Rosetta Genomics: Pipeline Provides Sustainable Growth

Zacks Small Cap Research

By Grant Zeng, CFA

NASDAQ:ROSG
Earlier today in a news release, Rosetta Genomics (ROSG) provided update on its product pipeline based on its proprietary microRNA platform technologies.  The company is developing microRNA based-molecular diagnostics and therapeutics.

MicroRNA based Molecular Diagnostics

Rosetta is currently marketing four cancer diagnostics: The Cancer Origin Test, The Lung Cancer Test, The Kidney Cancer Test, and The Mesothelioma Test.  The company is advancing several new diagnostic assays with the lead assay for the differential diagnosis of thyroid neoplasia. In addition, the company is evaluating several assays for other cancers as well as assays for non-invasive diagnosis of chronic kidney rejection; the early diagnosis and risk stratification of heart failure patients; and the early diagnosis and differentiation of Alzheimer’s disease.

Thyroid neoplasia differential diagnosis 

The thyroid neoplasia test is tissue-based microRNA diagnostics for the differential diagnosis of indeterminate thyroid fine needle aspirate (FNA) samples.

Results from initial studies have demonstrated that microRNA expression levels can differentiate malignant nodules from benign nodules, and also demonstrated the ability to extract and profile microRNAs from thyroid FNAs, in various sample types and in a way consistent with common clinical practices. 

Rosetta is currently commencing larger studies and anticipates launching this assay prior to the end of 2015.

The thyroid neoplasia assay has the potential to improve clinical management in a cost-effective manner by reducing the number of unnecessary surgeries.

In addition to the thyroid neoplasia diagnostic, Rosetta is also developing molecular diagnostics for bladder cancer, ovarian cancer and breast cancer. These developments are still in different stages. Rosetta’s goal is to launch at least one assay for an oncology indication prior to the end of 2016.

Non-invasive diagnosis of chronic kidney rejection

Rosetta is working on developing blood- or urine-based microRNA biomarkers to advance a new diagnostic test for chronic kidney rejection. 

Chronic kidney rejection is currently diagnosed only by histological examination of a tissue sample obtained by biopsy. This method is expensive, unpleasant for the patient and unsuitable for serial clinical use due to the risk of bleeding and other complications. Furthermore, morphological changes may be patchy, difficult to interpret and subject to observer bias.

Rosetta’s microRNA based, non-invasive test has the potential to enable diagnosis at an earlier stage. Rosetta expects to complete development of and launch this assay in 2017. 

Heart failure

Rosetta is developing blood-based microRNA test for the early diagnosis of heart failure (HF) and refined risk stratification of patients following myocardial infarction (MI, or heart attack). 

The Company has published two supportive studies.  The first was published in the European Journal of Heart Failure (Goren et al., 2012) and showed that elevated serum levels of specific microRNAs identify HF patients. The second was published in the American Journal of Cardiology (Goren et al., 2013) and showed a significant reduction in the level of a specific microRNA (miR-150) in platelets of HF patients that also suffered atrial fibrillation.

Rosetta plans to conduct additional studies and anticipates launching a new assay in HF in 2017.

Alzheimer’s disease

Rosetta has profiled serum samples of Alzheimer’s disease (AD) patients in comparison to serum samples healthy controls and identified that several microRNAs in AD blood maintained their direction when compared between AD brain and brain cancer tissue.  Rosetta plans to conduct a proof-of-concept study in additional cohorts in order to profile differentially expressed microRNAs in the cerebrospinal fluid of AD patients compared with normal donors using deep sequencing.  The company expects to advance studies relating to this project in 2014.

MicroRNA-based Therapeutics

Rosetta’s therapeutics pipeline has three distinct projects.  

CMV therapeutic

Rosetta is in the discovery stage of a project aimed at developing a microRNA-based therapeutic for the treatment of human CMV infection. Rosetta has identified several viral microRNA candidates and has prepared a library of microRNA mimetics as well as specific inhibitors of these microRNAs. The Company is studying the effect of the library compounds on viral replication and infectivity. 

Rosetta anticipates selecting a lead candidate in 3Q 2014 and is considering various alternative routes to market, including through or with third parties, for further preclinical and clinical development.

Rimonim and Magneton projects  

Rosetta has two projects under development: Rimonim and Magneton , which aim at developing novel technologies for the effective delivery of microRNA mimetics for therapeutics. 

Both projects are supported by the Office of Chief Scientist at the Ministry of Industry, Trade and Labor of the State of Israel (OCS). If successful, Rosetta will seek to use these technologies for future internal projects as well as to partner them with other therapeutics companies.  

We believe Rosetta’s microRNA platform technologies are versatile. The company has built a robust pipeline based on this platform. The company has an aggressive goal aiming to commercialize one new assay per year commencing in 2015. We are confident that Rosetta’s long term pipeline has the potential to provide sustainable growth in the coming years.

Based on our analysis, we think Rosetta’s shares are undervalued at current market price. We have a price target of $10.50.


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