By Doug Macron
Rosetta Genomics this week announced that it will cut almost one-fifth of its workforce, move all remaining employees to a four-day work week, and cut salaries by 20 percent across the board in a cost-cutting bid expected to reduce its monthly expenditures by 32 percent.
The moves, which are expected to reduce Rosetta's annual operating costs by $4 million, come less than a month after the Israeli firm unveiled two new microRNA-based tests it has under development. It also said that it plans to establish its own sales force to market them and certain other of its next-generation products (GSN 9/9/2010).
Despite the cutbacks, Rosetta President and CEO Kenneth Berlin said that these initiatives remain on track.
As Rosetta focuses on its second- and third-generation products — dubbed Gen 2 and Gen 3, respectively — "we're going to need to shape the company a little differently and have a different mix of resources," Berlin told Gene Silencing News. "But ultimately it's about creating more runway so that we can get some things done that will enable us to maximize … the new products coming down the pike."
Because the 14 jobs eliminated will be in both the research and development and general and administrative departments, "we were careful not to impact the projects that are bringing in revenue in the near term," he said. "We feel very confident that, given where the projects stand … in the development pipeline, we're not going to see any impact on the … products we're launching between now and the end of next year."
Specifically, Rosetta is planning on launching five new miRNA-based tests before the end of next year, including miRview Kidney, which is designed to identify four histological types of renal tumors and is expected to hit the US market in the second quarter of 2011; miRview Meso Prognostic, which is being developed to sub-classify mesothelioma patients based on their prognosis and is slated for US commercialization in the fourth quarter of next year; and miRview Bladder, which is designed to assess the risk of superficial bladder cancer becoming invasive and should reach the market in the second half of 2011.
Also on track for a US launch next year is miRview Lung, which is designed to distinguish between neuroendocrine and non-small cell lung cancer, and to sub-classify non-small cell lung cancer patients into squamous and non-squamous subtypes. It is expected to reach the market in the first half of 2011.
Rosetta had also planned to launch an expanded version of the company's existing diagnostic miRview Mets, which is designed to identify the sources of tumors of unknown primary origin, but a dispute with commercialization partner Prometheus Laboratories had made the US introduction date of the Gen 2 version uncertain (GSN 6/3/2010).
Prometheus holds the exclusive US market rights to Rosetta's three currently marketed diagnostics: miRview Meso, which is designed to differentiate lung cancer from mesothelioma; miRview Mets; and miRview Squamous, which is designed to differentiate squamous from non-squamous non-small cell lung cancer. It also has the right of first refusal to market miRview Lung in the US, as well as the rights to the expanded version of miRview Mets.
Berlin declined to comment on the Prometheus dispute this week since the companies are currently in arbitration.
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Certain of Rosetta's third-generation products, however, are likely to experience some development delays as the company draws some of its resources from later-stage projects to near-term ones, Berlin conceded.
Last month, the firm announced that it is working on 10 new projects, which are expected to expand the company's reach beyond its core oncology focus into areas including neurodegenerative and cardiovascular diseases (GSN 9/16/2010). Specific details about the nature of the assays were not provided.
"We could see a one- or two-quarter delay on some of the Gen 3 products," he told Gene Silencing News. The extent of the delays, however, will depend on when "we gear back up" from the four-day work week to a five-day one, which remains uncertain at this point.
Nonetheless, Berlin said that Rosetta also remains focused on establishing its own US sales team for miRview Kidney, miRview Meso Prognostic, and miRview Bladder.
Last month, he said during a conference call held to discuss Rosetta's second-quarter financial results that the company is aiming to have its own "dedicated selling team of approximately 68 sales professionals … located in key oncology markets in the US."
This week he said that there will be no delay in doing so, although details on the timing of the effort have not been publicly disclosed.
Still, Rosetta will "obviously need money to do that," he noted, adding that the company is considering both non-dilutive and dilutive transactions to raise the necessary capital.
As of June 30, the company had $7.7 million in cash, cash equivalents, short-term bank deposit and marketable securities. With the cost-cutting measures in place, Rosetta said it has enough cash and cash equivalents to finance its operations through March 2011, and Berlin said that this is "where we need to be in terms of giving us enough runway to execute the things we need to execute to secure our future."
After March 2011, he said, the company is expected to fund itself through "a combination of money coming in from strategic deals and/or financing, which will help fuel the growth of [our] commercial infrastructure … increased penetration of our first-generation products [already on the market] … and the new products coming on line over the next 12 months."
Partnerships and collaborations are also expected to "play a role in 2011 in terms of bringing money in," Berlin noted.
"We're in a number of discussions with a number of different entities," he said, but declined to comment further.