RosettaGX Reveal for the Diagnosis of
Indeterminate Thyroid FNA Expected to Drive Significant Revenue
Growth over the Next Several Years
Conference call begins today at 4:30 p.m.
Eastern time
Rosetta Genomics Ltd. (NASDAQ:ROSG), a leading developer and
provider of microRNA-based and other molecular diagnostics, reports
financial results for the three and six months ended June 30,
2016.
Recent developments include:
- Gross billings for RosettaGX Reveal™
(“Reveal”), the Company’s first-of-its-kind microRNA classifier for
indeterminate thyroid nodules, are tracking to be approximately
$1.5 million for the first nine months of 2016;
- Announced that Reveal is now available
for use on ThinPrep® samples;
- Published data confirming the
analytical validity of Reveal to classify indeterminate thyroid
nodules in the peer-reviewed journal Cancer Cytopathology;
- Entered into a services agreement with
an unnamed global pharmaceutical company to provide Fluorescence in
Situ Hybridization (FISH) testing services for a clinical study the
pharmaceutical company is conducting in prostate cancer;
- Launched OncoGxSelect™, a
next-generation sequencing (NGS)-based test that detects somatic
mutations frequently found in cancers and provides actionable
results to help guide decisions related to targeted cancer
therapies; and
- Received U.S. patent allowance for a
microRNA-based ovarian cancer treatment.
Management Commentary
“Throughout the first half of 2016 we demonstrated our ability
to increase revenues by expanding our molecular diagnostics test
menu and advancing our commercial programs to enable precision
medicine for patients and physicians,” said Kenneth A. Berlin,
President and Chief Executive Officer of Rosetta Genomics. “We are
particularly pleased about our progress with the commercial launch
and clinical adoption of our Reveal test for the classification of
indeterminate thyroid nodules.
“We made two key advances that significantly enhance our
commercial efforts with Reveal. First, compelling analytical data
was published in a peer-reviewed journal that supports the
robustness of the Reveal assay under many different laboratory
conditions. In addition, we presented data at the recent American
Thyroid Society annual meeting confirming that Reveal produces the
same high-level performance on ThinPrep prepared slides as it does
on a direct smear from a thyroid Fine Needle Aspirate (“FNA”)
biopsy. We believe offering the option of using Reveal with either
ThinPrep or direct smears will expand our customer base and
potentially increase our test volumes by more than 50% over the
next several months.
“We are gaining traction with our strategy to use Reveal to
access new accounts to promote our exceptional thyroid offering as
well as our urologic cancer and solid tumor product lines. In the
near term, this primary focus on Reveal may temporarily slow the
growth of the solid tumor and urology business lines as our sales
people will be mainly calling on pathologists and endocrinologists,
rather than oncologists and urologists. Over the long term, we
believe that by winning new accounts with our Reveal offering we
will be able to expand use of our solid tumor and urologic oncology
offerings by many of these new accounts, thus further accelerating
revenue growth.
“The commercial launch of Reveal will continue to be a prime
focus of our company. We believe Reveal’s excellent performance –
combined with the assay’s ability to be used with either ThinPrep
or FNA biopsy, as well as its unique ability to use the same smears
from the original indeterminate diagnosis – gives Reveal a
significant competitive advantage that we expect will allow us to
gain meaningful market share in this $350 million market in the
U.S. and recent trends in demand and gross billings for Reveal
demonstrate this. For example, in the third quarter we expect
approximately 300 Reveal orders with gross billings of
approximately $900,000.
“With demand for Reveal reaching higher levels in the current
quarter and with that demand expected to continue to increase
substantially going forward, we are increasing capacity at our
Philadelphia laboratory to process samples. In addition, the
investments we made in enhancing billing and collections is bearing
fruit as we continue to improve collections.. We are pleased with
our progress to date, as evidenced by our cash collections during
the first half of 2016.
“Throughout the balance of the year we will continue to build on
recent progress to drive demand for Reveal and the rest of our
products and improve billings, collections and reimbursement. We
look forward to making advances that will enhance shareholder
value,” concluded Mr. Berlin.
Second Quarter Financial Results
- Revenues for the second quarter of 2016
increased 23% to $2.4 million compared with revenues of $2.0
million for the second quarter of 2015, and decreased 7% compared
with revenues of $2.6 million for the first quarter of 2016. On a
pro-forma basis (as if the PersonalizeDx acquisition occurred
on January 1, 2015 instead of the actual acquisition date of April
13, 2015), revenues increased 13% compared with revenues of $2.1
million for the second quarter of 2015.
- Revenues from urologic cancer testing
services in the second quarter of 2016 increased 43% to $1.4
million, compared with $971,000 for the second quarter of 2015, and
represented approximately 58% of clinical testing revenues for the
second quarter of 2016. On a pro-forma basis, revenues increased
26% compared with $1.1 million for the second quarter of 2015.
- Revenues from solid tumor testing
services in the second quarter of 2016 of $855,000 decreased 13%
compared with $986,000 in the second quarter of 2015, primarily due
to a refocused sales force emphasis on the Reveal introduction.
Solid tumor testing services, represented 35% of total clinical
testing revenues during the second quarter of 2016. On a pro-forma
basis, revenues decreased 17% compared with $1.0 million in the
second quarter of 2015.
- Reveal revenues during the second
quarter of 2016 were $166,000 compared with $17,000 in the first
quarter of 2016. There were no Reveal revenues in the second
quarter of 2015 as the assay was not launched commercially until
the first quarter of 2016. On a non-GAAP basis, gross billings for
Reveal during the second quarter of 2016 were $511,000 compared
with gross billings of Reveal of $111,000 in the first quarter of
2016. Gross billings are the aggregate amounts invoiced to
customers.
- Cost of revenues for the second quarter
of 2016 increased to $2.0 million from $1.9 million for the second
quarter of 2015.
- Research and development expenses for
the second quarter of 2016 increased to $618,000 from $613,000 for
the second quarter of 2015.
- Sales, marketing and business
development expenses for the second quarter of 2016 decreased to
$1.7 million from $2.5 million in the prior-year period primarily
due to higher headcount in 2015 and transitional expenses
associated with the consolidation of the PersonalizeDx business
into Rosetta.
- General and administrative expenses for
the second quarter of 2016 decreased to $1.5 million compared with
$2.2 million for the same period in 2015 primarily due to
acquisition-related expenses in 2015.
- The operating loss for the second
quarter of 2016 was $3.4 million, which included $229,000 of
non-cash stock-based compensation expense, compared with an
operating loss of $2.9 million for the second quarter of 2015,
which included $268,000 of non-cash stock-based compensation
expense as well as a gain of $2.4 million on bargain purchase
related to the acquisition of PersonalizeDx.
- The net loss for the second quarter of
2016 was $3.4 million, or $0.16 per ordinary share on 20.9 million
weighted average shares outstanding, compared with a net loss for
the second quarter of 2015 of $2.8 million, or $0.20 per ordinary
share on 14.4 million weighted average shares outstanding.
- On a non-GAAP basis, excluding $229,000
of non-cash stock-based compensation expense, the net loss for the
second quarter of 2016 was $3.2 million, or $0.15 per ordinary
share on 20.9 million weighted average shares outstanding. For the
second quarter of 2015, excluding the $268,000 of non-cash
stock-based compensation expense as well as the gain of $2.4
million on bargain purchase related to the acquisition of
PersonalizeDx, the non-GAAP net loss was $4.9 million, or $0.34 per
ordinary share on 14.4 million weighted average shares
outstanding.
Six Month Financial Results
- Revenues for the first six months of
2016 increased 120% to $5.0 million compared with revenues of $2.3
million for the first six months of 2015. On a pro forma basis,
revenues for the six months of 2016 increased 20% compared with pro
forma revenues of $4.2M for the first six months of 2015.
- Cost of revenues for the six-month
period ended June 30, 2016 was $3.6 million compared with $2.3
million for the same period of 2015.
- Total operating expenses for the first
six months of 2016 of $8.8 million compared with $6.7 million in
the first six months of 2015, which included a gain of $2.4 million
on bargain purchase related to the acquisition of
PersonalizeDx.
- The operating loss for the first half
of 2016 was $7.4 million, which included $459,000 of non-cash
stock-based compensation expense, compared with an operating loss
of $6.7 million for the first half of 2015, which included $544,000
of non-cash stock-based compensation expense as well as a gain of
$2.4 million on bargain purchase related to the acquisition of
PersonalizeDx.
- The net loss for the first six months
of 2016 was $7.4 million, or $0.36 per ordinary share on 20.8
million weighted average shares outstanding, compared with a net
loss for the first six months of 2015 of $6.7 million, or $0.49 per
ordinary share on 13.6 million weighted average shares
outstanding.
- On a non-GAAP basis, excluding $459,000
of non-cash stock-based compensation expense, the net loss for the
first half of 2016 was $7.0 million, or $0.34 per ordinary share on
20.8 million weighted average shares outstanding. For the first
half of 2015, excluding the $544,000 of non-cash stock-based
compensation expense as well as the gain of $2.4 million on bargain
purchase related to the acquisition of PersonalizeDx, the non-GAAP
net loss was $8.5 million, or $0.62 per ordinary share on 13.6
million weighted average shares outstanding.
Balance Sheet Highlights
As of June 30, 2016, Rosetta Genomics had cash, cash
equivalents, restricted cash and short-term bank deposits of $8.7
million, compared with $13.6 million as of December 31, 2015. The
Company used approximately $6.5 million in cash to fund operations
during the first six months of 2016, and collected approximately
$4.9 million in cash from its clinical testing services as well as
$1.6 million from a licensing deal signed in December 2015. Based
on the Company’s current operations and plans, which include a
cost-reduction plan should it be unable to raise sufficient
additional capital, if necessary, Rosetta Genomics expects its
current cash position will fund operations into May 2017.
Conference Call
Rosetta Genomics management will host a conference call today
beginning at 4:30 p.m. Eastern time to provide an update on the
Company’s business and answer questions. Individuals interested in
listening to the conference call may do so by dialing (866)
239-5859, or for international callers (702) 495-1913. The
conference ID number is 82293939. The call is also being webcast,
and can be accessed on the investor relations section of the
Company’s website at www.rosettagx.com.
A telephone replay will be available through October 2, 2016 by
dialing (855) 859-2056, or for international callers (404)
537-3406, and entering the conference ID number 82293939. The
webcast will be available on the Company’s website for 30 days.
ThinPrep® is a registered trademark of Hologic, Inc.
Use of Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures.
A "non-GAAP financial measure" refers to a numerical measure of
historical or future financial performance, financial position or
cash flows that excludes (or includes) amounts that are included in
(or excluded from) the most directly comparable measure calculated
and presented in accordance with GAAP in the financial statements.
In this news release, Rosetta provides non-GAAP gross billings,
non-GAAP pro forma revenues and non-GAAP net loss as additional
information relating to its operating results. The presentation of
this additional information is not meant to be considered in
isolation or as a substitute for revenues, net loss or net loss per
share prepared in accordance with GAAP.
Pursuant to the requirements of Regulation G promulgated by the
Securities and Exchange Commission, the Company has provided a
reconciliation of each non-GAAP financial measure used in this
earnings release and related conference call or webcast to the most
directly comparable financial measure prepared in accordance with
GAAP. This reconciliation is presented in the tables below under
the heading "Reconciliation of GAAP to Non-GAAP Consolidated
Statement of Operation." Investors are encouraged to review these
reconciliations to ensure they have a thorough understanding of the
reported non-GAAP financial measures and their most directly
comparable GAAP financial measures.
Management uses these non-GAAP measures for internal reporting
and forecasting purposes. The Company has provided these non-GAAP
financial measures in addition to GAAP financial results because it
believes that these non-GAAP financial measures provide useful
information to certain investors and financial analysts for
comparison across accounting periods not influenced by certain
non-cash items that are not used by management when evaluating the
Company's historical and prospective financial performance.
About Rosetta Genomics
Rosetta develops and commercializes a full range of
microRNA-based and other molecular diagnostics. Rosetta’s
integrative research platform combining bioinformatics and
state-of-the-art laboratory processes has led to the discovery of
hundreds of biologically validated novel human microRNAs. Building
on its strong patent position and proprietary platform
technologies, Rosetta is working on the application of these
technologies in the development and commercialization of a full
range of microRNA-based diagnostic tools. Through the acquisition
of PersonalizeDx, the Company now offers core FISH, IHC and
PCR-based testing capabilities and partnerships in Pathology,
Oncology and Urology that provide additional content and platforms
that complement Rosetta’s microRNA and Next-Gen Sequencing
offerings. RosettaGX Reveal™, a Thyroid microRNA Classifier for the
diagnosis of indeterminate thyroid FNA smears, as well as the full
RosettaGX™ portfolio of cancer testing services are commercially
available through the Company’s Philadelphia, PA- and Lake Forest,
CA-based CAP-accredited, CLIA-certified labs. For more information
visit www.rosettagx.com.
Forward-Looking Statement Disclaimer
Various statements in this release concerning Rosetta’s future
expectations, plans and prospects including, but not limited to
statements about expanding the customer base, increasing test
volumes by more than 50% over the next several months, increasing
penetration of our solid tumor and urologic oncology offerings,
accelerating revenue growth, gaining meaningful market share,
increasing demand, improving billings, collections and
reimbursement, enhancing shareholder value, that RosettaGX Reveal
is expected to drive significant revenue growth over the next
several years, that Rosetta expects that RosettaGX Reveal’s
competitive advantage will allow it to gain meaningful market share
in a $350 million market in the U.S., and that Rosetta expects its
current cash position will fund operations at least through April
2017 constitute forward-looking statements for the purposes of the
safe harbor provisions under The Private Securities Litigation
Reform Act of 1995. Actual results may differ materially from those
indicated by these forward-looking statements as a result of
various important factors, including those risks more fully
discussed in the "Risk Factors" section of Rosetta’s most recently
filed Annual Report on Form 20-F, as filed with the SEC. In
addition, any forward-looking statements represent Rosetta’s views
only as of the date of this release and should not be relied upon
as representing its views as of any subsequent date. Rosetta does
not assume any obligation to update any forward-looking statements
unless required by law.
CONDENSED INTERIM CONSOLIDATED
BALANCE SHEETS U.S. dollars in thousands June
30, December 31, 2016 2015
Unaudited ASSETS CURRENT ASSETS: Cash and cash
equivalents $ 8,055 $ 12,447 Short-term bank deposits and
restricted cash 600 1,098 Trade receivables 3,371 3,633 Other
accounts receivable and prepaid expenses 767 2,192
Total current
assets
12,793 19,370 LONG TERM ASSETS: Property and
equipment, net 2,918 2,975 Long-term bank deposits and other
long-term receivables 84 78
Total long
term assets
3,002 3
,053
Total
assets
$ 15,795 $ 22,423
CONDENSED INTERIM CONSOLIDATED BALANCE
SHEETS
U.S. dollars in thousands (except share and per share data)
June 30, December 31, 2016 2015
Unaudited LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES: Current maturity of long-term capital lease $
55 $ - Trade payables 982 1,070 Accrued expenses 409 517 Employees
and accruals 1,608 1,216
Total current
liabilities
3,054 2,803 LONG-TERM
LIABILITIES: Long term capital lease obligations 92
-
Total
long-term liabilities
92
-
COMMITMENTS AND CONTINGENT LIABILITIES SHAREHOLDERS EQUITY:
Share capital: Ordinary Shares of NIS 0.6 par value: 60,000,000
shares authorized at June 30, 2016 and December 31, 2015;
20,868,826 (unaudited) and 20,518,794 shares issued at June 30,
2016 and December 31, 2015, respectively; 20,865,568 (unaudited)
and 20,515,536 shares outstanding at June 30, 2016 and December 31,
2015, respectively 3,247 3,194 Additional paid-in capital 157,102
156,696 Accumulated deficit (147,700 ) (140,270 )
Total
shareholders' equity
12,649 19,620
Total
liabilities and shareholders' equity
$ 15,795 $ 22,423
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS U.S. dollars in thousands (except share and per share
data) Three months ended
June 30,
Six months ended
June 30,
2016 2015 2016 2015
Unaudited Unaudited Revenues $ 2,412 $ 1,957 $
5,015 $ 2,278 Cost of revenues 1,989 1,917
3,647 2,269 Gross profit
423 40 1,368 9
Operating expenses: Research and development, net 618 613
1,459 1,361 Sales, marketing and business development 1,742 2,478
3,639 4,075 General and administrative 1,451 2,232 3,664 3,643
Gain from bargain purchase related
toacquisition of CynoGen, Inc.
- (2,352 ) - (2,352 )
Total operating expenses 3,811 2,971
8,762 6,727 Operating loss 3,388 2,931
7,394 6,718 Financial expense (income), net (1 ) (117 ) 24 41
Income tax expenses 6 5 12
10 Net comprehensive loss $ 3,393 $
2,819 $ 7,430 $ 6,687 Basic and diluted net
loss per ordinary
share attributable to Rosetta
Genomics' shareholders
$ 0.16 $ 0.20 $ 0.36 $ 0.49 Weighted
average number of ordinary shares used to compute basic and diluted
net loss per ordinary share 20,862,599
14,425,034 20,756,461 13,598,198
Non-GAAP RECONCILING TABLES
U.S. dollars in thousands (except share and per share
data)
Quarter ended June 30, 2015
USD in
thousands
(Unaudited) GAAP revenues $ 1,957
Additional revenues from PersonalizeDx for
non-consolidated periodof April 1, 2015 - April 12, 2015
169 Pro forma revenues $ 2,126
Quarter ended
June 30, 2015
USD in
thousands
(Unaudited) GAAP revenues for urologic cancer testing
services $ 971
Additional revenues from PersonalizeDx for
non-consolidated periodof April 1, 2015 - April 12, 2015
131 Pro forma revenues for urologic cancer testing services $ 1,102
Quarter ended June 30, 2015
USD in
thousands
(Unaudited) GAAP revenues for solid tumor testing services $
986
Additional revenues from PersonalizeDx for
non-consolidated periodof April 1, 2015 - April 12, 2015
38 Pro forma revenues for solid tumor testing services $ 1,024
Three months ended
USD in
thousands
June 30, 2016 March 31, 2016 Revenues for
Reveal $ 166 $ 17 Unrecognized billings $ 345 $ 94 Gross billings
for Reveal $ 511 $ 111
Six months ended June 30, 2015
USD in
thousands
(Unaudited) GAAP revenues $ 2,278
Additional revenues from PersonalizeDx for
the non-consolidatedperiod of January 1, 2015 - April 12, 2015
$ 1,903 Pro forma revenues $ 4,181
Quarter ended June 30, 2016 2015
USD in
thousands
(Unaudited) (Unaudited) Net loss $ 3,393 $ 2,819
Share-based compensation $ 229 $ 268 Gain from bargain purchase
related to acquisition of PersonalizeDx - (2,352 )
non-GAAP net loss $ 3,164 $
4,903
Quarter ended June 30, 2016 2015
Basic and diluted
per share data
(Unaudited) (Unaudited) Net loss $ 0.16 $ 0.20
Share-based compensation $ 0.01 $ 0.02
Gain from bargain purchase related to
acquisition of PersonalizeDx
- $ (0.16 )
non-GAAP net loss $ 0.15
$ 0.34 Weighted average number of Ordinary
shares used to compute basic and diluted net loss per Ordinary
share 20,862,599 14,425,034
Six months ended June 30, 2016 2015
USD in
thousands
(Unaudited) (Unaudited) Net loss $ 7,430 $ 6,687
Share-based compensation $ 459 $ 544 Gain from bargain purchase
related to acquisition of PersonalizeDx - $ (2,352 )
non-GAAP net loss $ 6,971 $
8,495 Six months ended June
30, 2016 2015
Basic and diluted
per share data
(Unaudited) (Unaudited) Net loss $ 0.36 $ 0.49
Share-based compensation $ 0.02 $ 0.04 Gain from bargain purchase
related to acquisition of PersonalizeDx $ - $ (0.17 )
non-GAAP
net loss $ 0.34 $ 0.62
Weighted average number of Ordinary shares used to compute
basic and diluted net loss per Ordinary share 20,756,461 13,598,198
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160926006388/en/
Rosetta Genomics:Ken Berlin, (267) 298-1159President
& CEOinvestors@rosettagx.comorInvestor:LHAAnne Marie
Fields, (212) 838-3777afields@lhai.com
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