drawbacks to these panels.

First, almost all patients will eventually develop resistance to TKI therapies. Over 50% of these patients will develop the T790M resistance mutation and 33% will develop the C797S resistance mutation as a result of the treatment. Therefore, testing up front will likely not identify those mutations, as they will develop during treatment.

Second, at a price point of $4,000-$6,000 per test, they are too expensive to be considered for patient monitoring which may require repetitive testing for T790M and C797S.

Billed at below $500 for both mutations, Precipio’s test is the only economical option for repetitive patient monitoring using a simple blood draw, which is critical to identify the mutation as early as possible.

Precipio’s test provides physicians the ability to monitor their patients using the most cost effective resistance mutation panel on the market, tested on a simple blood (liquid biopsy) sample. An assay using ICP yields results quickly, and creates unprecedented opportunities for clinicians to obtain a deeper understanding of changes to the biology of a patient’s tumor, in real-time.

Market Potential

Approximately 220,000 new lung cancer patients are diagnosed each year in the US, in addition to the estimated 550,000 existing lung cancer patients. Applying the percentage of patients on TKI therapies that would require monitoring to identify resistance, and a frequency of 4 tests per year, this equates to a domestic market potential of $1.5B annually.

Business Model

Some hospitals and laboratories may not have sufficient volume to justify an in-house setup initially. For those customers, our CLIA lab will run the test as a centralized laboratory, allowing the hospital to initially assess, and then grow the volume from its physicians, to reach an economically justified threshold to internalize the test.

While Precipio’s primary focus is the sale of ICP kits to laboratories, establishing the test in our CLIA facility assists our customers in internalizing ICP. Many hospitals considering bringing the test in house, initially examine the volume requirements within their network to assess the capacity and economics of running the test in their laboratory.

Therefore, the option for the hospital to initially send their tests to Precipio while they on-board the test, is an attractive no-risk option we offer to our customers while they internalize the test. This also creates an attractive additional revenue stream for Precipio, as well as the ability to collect clinical data for further research and development.

“Our ultimate goal is for every laboratory with a focus on molecular diagnostics to run these tests in-house, changing the economic model and enabling the lab to make money with liquid biopsy testing,” said Ilan Danieli, President and Chief Executive Officer of Precipio. “Over the next few months, our team will continue to launch additional liquid biopsy assays in our CLIA lab. This will allow physicians to order directly from Precipio or allow Precipio to handle orders from hospitals until they decide to bring the ICE COLD-PCR technology into their own laboratory, ” Mr. Danieli continued.

About Precipio

Precipio has built a platform designed to eradicate the problem of misdiagnosis by harnessing the intellect, expertise and technology developed within academic institutions and delivering quality diagnostic information to physicians and their patients worldwide. Through its collaborations with world-class academic institutions specializing in cancer research, diagnostics and treatment such as the Yale School of Medicine and Harvard’s Dana-Farber Cancer Institute, Precipio offers a new standard of diagnostic accuracy enabling the highest level of patient care. For more information, please visit www.www.precipiodx.com.

Forward-Looking Statements

Certain statements in this press release constitute “forward-looking statements,” within the meaning of federal securities laws, including statements related to Precipio’s merger with Transgenomic, consolidation of laboratory operations, reductions of accounts payable, plans and prospects and other statements containing the words “anticipate,” “intend,” “may,” “plan,” “predict,” “will,” “would,” “could,” “should,” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors. Factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include the known risks, uncertainties and other factors described in the Company’s definitive proxy statement filed on May 12, 2017, the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, the Company’s prior filings and from time to time in the Company’s subsequent filings with the Securities and Exchange Commission. Any change in such factors, risks and uncertainties may cause the actual results, events and performance to differ materially from those referred to in such statements. All information in this press release is as of the date of the release and the Company does not undertake any duty to update this information, including any forward-looking statements, unless required by law.