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Rosetta Genomics Posts Greater Q4 Losses As It Prepares to Launch miRNA Diagnostics

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Rosetta Genomics last week reported that fourth-quarter net losses ballooned almost 300 percent as research and development spending nearly doubled amid the company’s efforts to move its first three microRNA-based diagnostics onto the US market this year.
 
During a conference call to discuss the quarter, Rosetta officials confirmed that the tests are on schedule, and noted that the company is expanding its diagnostics pipeline to include new cancer- and women’s health-related indications.
 
According to Rosetta CSO Dalia Cohen, the company has recently identified miRNAs that are potential biomarkers for differential diagnoses of various cancers including primary tumors compared with metastases; neuroendocrine tumors versus non-small cell lung cancer; lung cancer versus thymoma; and carcinoid compared with other neuroendocrine tumors.
 
In addition, Cohen said the company identified microRNAs “that are potential prognosis markers” for mesothelioma and melanoma.
 
Up first in Rosetta’s diagnostics pipeline, however, is its test to differentiate non-squamous from squamous non-small cell lung cancer.
 
“The unmet medical need for differentiating squamous from non-squamous cancer has already been established in the literature,” Ronen Tamir, Rosetta’s executive vice president of marketing and communications, said during the conference call.
 
He cited a paper published in 2004 in the Journal of the National Cancer Institute in which 400 lung cancer samples from a controlled cohort were sent for pathological review by independent pathologists. “The percentage of initial agreement between the two blinded experts was 74.7 percent,” he said.
 
According to Tamir, these findings were validated in another study, published in Lung Cancer in 2006, which found that the agreement in the histopathological evaluation of lung cancer in 668 patients “by regional pathologists and a central pathologist who was blinded to the evaluations of the regional pathologists … was 0.65.”
 
However, it is the approval of cancer drugs like Genentech’s Avastin, which is currently indicated for first-line treatment of non-squamous, non-small cell lung cancer, that has really made it “critical” to be able to differentiate the two types of lung cancer, he added. Avastin carries a boxed warning regarding the incidence of fatal pulmonary hemorrhage in non-small cell lung cancer patients with squamous histology.
 
Additionally, Tamir noted that Bayer Healthcare and Onyx Pharmaceuticals last month reported that in a phase III study evaluating their liver and kidney cancer drug Nexavar in non-small cell lung cancer patients, higher mortality was observed in patients with squamous cell carcinoma who received the drug as part of a chemotherapy regimen.
 

“The unmet medical need for differentiating squamous from non-squamous cancer has already been established in the literature.”

Rosetta said that this first diagnostic is scheduled to be submitted to the New York Department of Health for approval before the end of June.
 
Rosetta’s second and third diagnostics — which are designed to differentiate lung adenocarcinoma from mesothelioma and identify the source of cancers of unknown primary origin, respectively — are expected to be reviewed by the New York Department of Health in the second half of the year.
 
Tamir said during the call that all three diagnostics will initially be commercialized by Columbia University Medical Center, which last year partnered with Rosetta to validate the company’s CUP diagnostics (see RNAi News, 5/24/2007).
 
Columbia is “going to launch the test, and thus [it is] going to be … in charge of all launch activities,” he said. Rosetta, meanwhile, will focus on “discussing the medical rationale behind the technology and behind the tests with the medical community, as well as [discussing] all the scientific measures and research activities.”
 
According to Columbia’s website, its department of pathology and cell biology offers a variety of diagnostic services and a staff of over 400.
 
Although Columbia will initially carry out “all commercial activities” related to the three diagnostics, “potentially, we may want to have more than one … lab in the United States” handling the tests, Tamir added, declining to elaborate when asked for more information by an analyst during the conference call.
 
The Financials
 
For the fourth quarter, Rosetta’s net loss climbed to $8.2 million, or $0.69 per share, from $2.1 million, or $0.82 per share, in the year-ago period. For the full-year 2007, the company’s net loss rose to $14.6 million, or $1.32 per share, from $7.6 million, or $2.98 per share, in 2006.
 
R&D costs in the quarter jumped 58 percent to $2.1 million from $1.3 million in the same period the year before, and accounted for 60 percent of the company’s total operating loss. Rosetta’s general and administrative expenses in the quarter climbed to $1.4 million from $895,000.
 
For 2007, Rosetta’s R&D expenses rose to $6.4 million from $4.8 million the year before, while G&A costs rose to $4.6 million from $3.4 million in the previous year.
 
Rosetta reported no revenues for the year.
 
As of Dec. 31, 2007, Rosetta had $24.3 million in cash, cash equivalents, short- and long-term bank deposits, and marketable securities. The company said it expects its 2008 cash expenditure to be $14 million.