Rosetta sees first product launches in 2008

The company will collaborate with Ben Gurion University for the development of microRNA-based therapeutic applications.

MicroRNA-based drug development comapny Rosetta Genomics Ltd. (Nasdaq:ROSG) today published its financial report for the second quarter of 2007. Like many biomedical companies, it did not record any sales; the financials focused on progress in the company’s R&D, contracts with third parties, and the time for products to reach market.

Rosetta CEO Amir Avniel said, “We were issued two patents relating to a human and viral microRNA… We've seen steady progress in our microRNA-based therapeutic collaboration for liver cancer with Isis Pharmaceuticals, funded in part by the BIRD Foundation. Together, we have identified several antisense compounds, which we believe can be used to develop the first microRNA-based therapy for hepatocellular carcinoma. We plan to begin testing leads to several microRNAs in animal models by the end of this year. We are all very pleased with our progress thus far this year and are confident we will continue to build shareholder value with our programs throughout 2007, leading to the launch of our first products in 2008."

As for the numbers, Rosetta posted a net loss of $2.3 million for the second quarter, up from $1.8 million for the corresponding quarter of 2006. The company had $34.2 million in cash and cash equivalents at the end of June, up from $15.5 million a year earlier.

For many investors, Rosetta is an enigma. It is hard enough for investors in biomedical companies to assess the value of companies with no sales, but on the basis of their progress in human clinical trials, but Rosetta went public without having even begun trials at all.

Three weeks ago, Rosetta president Michael French told “Globes” in an interview, “They talk about us as a very early-stage company, but in truth, in a year or two, we’ll have a product on the market.”

Before joining Rosetta, French was a senior executive at siRNA Therapeutics Inc., and to which Rosetta is often compared, after Merck & Co. (NYSE:MRK) acquired it for more than $1 billion. French’s duties included relations with analysts and the handling of the merger. He agrees with the argument that it is very hard for companies like Rosetta to sell their stories to investors.

“Globes”: When you compare Rosetta to siRNA, you’re talking about the price tag for its sale to Merck. Is Rosetta also interested in being acquired? Are you counting on large companies racing to obtain RNA and microRNA capabilities?

French: “It’s true that siRNA obtained a high value for its acquisition by a strategic entity, a value that it might not have achieved in the market. Rosetta isn't interested in principle of being sold, and I don’t think that there’ll be a race in which companies will be willing to pay any price for companies with capabilities but no products. The large companies are still licking their wounds from the genome time. However, any such acquisition definitely takes away capability in this field from the free market, and companies should take note and anchor collaborations so as not to remain outside.

“By the way, Rosetta isn't a silencing RNA company like Asuragen, siRNA, or Silence Therapies. It deals with an earlier stage in the process of gene coding for biological activity, and could therefore offer therapies and diagnostic markets that catch a disease much closer to the source.”

In a separate development this week, Rosetta signed collaboration agreement with Ben Gurion University of the Negev, for the development of microRNA-based therapeutic applications for several key viruses including the Epstein-Barr virus (EBV) and Herpes Simplex Viruses (HSV). In May, the company signed a research agreement with Columbia University, which will perform clinical validation studies of Rosetta Genomics' first diagnostic products. A month earlier, the company signed an agreement with the Henry Ford Hospital in Detroit, Michigan, which will provide samples for the clinical validation of its Cancer of Unknown Primary (CUP) diagnostic test.

CE Unterberg Towbin and Cantor Fitzgerald have both given Rosetta “Buy” recommendations.

Published by Globes [online], Israel business news - www.globes.co.il - on August 6, 2007

© Copyright of Globes Publisher Itonut (1983) Ltd. 2007

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