This story has been updated to include comments by Rosetta's management.
Rosetta Genomics this week announced this week that it has sold Parkway Clinical Laboratories, a Clinical Laboratory Improvement Amendments-certified laboratory it acquired about a year ago, for up to $2.5 million.
The company also reported its first-quarter financial results, which showed a decline in its net loss amid a sharp drop in research and development spending, while its top executive reaffirmed that Rosetta expects its next test, a screen for colon cancer dubbed miRscreen Colon, to be available in the US by late 2009 or early 2010.
Rosetta bought Bensalem, Pa.-based Parkway for $2.9 million in cash and stock in a move it said would give it the expertise and infrastructure needed to begin marketing its line of microRNA-based diagnostics (see RNAi News, 6/12/2008). Rosetta later established Rosetta Genomics Laboratories, where it performs its miRNA tests, in nearby Philadelphia.
"With its CLIA certification, Parkway helped facilitate Rosetta Genomics Laboratories in obtaining [its own] CLIA certification," Rosetta President and CEO Amir Avniel said in a statement this week. However, "Parkway's main business is drugs of abuse and pre-employment drug testing … [which are] not part of Rosetta's core business."
As such, Rosetta said it has sold Parkway back to its management for up to $2.5 million, which is payable over six years based on revenues. Additional terms of the deal were not disclosed.
The company noted that Rosetta Genomics Laboratories would continue to conduct the existing miRNA diagnostics, as well as miRscreen Colon once it reaches the market late this year or early next year.
During a conference call held to discuss Rosetta's first-quarter financials, Avniel noted that the company is currently repeating in a greater number of samples earlier experiments that showed that the expression patterns of two miRNAs in serum can be used to identify the presence of colon cancer with 91 percent sensitivity and 72 percent specificity.
Rosetta is also exploring the possibility of expanding the test's capacity to screen a greater number of cancer-related miRNAs and is nearing a final decision on which miRNAs will be used as colon-cancer biomarkers.
Rosetta expects to complete this work by the end of the second quarter, he said.
"By the end of the third quarter, we expect to complete the design of the test itself and expect to have the final assay," Avniel added.
In the quarter, Rosetta reported revenues of $654,000, which were primarily generated by Parkway, versus zero revenues in the first quarter of last year.
The company's net loss in the three-month period ended March 31 fell to $3.3 million, or $0.27 per share, from $3.7 million, or $0.31 per share, in the year-ago quarter.
Research and development spending shrank almost 30 percent, falling to $1.7 million from $2.4 million, while general and administrative expenses jumped to $1.1 million from $829,000.
At the end of the first quarter, Rosetta had cash, cash equivalents, and short- and long-term back deposits and marketable securities totaling $13.1 million. This does not include the $8 million the company grossed through a stock sale to Prometheus last month.
Looking ahead, Rosetta said it expects its 2009 cash burn to be roughly $10 million, exclusive of the impact of any new product-distribution partnerships, including two the company expects to ink before the end of the year.
In January, Rosetta signed a deal making Teva Pharmaceuticals the distributor of its three miRNA diagnostics in Israel and Turkey (see RNAi News, 1/8/2009).
The tests, which were introduced in the US late last year (see RNAi News, 12/31/2008) , include miRview Meso, which differentiates lung cancer from mesothelioma; miRview Mets, which is designed to determine the source of cancers of unknown primary origin; and miRview Squamous, which is designed to differentiate squamous from non-squamous non-small cell lung cancer.
A few months later, Rosetta found in Prometheus Laboratories a US commercialization partner for the diagnostics (see RNAi News, 4/16/2009).
During the conference call, Avniel said that he anticipates that Rosetta will sign two new distribution deals covering Latin America and Europe before the end of 2009.