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Rosetta Genomics Initiated with Hold Rating by Cantor Fitzgerald

NEW YORK (GenomeWeb) – Cantor Fitzgerald today initiated coverage of miRNA-based diagnostics firm Rosetta Genomics with a Hold rating and a $4 price target on the company's stock.

Analyst Sung Ji Nam said in a report that while Rosetta is a "pioneer" in the miRNA Dx space, a lack of clinical evidence that its products improve patient outcomes has held back the company. Rosetta currently offers four cancer diagnostic tests through its CLIA laboratory, including the Cancer Origin Test, which, Nam said, comprises the majority of Rosetta's revenues.

"[H]owever, we are not certain as to the value proposition of the COT or the potential size of the addressable market," she said. "Despite the test and other directly competitive tests (Response Genetics and BioMérieux) also having been around for a while, the total market for molecular testing for cancer of unknown primary is still only approximately $28 million," as estimated by Rosetta.

She further added that the National Cancer Comprehensive Network "does not recommend indiscriminate use of the test for the target market, as it believes there is a lack of data to support improved clinical outcome." Rosetta is conducting a post-marketing registry study to demonstrate improved clinical outcomes, and Nam expects initial data to become available in the second half of 2015.

Rosetta is also developing a thyroid neoplasia assay, but because it is still in the proof-of-concept stage, the test will not be commercially available until the end of 2015 at the earliest, Nam said.

While the company's product portfolio and pipeline target significant market opportunities in cancer, neurological diseases, and cardiovascular diseases, "we think it's still early to tell whether microRNAs as biomarkers in diagnostics are meaningfully differentiated and superior assays based on DNA, mRNA, or proteins," she added.

Nam estimated Rosetta's full-year 2014 revenues at $1.1 million and full-year 2015 revenues at $5.1 million. She estimated a net loss per share of $1.31 in 2014 and $1.18 in 2015.

Rosetta's shares on the Nasdaq were trading at $2.91 on Friday morning, unchanged from Thursday's closing price.

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