Dear all,

 please find attached our update on the Polish leader in diagnostic genetics Inno-Gene S.A. We have increased our valuation from previously PLN 4.10-PLN 5.30 to PLN 10.40-PLN 15.50 per share

(1) Since our first report in Feb 2015, Inno-Gene has made several very positive announcements. Most importantly, in Sep 2015 the company announced a new 3−year strategy, which foresees the concentration on tests, which are conducted using the highly-efficient Next-Generation Sequencing (NGS) technology. IGN expects that by 2018 this will help it to double its market share in the rapidly-growing Polish market for diagnostic genetics (CAGR 15−18E of 36% to PLN 200m) from currently 6% to 12% and significantly improve margins. A few months earlier, IGN also announced that it would become the exclusive distributor of Premaitha Health’s NIPT test “IONA” in Poland, which is the only non-invasive prenatal test worldwide that is recognized as a medical exam with diagnostic value. Worldwide, Transparency Market Research and MarketsandMarkets expect the markets for NIPT and NGS-based tests to grow at a CAGR of 17.5% and 23.1% respectively (vs. 13.3% for the entire market for diagnostic genetics).

(2) IGN is in the process of conducting a public offering of 1.3m new shares and wants to change to the main market of the WSE in Q1/16. The company plans to use the proceeds (EVRe: max. PLN 10.4m) mainly for developing new high-margin NGS-based tests (e.g. its own NIPT test), investments in equipment and financing its 36.5%/63.5% joint-venture with International Technology Ventures LLC, which owns exclusive rights to the use of Illumina’s Whole Genome Sequencing (WGS) system HiSeq X Ten in Poland, that is currently the most advanced worldwide.

(3) Due to the positive newsflow we have adjusted our estimates for IGN, which results in a new fair value range of PLN 10.40-PLN 15.50 per share based on three different scenarios (prev. PLN 4.10-PLN 5.30). While top line growth should be positively affected by new proprietary tests from 2016 and distribution agreements in Poland and abroad, we expect that the use of NGS and WGS technology will strongly improve the company’s profitability going forward.

In case of any further questions, do not hesitate to contact us.

Best regards,

Adrian Kowollik

Managing Partner

East Value Research GmbH | Mülhauser Str. 5 | D-10405 Berlin
Tel. (D): +49 30 20609082 | Tel. (PL): +48 889 058 270 | E-Mail: ak@eastvalueresearch.com | Skype: a_kowollik