Rosetta Genomics Reports 2016 First Quarter Financial Results

PHILADELPHIA & REHOVOT, Israel–(BUSINESS WIRE)–Rosetta Genomics Ltd. (NASDAQ:ROSG), a leading developer and provider of
microRNA-based and other molecular diagnostics, today reported financial
results for the three months ended March 31, 2016.
Recent developments include:

• Expanded molecular diagnostics test menu with the launch of three new
  product offerings in common hematologic cancers and solid tumors;
• Received conditional approval status from the New York State
  Department of Health (NYSDOH) for RosettaGX Reveal™, the Company’s
  novel microRNA classifier for the diagnosis of indeterminate thyroid
  Fine Needle Aspirate (FNA) smears;
• Entered into an agreement that establishes health insurance access to
  Rosetta’s entire suite of diagnostic tests and services with America’s
  Choice Provider Network (ACPN®), an independent multispecialty
  national provider network; and
• Granted U.S. patent allowance for use of gene expression signature for
  classification of kidney tumors and granted European patent allowance
  for use of microRNA molecules for the treatment of liver cancer.

Management Commentary
“We are especially pleased to report record quarterly clinical testing
revenues as it demonstrates the progress we have made in expanding our
molecular diagnostics test menu, selling our clinical testing products
and improving collections,” said Kenneth A. Berlin, President and Chief
Executive Officer of Rosetta Genomics. “Throughout the first quarter we
completed the revamping of our sales force and invested in our billing
and collections department. The results are reflected in our growing
revenue and expanding customer base, as well as in improved collections.
Further, these changes position us to drive revenue growth throughout
the balance of the year and beyond.
“The commercial launch of RosettaGX Reveal continues to be a prime focus
for our team. We expect the positive performance data from our blinded
validation study to be published in a peer-reviewed journal in the
coming weeks. These data demonstrate exceptional performance and we
anticipate that a journal publication will strongly support our
reimbursement and sales efforts. In addition, our revamped sales team
has been able to use RosettaGX Reveal to access new accounts to promote
not only our exceptional thyroid offering, but also to promote our
urologic cancer and solid tumor product lines. Since the beginning of
the year, these promotional efforts resulted in the acquisition of over
30 thyroid customer accounts and over 60 new customer accounts for our
urology and solid tumor businesses.
“Our work for the balance of the year will continue to focus on driving
revenue growth in both our base business as well as with our new
products, such as RosettaGX Reveal, expanding reimbursement, improving
collections and advancing our clinical development programs, which
should position us to achieve a number of important milestones that will
enhance shareholder value,” concluded Mr. Berlin.
First Quarter Financial Results
Please note that the pro forma comparisons below are meant to provide a
comparison as if the PersonalizeDx acquisition occurred on January 1,
2015. The actual acquisition date was April 13, 2015.

• Revenues for the first quarter of 2016 increased 711% to $2.6 million
  compared with revenues of $321,000 for the first quarter of 2015, and
  increased 27% compared with pro forma revenues of $2.1 million for the
  first quarter of 2015.
• Revenues from urologic cancer testing services in the first quarter of
  2016 were $1.4 million, an increase of 7% compared with pro forma
  revenues of $1.3 million for the first quarter of 2015, and
  represented approximately 54% of clinical testing revenues for the
  quarter.
• Revenues from solid tumor testing services in the first quarter of
  2016 increased 272% to $1.2 million compared with revenues of $321,000
  for the first quarter of 2015, and increased 58% compared with pro
  forma revenues of $0.8 million in the first quarter of 2015. Solid
  tumor testing services represented nearly 46% of total clinical
  testing revenues during the first quarter of 2016, with the balance
  coming from RosettaGX Reveal.
• Cost of revenues for the first quarter of 2016 increased to $1.7
  million compared with $352,000 for the first quarter of 2015, due to
  the acquisition of PersonalizeDx leading to a higher volume of
  processed samples, as well as to increases in personnel and
  infrastructure.
• Research and development expenses for the first quarter of 2016
  increased to $842,000 from $748,000 for the first quarter of 2015,
  primarily due to increased activities in Thyroid and other areas.
• Sales, marketing and business development expenses for the first
  quarter of 2016 increased to $1.9 million from $1.6 million in the
  prior-year period due to a larger commercial footprint as a result of
  the acquisition of PersonalizeDx.
• General and administrative expenses for the first quarter of 2016
  increased to $2.2 million compared with $1.4 million for the same
  period in 2015, with the increase primarily due to increased personnel
  and activities related to the acquisition of PersonalizeDx.
• The operating loss for the first quarter of 2016 was $4.0 million,
  which included $230,000 of non-cash stock-based compensation expense,
  compared with an operating loss of $3.8 million for the first quarter
  of 2015, which included $276,000 of non-cash stock-based compensation
  expense.
• The net loss for the first quarter of 2016 was $4.0 million, or $0.20
  per ordinary share on 20.7 million weighted average shares
  outstanding, compared with a net loss for the first quarter of 2015 of
  $3.9 million, or $0.30 per ordinary share on 12.8 million weighted
  average shares outstanding.
• On a non-GAAP basis, excluding $230,000 of non-cash stock-based
  compensation expense, the net loss for the first quarter of 2016 was
  $3.8 million, or $0.18 per ordinary share on 20.7 million weighted
  average shares outstanding. For the first quarter of 2015, excluding
  the $276,000 of non-cash stock-based compensation expense, the
  non-GAAP net loss was $3.6 million, or $0.28 per ordinary share on
  12.8 million weighted average share outstanding.

Balance Sheet Highlights
As of March 31, 2016, Rosetta Genomics had cash, cash equivalents,
restricted cash and short-term bank deposits of $12.6 million compared
with $13.6 million as of December 31, 2015. The Company used
approximately $2.6 million in cash to fund operations during the first
quarter of 2016, and collected approximately $2.7 million in cash from
its clinical testing services in addition to $1.6 million in cash
receipts from a licensing deal signed in December 2015. Based on the
Company’s current operations and plans, which include a cost-reduction
plan should it be unable to raise sufficient additional capital, if
necessary, Rosetta Genomics expects its current cash position will fund
operations for at least the next 12 months.
Conference Call
Rosetta Genomics management will host a conference call today beginning
at 10:00 a.m. Eastern time to provide an update on the Company’s
business and answer questions. Individuals interested in listening to
the conference call may do so by dialing (866) 239-5859, or for
international callers (702) 495-1913. The conference ID number is
12008886. The call is also being webcast, and can be accessed on the
investor relations section of the Company’s website at www.rosettagx.com.
A telephone replay will be available through May 29, 2016 by dialing
(855) 859-2056 or for international callers (404) 537-3406, and entering
the conference ID number 12008886. The webcast will be available on the
Company’s website for 30 days.
Use of Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures. A
“non-GAAP financial measure” refers to a numerical measure of historical
or future financial performance, financial position or cash flows that
excludes (or includes) amounts that are included in (or excluded from)
the most directly comparable measure calculated and presented in
accordance with GAAP in the financial statements. In this news release,
Rosetta provides non-GAAP pro forma revenues and non-GAAP net loss as
additional information relating to its operating results. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for revenues, net loss or net
loss per share prepared in accordance with GAAP.
Pursuant to the requirements of Regulation G promulgated by the
Securities and Exchange Commission, the Company has provided a
reconciliation of each non-GAAP financial measure used in this earnings
release and related conference call or webcast to the most directly
comparable financial measure prepared in accordance with GAAP. This
reconciliation is presented in the tables below under the heading
“Reconciliation of GAAP to Non-GAAP Consolidated Statement of
Operation.” Investors are encouraged to review these reconciliations to
ensure they have a thorough understanding of the reported non-GAAP
financial measures and their most directly comparable GAAP financial
measures.
Management uses these non-GAAP measures for internal reporting and
forecasting purposes. The Company has provided these non-GAAP financial
measures in addition to GAAP financial results because it believes that
these non-GAAP financial measures provide useful information to certain
investors and financial analysts for comparison across accounting
periods not influenced by certain non-cash items that are not used by
management when evaluating the Company’s historical and prospective
financial performance.
About Rosetta Genomics
Rosetta develops and commercializes a full range of microRNA-based and
other molecular diagnostics. Rosetta’s integrative research platform
combining bioinformatics and state-of-the-art laboratory processes has
led to the discovery of hundreds of biologically validated novel human
microRNAs. Building on its strong patent position and proprietary
platform technologies, Rosetta is working on the application of these
technologies in the development and commercialization of a full range of
microRNA-based diagnostic tools. In addition, the Company offers core
FISH, IHC and PCR-based testing capabilities in Pathology, Oncology and
Urology that provide additional content and platforms that complement
Rosetta’s microRNA and Next-Gen Sequencing offerings. RosettaGX Reveal™,
a Thyroid microRNA Classifier for the diagnosis of indeterminate thyroid
FNA smears, as well as the full RosettaGX™ portfolio of cancer testing
services are commercially available through the Company’s Philadelphia,
PA- and Lake Forest, CA-based CAP-accredited, CLIA-certified labs. For
more information visit www.rosettagx.com.
Forward-Looking Statement Disclaimer
Various statements in this release concerning Rosetta’s future
expectations, plans and prospects including, but not limited
to statements that the changes in our sales force and billing and
collections department position us to drive revenue growth throughout
the balance of the year and beyond; that data from our blinded
validation study for RosettaGX Reveal™ will be published in a
peer-reviewed journal in the coming weeks and that such publication will
support our reimbursement and sales efforts; and that work for the
balance of the year will position us to achieve a number of important
milestones that will enhance shareholder value; and that our cash, cash
equivalents, restricted cash and short-term bank deposits will be
sufficient to fund operations for at least the next 12 months,
constitute forward-looking statements for the purposes of the safe
harbor provisions under The Private Securities Litigation Reform Act of
1995. Actual results may differ materially from those indicated by these
forward-looking statements as a result of various important factors,
including those risks more fully discussed in the “Risk Factors” section
of Rosetta’s most recently filed Annual Report on Form 20-F, as filed
with the SEC. In addition, any forward-looking statements represent
Rosetta’s views only as of the date of this release and should not be
relied upon as representing its views as of any subsequent date. Rosetta
does not assume any obligation to update any forward-looking statements
unless required by law.