Rosetta Genomics announces third-quarter 2009 financial results

Dec 18 2009

Rosetta Genomics, Ltd. (NASDAQ:ROSG), a leading developer of microRNA-based molecular diagnostics, today reported financial results for the three and nine months ended September 30, 2009 and provided a business update. Highlights of the third quarter of 2009 and subsequent weeks include:

• The hiring of Kenneth A. Berlin as president and chief executive officer
• The commencement in October of processing of samples provided by our licensee as well as a number of our distribution partners of our first three miRview™ tests in our CLIA-certified lab in Philadelphia
• Prioritizing the Company’s product pipeline to include five additional microRNA-based tests
• Further strengthening the Company’s intellectual property position with receipt of its third and fourth issued U.S. patents covering microRNAs and receiving five more notices of allowance
• Entering into an exclusive distribution agreement with Genetic Technologies Ltd. for our first three cancer diagnostic tests in Australia, New Zealand and Singapore

Management Commentary

“We completed a series of distribution and licensing agreements for our miRview™ mets, miRview™ meso and miRview™ squamous tests throughout the year, and we are pleased that several of our marketing partners, in recent weeks, have launched these products,” said Kenneth A. Berlin, president and chief executive officer of Rosetta Genomics. “We have begun to receive the samples and process these tests, and expect sales to begin to ramp up through 2010. For 2010 we forecast revenues from the processing of these tests to range from $2 million to $4 million, based on processing between 1,200 and 2,400 samples.”

“Since joining Rosetta Genomics in early November, I have been reviewing our commercialization strategy, technology and research capabilities while meeting with our passionate and highly professional staff,” he continued. “I undertook this task with the objective eye that comes with being new to the company, and with the goal of maximizing our assets to build shareholder value. Together with my management team and the board of directors we have prioritized five new tests that we will develop in the near term.”

Rosetta is disclosing that the following three tests are expected to be developed and commercialized during the next two years:

• Second-generation miRview™ mets. We are working to expand the utility of our test for cancer of unknown primary. The current version of this test has a tumor panel of 25 cancers. We are now developing a test that is designed to identify a much larger panel of cancer origins. We believe that we can bring this test to market in the second half of 2010.
• FNA (Fine Needle Aspirate) lung cancer. We expect to launch another lung cancer diagnostic in the second half of 2011, which after differentiating small cell lung cancer from non-small cell lung cancer will further sub-classify non-small cell lung cancer into squamous or non-squamous. This test is being developed to leverage our newly developed Fine Needle Aspirate platform technology, which we plan to leverage across several types of tests.
• Bladder cancer. This test is intended to predict the risk of superficial bladder cancer becoming invasive. Our target date for commercialization is late 2011.

“The results we have seen in our colon cancer studies in serum over the past several months suggest that we will not be able to bring to market a competitive serum-based colon cancer screening assay. While we continue to work on a colon cancer screening test in other blood compartments, we’ve recently determined that a colon cancer screening test will not be a priority project at this time. I believe the five products we have decided to advance ahead of the colon cancer test represent a more compelling and differentiated product offering, and therefore better position us for success,” added Mr. Berlin.

“Our intellectual property is extensive, and our development work relies on these assets. We were very pleased during the third quarter and recent weeks to add two issued U.S. patents covering microRNAs to our portfolio, as well as to receive five notices of allowance. We now have four issued U.S. patents, 11 U.S. notices of allowance and 92 patent applications worldwide, including 39 in the U.S. We believe that our patents and patent applications, including those licensed from other parties, together represent the broadest of any company working in the area of microRNAs, and pose a formidable barrier to entry to our competitors,” he concluded.

Financial Overview

The company recorded no revenues in the third quarters of 2009 and 2008.

Research and development expenses were $1.7 million for the third quarter of 2009, compared with $2.0 million for the third quarter of 2008. R&D expenses decreased mainly due to steps taken by the company to reduce costs.

Marketing and business development expenses were $825,000 for the third quarter of 2009, compared with $519,000 for the third quarter of 2008. The increase was derived primarily from post-market validation expenses.

General and administrative expenses were $858,000 in the third quarter of 2009, compared with $691,000 in the third quarter of 2008.

The operating loss for the third quarter of 2009 was $3.5 million, including $264,000 of non-cash stock based compensation expense. This compares with an operating loss of $3.2 million, including $237,000 of non-cash stock based compensation expense, for the corresponding quarter of 2008.

The company’s net loss from continuing operations in the third quarter of 2009 was $3.4 million, or $0.24 per ordinary share, compared with a net loss from continuing operations of $3.1 million, or $0.25 per ordinary share, in the same period of 2008.

On a non-GAAP basis, excluding stock-compensation expense, the net loss for the 2009 third quarter was $3.1 million, or $0.22 per ordinary share. This compares with the comparable figures for the 2008 third quarter of $2.7 million, or $0.23 per ordinary share.

On a GAAP basis, the net loss for the 2009 third quarter was $3.4 million, or $0.24 per ordinary share. This compares with the GAAP net loss for the 2008 third quarter of $3.0 million, or $0.25 per ordinary share.

For the nine months ended September 30, 2009 the company reported revenues from continuing operations of $31,000, compared with no revenues in the comparable prior year period. The company’s net loss from continuing operations for the nine months ended September 30, 2009 was $10.6 million or $0.80 per ordinary share, compared with a net loss from continuing operations of $10.6 million or $0.89 per ordinary share in the same period of 2008.

As of September 30, 2009, the company had $13.5 million in cash, cash equivalents, short-term bank deposits and marketable securities.

Details reconciling non-GAAP amounts with GAAP amounts including specified items are provided in the table attached.

2010 Financial Guidance

The company expects its cash burn from operations for 2010 to be approximately $900,000 per month; however, this may change significantly based on a number of factors, including our current assumptions of revenues and royalties from sales of our three marketed products, as well as the availability of other potential sources of cash.

Conference Call Information

Rosetta Genomics will host a conference call beginning at 8:30 a.m. Eastern time today to discuss third quarter results and recent corporate developments. To access the live conference call, U.S. and Canadian participants may dial (866) 239-5859; international participants may dial (702) 495-1913. To access the 24-hour audio replay, U.S. and Canadian participants may dial (800) 642-1687; international participants may dial (706) 645-9291. The access code for the replay is 46130893. The replay will be available until December 21, 2009.

A live audio webcast of the call will also be available on the "Investors" section of the company's website www.rosettagenomics.com. An archived webcast will be available on the company's website approximately two hours after the event, and will be archived for 30 days thereafter.