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Rosetta Prices IPO Below Previously Lowered Range; miRNA R&D Plans Remain Unchanged

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Rosetta Genomics this week began trading on the Nasdaq exchange after pricing its initial public offering of 3.75 million shares at $7 per share — even lower than it had previously planned to sell the stock when it cut the IPO’s price range late last month.
 
Undeterred, Rosetta appears determined to follow through on its plan to reach the forefront of the promising, but unproven, miRNA field.
 
The IPO will raise $30.17 million if the underwriters exercise an over-allotment option to purchase an additional 562,500 shares.
 
Rosetta shares will trade on the Nasdaq exchange under the symbol “ROSG.”
 
Rosetta first filed to float as many as 3.45 million shares in the US last September at a price range of $11 to $13 per share, which would have valued the IPO at $44.85 million (see RNAi News, 9/7/23006).
 
By late November, however, Rosetta had not proceeded with the offering, raising rumors that the microRNA firm may have scrapped plans to go public amid difficult market conditions (see RNAi News, 11/22/2006).
 
Then, late last month, Rosetta put an end to the rumors by filing an amended IPO prospectus. The new IPO had a lower price range — $7.50 to $8.50 per share — but offered more shares (see RNAi News, 1/25/2007).
 
Over the past few weeks the investment community appeared to have shed some of its desire to see Rosetta as a public firm, causing the company to trim $0.50 off the low end of its already-lowered planned price range.
 
Less Cash, Same Goal
 
In late 2005, Rosetta founder and Chief Architect Isaac Bentwich, who at the time was chairman and CEO, revealed to RNAi News that his company was aiming to float its shares in the US as part of a broader strategy to position the firm as a key player in miRNA consumables, diagnostics, and therapeutics (see RNAi News, 11/4/2005).
 
Even with the loss of the $0.50 per share, which translates to about $2.2 million, Rosetta has not made any changes to how much of the IPO proceeds it plans to spend on research and development.
 

The IPO will raise $30.17 million if the underwriters exercise an over-allotment option to purchase an additional 562,500 shares.

Specifically, Rosetta has proposed spending around $17 million of the proceeds on R&D, including $3 million to support the continued development of its lung and prostate cancer diagnostics, which are being conducted with US Genomics (see RNAi News, 5/25/2006) and Asuragen (see RNAi News, 1/19/2006), respectively.  
 
About $6 million will be used to fund Rosetta’s in-house colorectal cancer and breast cancer diagnostic programs, while roughly $4 million will go towards the company’s in-house cancer-of-unknown-primary diagnostic program.
 
An estimated $4 million will be used to support a liver cancer therapeutic being developed in collaboration with Isis Pharmaceuticals (see RNAi News, 2/23/2006).
 
Additionally, Rosetta continues to expect to spend $2.5 million on intellectual property licensing and protection efforts. The company did, however, say in its final prospectus that it will apply about $3.1 million to business development activities, compared with the $6.6 million it had earmarked for such efforts in January.

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