UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of September 2014

 

Commission File Number 001-33042

 

ROSETTA GENOMICS LTD.

(Translation of registrant’s name into English)

 
10 Plaut Street, Science Park
Rehovot 76706, Israel
(Address of Principal Executive Offices) 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F [Ö ]                   Form 40-F [   ]

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):         [   ]

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):         [   ]

 

 

 
 

Rosetta Genomics Ltd.

 

The unaudited condensed interim consolidated financial statements of Rosetta Genomics Ltd. (the “Company”) and its subsidiaries as of and for the six months ended June 30, 2014 are filed as Exhibit 99.1 to this Form 6-K and incorporated by reference herein. A copy of the press release issued by the Company on September 17, 2014 is filed as Exhibit 99.2 to this Form 6-K and incorporated by reference herein.

 

The information contained in this Report (included the exhibits hereto) is hereby incorporated by reference into the Company’s Registration Statements on Form F-3, File Nos. 333-163063, 333-171203, 333-172655, 333-177670 and 333-185338.

 

Exhibits

 

 

Exhibit
Number

 

Description of Exhibit

99.1Unaudited Condensed Interim Consolidated Financial Statements as of and for the six months ended June 30, 2014.
99.2Press Release dated September 17, 2014.
101The following materials from Exhibit 99.1 to this Report on Form 6-K formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Interim Consolidated Balance Sheets, (ii) the Condensed Interim Consolidated Statements of Loss, (iii) the Condensed Interim Consolidated Statements of Changes in Shareholders' Equity, (iv) the Condensed Interim Consolidated Statements of Cash Flows, and (v) Notes to Condensed Interim Consolidated Financial Statements.

 

 
 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

   
  ROSETTA GENOMICS LTD.
 

 

Date: September 17, 2014

By: /s/ Oded Biran  
   

Oded Biran

Chief Legal Officer and Corporate Secretary

 
 

 

 

 

 

 


Exhibit 99.1

 

 

 

 

 

 

ROSETTA GENOMICS LTD. AND ITS SUBSIDIARY

 

 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

 

 

AS OF JUNE 30, 2014

 

 

 

UNAUDITED

 

 

 

 

INDEX

 

 

  Page
   
Condensed Interim Consolidated Balance Sheets 2 - 3
   
Condensed Interim Consolidated Statements of Loss 4
   
Condensed Interim Consolidated Statements of Changes in Shareholders' Equity 5
   
Condensed Interim Consolidated Statements of Cash Flows 6
   
Notes to Condensed Interim Consolidated Financial Statements 7 - 13

 

 

 

 

- - - - - - - - - - - - - - - - - - -

 

 
 ROSETTA GENOMICS LTD. AND ITS SUBSIDIARY

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

 

 

       June 30,   December 31, 
   Note   2014   2013 
       Unaudited     
                
ASSETS               
                
CURRENT ASSETS:               
                
Cash and cash equivalents       $9,057   $16,774 
Restricted cash        59    24 
Short-term bank deposits        10,670    7,667 
Trade receivables        444    224 
Other accounts receivable and prepaid expenses        645    309 
                
Total current assets        20,875    24,998 
                
LONG-TERM ASSETS:               
                
Long-term account receivable        8    8 
Property and equipment, net        790    874 
                
Total long-term assets        798    882 
                
Total assets       $21,673   $25,880 
                

 

 

 

 

The accompanying notes are an integral part of the unaudited condensed interim consolidated financial statements.

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 ROSETTA GENOMICS LTD. AND ITS SUBSIDIARY

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

 

 

       June 30,   December 31, 
   Note   2014   2013 
       Unaudited     
LIABILITIES AND SHAREHOLDERS' EQUITY               
                
CURRENT LIABILITIES:               
                
Trade payables       $752   $906 
Other accounts payable and accruals        758    1,032 
                
Total current liabilities        1,510    1,938 
                
LONG-TERM LIABILITIES:               
                
Warrants related to share purchase agreements   4    59    81 
Deferred revenue        228    228 
                
Total long-term liabilities        287    309 
                
COMMITMENTS AND CONTINGENCIES               
                
SHAREHOLDERS' EQUITY:               
                
Share capital:               
Ordinary shares of NIS 0.6 par value: 40,000,000 shares authorized at June 30, 2014 and
December 31, 2013; 11,234,720 (unaudited ) and 10,473,488 shares issued at June 30, 2014
and December 31, 2013, respectively; 11,231,462 (unaudited) and 10,470,230 shares
outstanding at June 30, 2014 and December 31, 2013, respectively
        1,739    1,609 
Additional paid-in capital        133,720    130,423 
Accumulated deficit        (115,583)   (108,399)
                
Total shareholders' equity        19,876    23,633 
                
Total liabilities and shareholders' equity       $21,673   $25,880 

 

 

The accompanying notes are an integral part of the unaudited condensed interim consolidated financial statements.

3
 ROSETTA GENOMICS LTD. AND ITS SUBSIDIARY

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS

U.S. dollars in thousands (except share and per share data)

 

   Note   Six months ended
June 30,
 
       2014   2013 
       Unaudited 
             
Revenues       $554   $193 
Cost of revenues        770    434 
                
Gross loss        216    241 
                
Operating expenses:               
                
Research and development, net        1,011    877 
Marketing and business development        3,393    3,563 
General and administrative        2,620    1,989 
                
Total operating expenses        7,024    6,429 
                
Operating loss        7,240    6,670 
Tax expenses        8    - 
Financial income, net   7    64    104 
                
Loss from continuing operations        7,184    6,566 
Net income from discontinued operations (Note 1)   1    -    273 
                
Net loss after discontinued operations       $7,184   $6,293 
                
Basic and diluted net loss per ordinary share from continuing operations attributable to Rosetta Genomics' shareholders       $0.66   $0.71 
                
Basic and diluted net income per ordinary share of discontinued operations attributable to Rosetta Genomics' shareholders       $-   $(0.03)
                
Basic and diluted net loss per ordinary share attributable to Rosetta Genomics' shareholders       $0.66   $0.68 
                
Weighted average number of ordinary shares used to compute basic net loss per ordinary share        10,806,738    9,213,633 
Weighted average number of ordinary shares used to compute diluted net loss per ordinary share        10,806,738    9,215,175 

 

 

The accompanying notes are an integral part of the unaudited condensed interim consolidated financial statements.

 

4
 ROSETTA GENOMICS LTD. AND ITS SUBSIDIARY

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)

U.S. dollars in thousands (except share and per share data)

 

   Number of
Ordinary
shares
   Share
capital
   Additional
paid-in capital
   Accumulated
deficit
   Total
Stockholders' equity (deficit)
 
                          
Balance as of January 1, 2013   9,096,547   $1,379   $125,023   $(95,502)  $30,900 
                          
Issuance of shares in May 2013, net of $144 issuance expenses   628,245    103    2,397    -    2,500 
Issuance of shares in June 2013, net of $11 issuance expenses   94,015    16    348    -    364 
Issuance of shares on September 2013,  net of $0.3 issuance expenses   2,950    (*)          -    10         10 
Issuance of shares on October 2013, net of $24 issuance expenses   240,935    41    725         766 
Issuance of shares on December 2013, net of $34 issuance expenses   331,738    57    1,037         1,094 
RSU's conversion   75,000    13    (13)        - 
Employee options exercised   800    (*)          -    3    -    3 
Stock-based compensation relating to options and RSUs issued to employees and directors   -    -    893    -    893 
Net loss   -    -    -    (12,897)   (12,897)
                          
Balance as of December 31, 2013   10,470,230   $1,609   $130,423   $(108,399)  $23,633 
                          
Issuance of shares in January 2014, net of $33 issuance expenses   261,654    45    876    -    921 
Issuance of shares in April 2014, net of $9 issuance expenses   59,241    10    283    -    293 
Issuance of shares in May 2014, net of $8 issuance expenses   66,387    11    247    -    258 
Issuance of shares in June 2014, net of $45 issuance expenses   361,967    62    1,422    -    1,484 
RSU's conversion   3,000    1    (1)   -    - 
Exercise of warrants   8,946    1    (1)   -    - 
Employee options exercised   37    (*)          -    (*)          -    -    - 
Stock-based compensation   -    -    471    -    471 
Net loss   -    -    -    (7,184)   (7,184)
                          
Balance as of June 30, 2014 (unaudited)   11,231,462   $1,739   $133,720   $(115,583)  $19,876 
                          

 

(*) Represents an amount lower than $1.

 

 

 

The accompanying notes are an integral part of the unaudited condensed interim consolidated financial statements.

5
 ROSETTA GENOMICS LTD. AND ITS SUBSIDIARY

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

 

 

   Six months ended
June 30,
 
   2014   2013 
   Unaudited 
Cash flows from operating activities:          
           
Net loss  $(7,184)  $(6,293)
Income from discontinued operations   -    273 
           
Loss from continuing operations   (7,184)   (6,566)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   158    139 
Increase in trade receivables   (220)   (97)
Decrease (increase) in other accounts receivable and prepaid expenses   (336)   118 
Stock-based compensation   471    467 
Change in fair value of warrants related to share purchase agreement   (22)   (56)
Increase (decrease) in trade payables   (154)   337 
Increase (decrease) in other accounts payable and accruals   (274)   436 
           
Net cash used in operating activities from continuing operations   (7,561)   (5,222)
Net cash provided by operating activities from discontinued operations   -    632 
           
Net cash used in operating activities   (7,561)   (4,590)
           
Cash flows from investing activities:          
           
Purchase of property and equipment   (74)   (290)
Investment in short-term bank deposits   (3,003)   (9,850)
Increase in restricted cash   (35)   (1)
           
Net cash used in investing activities from continuing operations   (3,112)   (10,141)
Net cash used in investing activities from discontinued operations   -    - 
           
Net cash used in investing activities   (3,112)   (10,141)
           
Cash flows from financing activities:          
           
Issuance of shares, net   2,956    2,864 
           
Net cash provided by financing activities   2,956    2,864 
           
Decrease in cash and cash equivalents   (7,717)   (11,867)
Cash and cash equivalents at beginning of period   16,774    30,798 
           
Cash and cash equivalents at end of period  $9,057   $18,931 
           

 

 

 

The accompanying notes are an integral part of the unaudited condensed interim consolidated financial statements.

 

6
 ROSETTA GENOMICS LTD. AND ITS SUBSIDIARY

 

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

 

 

NOTE 1: GENERAL

 

Organization and Business

 

Rosetta Genomics Ltd. ("the Company") commenced operations on March 9, 2000.

 

The Company'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 Genomics is working on the application of these technologies in the development of a full range of microRNA-based diagnostic tools. The Company's microRNA-based tests, Rosetta Cancer Origin TestTM, Rosetta Lung Cancer TestTM, Rosetta Mesothelioma TestTM, and Rosetta Kidney Cancer TestTM are commercially available worldwide and all samples are processed in its Philadelphia-based CAP-accredited, CLIA-certified lab.

 

The Company has a wholly-owned subsidiary in the U.S., Rosetta Genomics Inc. The principal business activity of the subsidiary is to commercialize the Company's products, distribute the diagnostic services of the Company's, perform and develop tests in its CLIA-approved laboratory and expand the business development of the Company in the U.S.

 

In the six-month period ended June 30, 2014, the Company incurred losses, after discontinued operations, of $7,184 and it had negative cash flows from operating activities in the amount of $7,561 as well as accumulated losses from previous years. In the six-month period ended June 30, 2014, the Company raised a net total of $2,956 from the issuance of its ordinary shares, net of issuance expense. As of June 30, 2014, the Company’s total shareholders’ equity amounted to $19,876 (unaudited).

 

 

Parkway Clinical Laboratories, Inc. ("Parkway")

 

Parkway is a national, full-service CLIA-certified clinical laboratory service that was owned by the Company. Parkway specializes in oral drug screening in the workplace environment and genetics testing services.

 

On May 18, 2009, the Company sold Parkway, in a management buy-out for up to a maximum amount of $2,500, to be paid as a fixed percentage of revenues (15%) over six years and minimum price of $750. According to ASC 810, "Consolidation", the Company calculated the fair value of future consideration by using discounted estimate of future cash receipt. As a result of the transaction, the controlling interests in Parkway were transferred to the buyer, as well as all the risks. Accordingly, the Company has no future liabilities or obligation related to Parkway.

 

The sale of Parkway met the criteria for reporting as discontinued operations and, therefore, the results of operations of the business and the gain on the sale have been classified as discontinued operations in the Consolidated Statement of Loss and prior period's results have been reclassified accordingly.

 

 

7
 ROSETTA GENOMICS LTD. AND ITS SUBSIDIARY

 

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

 

 

On April 18, 2013 the Company signed a settlement agreement with Sanra Laboratories ("Sanra") in connection with the Company's sale of Parkway to Sanra. Under the terms of the agreement, on April 20, 2013 and on May 10, 2013, Sanra and Parkway paid to the Company a total of $625.

 

As a result of this settlement, the Parkway asset has been removed from the Balance Sheets and the corresponding gain in the amount of $273 was recorded in the Consolidated Statements of Comprehensive Loss as income from discontinued operations.

 

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

 

The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2013, are applied consistently in these financial statements. For further information, refer to the consolidated financial statements as of December 31, 2013, set forth in the Company’s Annual Report on Form 20-F as filed with the U.S. Securities and Exchange Commission on March 31, 2014.

 

 

NOTE 3: UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

 

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

 

Operating results for the six-month period ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ended December 31, 2014.

 

 

NOTE 4: FAIR VALUE MEASUREMENT

 

The Company applies ASC 820, "Fair Value Measurements and Disclosures". Under this standard, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date.

 

In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

 

The hierarchy is broken down into three levels based on the inputs as follows:

 

Level 1 - Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

 

 

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 ROSETTA GENOMICS LTD. AND ITS SUBSIDIARY

 

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

 

 

Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

 

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

 

The availability of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment and the investments are categorized as Level 3.

 

The following methods and assumptions were used by the Company and its subsidiary in estimating their fair value disclosures for financial instruments:

The carrying amounts of cash and cash equivalents, short-term bank deposits, trade receivables, trade payables, and other accounts payable approximate their fair values due to the short-term maturities of such instruments.

 

The fair value of the liability for warrants related to share purchase agreement was calculated using the Black-Scholes Model and the Company classified this liability within Level 3. The fair value of the warrants at June 30, 2014 and December 31, 2013 was $59 (unaudited) and $81, respectively. Gain of $22 from the revaluation of warrants related to share purchase agreement is recorded under Financial Loss in the Condensed Interim Consolidated Statements of Loss.

 

The following table summarizes information about the fair value of the above warrants related to share purchase agreements:

 

   June 30, 2014    
   Unaudited   December 31, 2013 
A Warrants  $-   $27 
A' Warrants   59    54 
           
Total  $59   $81 

 

 

NOTE 5: COMMITMENTS AND CONTINGENT LIABILITIES

 

a.Restricted cash

As of June 30, 2014 and December 31, 2013, restricted cash was primarily attributed to a bank guarantee to the landlord of the Israeli property for the fulfillment of its lease commitments in the amount of approximately $59 (unaudited) and $24, respectively.

 

b.The Company leases its motor vehicles under cancelable operating lease agreements. The minimum payment under these operating leases, upon cancellation of these lease agreements was $8 as of June 30, 2014.


Lease expenses for motor vehicles for the six months ended June 30, 2014 and 2013, were $27 and $41, respectively

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 ROSETTA GENOMICS LTD. AND ITS SUBSIDIARY

 

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

 

 

c.In May 2006, the Company signed a royalty-bearing, co-exclusive, worldwide license agreement with a third party. Under this agreement, the Company was granted the right to make, use and sell the third party's proprietary microRNAs for diagnostic purposes including a limited right to sublicense. In consideration for this license the Company paid an initiation fee and will pay a fixed annual license maintenance fee, royalties based on net sales and a percentage of the Company's revenues from any sublicense. The Company estimates that until 2029 the minimum aggregate license maintenance fees over the term of this agreement should be approximately $960, of which $620 will be paid after June 30, 2014.

 

d.In June 2006, the Company signed a royalty-bearing, co-exclusive, worldwide license agreement with a third party. Under this agreement, the Company licensed from this third party the rights to its proprietary microRNAs for diagnostic purposes. In consideration for this license the Company paid an initiation fee and will pay a fixed annual license maintenance fee, royalties based on net sales and a percentage of the Company's revenue from any sublicense. The Company estimates that until 2022 the minimum aggregate license maintenance fees over the term of this agreement should be approximately $532, of which $348 will be paid after June 30, 2014.

 

e.In August 2006, the Company signed a royalty-bearing, exclusive, worldwide license agreement with a third party. Under this agreement, the Company has exclusively licensed from this third party the rights to its proprietary microRNAs for all fields and applications including a limited right to sublicense. In consideration for this license the Company paid an initiation fee and will pay minimum annual royalties, royalties based on net sales and a percentage of the Company's revenues from any sublicense. This agreement was amended and restated in August 2011 and is now on a non-exclusive basis. For the amendment, the Company paid an amendment fee. The Company estimates that until 2032 the aggregate minimum royalties over the term of this agreement should be approximately $320, of which $185 will be paid after June 30, 2014.

 

f.In December 2006, the Company signed a royalty-bearing, non-exclusive, worldwide license agreement with a third party. Under this agreement the Company licensed from the third party its proprietary microRNAs for research purposes. In consideration for this license the Company will pay an initiation fee and will be required to pay a fixed annual license maintenance fee, royalties based on net sales and a percentage of the Company's revenues from any sublicenses. The Company estimates that until 2022 the minimum aggregate license maintenance fees over the term of this agreement should be approximately $328, of which $174 will be paid after June 30, 2014.

 

g.In May 2007, the Company signed a royalty-bearing, co-exclusive, worldwide license agreement with a third party. Under this agreement, the Company has licensed from this third party the rights to its proprietary microRNAs for therapeutic purposes including a limited right to sublicense. In consideration for this license the Company paid an initiation fee and will pay a fixed annual license maintenance fee, payments based on milestones and royalties based on net sales and a percentage of the Company's revenues from any sublicense. The Company estimates that until 2029 the minimum aggregate maintenance fees over the term of this agreement should be approximately $690, of which $465 will be paid after June 30, 2014.

 

h.In January 2008, the Company signed a royalty-bearing, co-exclusive, worldwide license agreement with a third party. Under this agreement, the Company was granted the right to make, use and sell the third party's proprietary microRNAs for research purposes including a limited right to sublicense. In consideration for this license the Company paid an initiation fee and will pay a fixed annual license maintenance fee, royalties based on net sales and a percentage of the Company's revenues from any sublicense. The Company estimates that until 2029 the minimum aggregate license maintenance fees over the term of this agreement should be approximately $440, of which $310 will be paid after June 30, 2014.

 

 

10
 ROSETTA GENOMICS LTD. AND ITS SUBSIDIARY

 

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

 

 

i.Rimonim Consortium:


In January 2011, the Company joined the Rimonim Consortium, which is supported by the Office of the Chief Scientist of Israel's Ministry of Economy, of the State of Israel (the "OCS"). The purpose of the consortium is to develop RNAi-based therapeutics. As of June 30, 2014, the Company received total grants of $55 from the OCS for its development under the consortium.

 

j.Magneton Project:


In October 2013, the Company into a sponsored research agreement with Ramot at Tel Aviv University ("Ramot"), a Company organized under the laws of Israel and a wholly-owned subsidiary of Tel Aviv University ("TAU"), for the joint development of a nano-carrier system for miR mimetic technology to treat cancer.

 

The Company and Ramot are to perform joint research under the Magneton Project administered by the OCS for an initial period of 12 months commencing on October 1, 2013 and an additional period of 12 months, subject to approval by the OCS.

 

As of June 30, 2014, the Company received an advance of $43 from the OCS for its development under the Project.

 

 

NOTE 6: SHARE CAPITAL

 

a.Ordinary shares:

 

Ordinary shares confer upon the holders the right to receive notice to participate and vote in the general meetings of the Company, and the right to receive dividends, if declared.

 

b.Equity financing

 

On March 22, 2013, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the “Cantor Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent (“Cantor”), pursuant to which the Company may offer and sell, from time to time through Cantor, its ordinary shares, par value NIS 0.6 per share, having an aggregate offering price of up to $5,900. Sales of the Company’s ordinary shares under the Cantor Sales Agreement are made in sales deemed to be “at-the-market” equity offerings as defined in Rule 415 promulgated under the Securities Act of 1933, as amended.

 

On March 31, 2014, the Company filed a prospectus supplement relating to the offer and sale, from time to time on or after the date hereof, of its ordinary shares, par value NIS 0.6 per share, having an aggregate offering price of up to $10,000, pursuant to the above-mentioned Controlled Equity OfferingSM Sales Agreement dated March 22, 2013. Sales of the Company’s ordinary shares under the Cantor Sales Agreement are made in sales deemed to be “at-the-market” equity offerings as defined in Rule 415 promulgated under the Securities Act of 1933, as amended.

 

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 ROSETTA GENOMICS LTD. AND ITS SUBSIDIARY

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

 

From January 1, 2014 through June 30, 2014, the Company had sold through the Cantor Sales Agreement an aggregate of 749,249 of its ordinary shares, and received gross proceeds of $3,051 before deducting issuance expenses in an amount of $95.

 

c.Stock based compensation

 

During the six month period ended June 30, 2014, the Company's Board of Directors decided to grant employees options to purchase 55,000 ordinary shares of the Company. The exercise prices for such options ranges from $4.35-$5.16 per share, with vesting to occur over 4 years.

 

The Company estimates the fair value of stock options granted during the six-month periods ended June 30, 2014 under ASC 718 using the Black-Scholes option pricing model with the following weighted-average assumptions: expected volatility ranges from 1.13%-1.17%; risk free interest rates range between 2.13%-2.27%; dividend yield of 0%; time to maturity (in years) 6.25; and options forfeiture rate of 10%.

 

During the six-month periods ended June 30, 2014 and 2013, the Company recorded stock based compensation in a total amount of $471 and $467, respectively.

 

During the six month period ended June 30, 2014, the Company's Board of Directors approved the granting of 51,000 Restricted Share Units ("RSUs") to certain employees, the RSUs will exercise to shares one year after the date of grant.

 

 

NOTE 7: FINANCIAL INCOME, NET

 

   Six months ended, 
   June 30, 2014   June 30, 2013 
         
Financial income:          
Interest income on short-term bank deposits  $(54)  $(60)
Change in fair value of warrants related to share purchase agreement   (22)   (56)
Foreign currency adjustments gains   (4)   (2)
           
Total Financial income   (80)   (118)
           
Financial expenses:          
Interest expense   16    14 
           
Total financial expenses   16    14 
           
Total financial income, net  $(64)  $(104)

 

 

 

12
 ROSETTA GENOMICS LTD. AND ITS SUBSIDIARY

 

NOTES TO UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

 

 

NOTE 8: SUBSEQUENT EVENTS

 

From July 1, 2014 through September 8, 2014, the Company had sold through the Cantor Sales Agreement an aggregate of 408,508 of its ordinary shares, and received gross proceeds of $1,807 before deducting issuance expenses in an amount of $54.

 

 

 

 

13


 

Exhibit 99.2

 

News Release  

 

   

Rosetta Genomics Reports Financial Results for the First Half of 2014

 

Demand for microRNA oncology testing services continues its momentum with gross billings growing three-fold, Company executes four research collaborations and advances broad pipeline of microRNA-based assays

 

Business Update Conference Call to be held September 18th at 10:00 a.m. Eastern time

 

PRINCETON, N.J. and REHOVOT, Israel (September 17, 2014) Rosetta Genomics Ltd. (NASDAQ: ROSG), a leading developer and provider of microRNA-based molecular diagnostics, today reported financial results for the six months ended June 30, 2014.

 

Highlights for the first half of 2014 and recent weeks include:

 

·Continued to enhance awareness of and demand for the Rosetta Cancer Origin Test, which resulted in 187% increase in revenues to $554,000 for the first half of 2014 from $193,000 for the first half of 2013 and have already surpassed by 37% the revenues for the entire 2013 year, with commercial initiatives continuing to gain momentum.
·Recorded gross billings for the first half of 2014 of $1.3 million, more than triple the $417,000 recorded in the first half of 2013 and have already surpassed by 20% the gross billings for the entire 2013 year.
·Strengthened commercial leadership with the addition of Doug Sites as Executive Vice President of Sales and Marketing and Kevin Watson as Director, Reimbursement-Managed Care.
·Advanced development of its thyroid neoplasia assay, which is expected to launch in the third quarter of 2015 and selected bladder cancer as the next oncology diagnostic to be developed with an expected launch in 2016.
·Executed four collaborative agreements, including a:
oMaster service provider agreement with an undisclosed major global biopharmaceutical company under which Rosetta will provide its microRNA profiling and other services in important areas of unmet medical need;
oStrategic alliance with Marina Biotech to jointly develop microRNA-based diagnostics and therapeutics for rare diseases;
oAgreement with a global pharmaceutical company to advance efforts in Alzheimer's disease diagnostics; and
oStrategic alliance with Moffitt Cancer Center to discover, develop and commercialize a variety of microRNA-based cancer diagnostics.
·Received three U.S. patents that cover the Company’s microRNA-based technology as a treatment for ovarian cancer, for the prognosis and treatment of prostate cancer and for the method of use of a core element of the Cancer Origin Test.

 

 
 

  

Management Commentary

 

"The first half of 2014 was a particularly productive period for Rosetta Genomics as we made meaningful advances across the three key areas for growth, namely current product sales, new product development and third-party collaborations,” said Kenneth A. Berlin, President and Chief Executive Officer of Rosetta Genomics.

 

“We recorded significant growth in product revenues year-over-year, underscoring the momentum of our sales and marketing efforts. To fortify our commercial strategy and enhance market adoption, we strengthened our leadership team with the addition of key hires to drive demand and reimbursement.

 

“Our clinical development programs continued to advance and we are on track to publish proof-of-concept data for our thyroid neoplasia assay by the end of the year. These data and other information are expected to highlight the advantages of our assay compared with current alternatives. Our specimen collection process will be a competitive differentiator, as it can utilize the actual smear used by the cytologist as opposed to taking additional Fine Needle Aspirates and preserving them in specialized tubes as is now required by currently marketed thyroid tests. Importantly, we remain on track to begin final validation testing in early 2015 and to launch our microRNA-based thyroid neoplasia assay in the third quarter of 2015.

 

“We are also advancing our previously published discovery work in bladder cancer into the development phase to achieve a microRNA-based diagnostic for better therapeutic guidance of patients with bladder cancer. We have two published studies relating to an assay for bladder cancer risk of invasiveness, which give us the confidence to move forward with additional feasibility and validation studies, with an aim for commercial launch in 2016. In addition, we will continue to explore additional oncology indications through early proof-of-concept studies in 2015.

 

“We are especially pleased with our progress with third-party collaborations. These alliances allow us to leverage our leading microRNA biomarker platform into both the diagnostics and therapeutics arenas, and have the potential to be significant contributors to long-term value creation. Specifically, we have successfully completed the feasibility phase of our master service agreement with an undisclosed global biopharmaceutical company and are now advancing to the next stage of this collaboration, which is expected to generate revenues by the end of 2014. In addition, we have initiated proof-of-concept studies with our global pharmaceutical partner to advance the development of an assay for the earlier detection of Alzheimer's disease which could have applications both as a diagnostic as well as for patient selection for clinical trials.

 

“We further strengthened our patent portfolio with the addition of three U.S. patents in various cancer indications. In addition to protecting our products from would-be competitors, these patents support our leading patent position in microRNA technology, specifically in oncology,” concluded Mr. Berlin.

 

 
 

  

Financial results for the six months ended June 30, 2014 include:

 

·For the first half of 2014 the Company recorded revenues from continuing operations of $554,000, up 187% from revenues of $193,000 for the first half of 2013.
·Cost of revenues for the first six months of 2014 increased to $770,000 from $434,000 for the first six months of 2013, primarily due to higher volume of processed samples as well as increases in personnel and infrastructure to meet current and anticipated sample volume. 

·Research and development expenses for the first half of 2014 increased to $1.0 million from $877,000 for the first half of 2013, primarily due to increases in headcount and lab materials to create and advance the Company’s expanded pipeline of R&D projects.
·Marketing and business development expenses for the first half of 2014 decreased to $3.4 million from $3.6 million in the prior-year period, as the Company maintained its ongoing investment in U.S. commercialization efforts as well as business development initiatives to procure collaborative and/or licensing agreements.
·General and administrative expenses for the first six months of 2014 were $2.6 million compared with $2.0 million for the same period in 2013, with the increase primarily due to higher overhead as the Company added key executives and other personnel.
·The operating loss for the first half of 2014 was $7.2 million, including $471,000 of non-cash stock-based compensation expense. This compares with an operating loss for the first half of 2013 of $6.7 million, including $467,000 of non-cash stock-based compensation expense.
·The net loss after discontinued operations for the first six months of 2014 was $7.2 million, or $0.66 per ordinary share on 10.8 million shares outstanding, compared with a net loss after discontinued operations for the same period in 2013 of $6.3 million, or $0.68 per ordinary share on 9.2 million shares outstanding.
·On a non-GAAP basis, excluding stock-based compensation expense and income/loss from revaluation of warrants, which are presented as a liability on the balance sheet, the net loss for the first six months of 2014 was $6.7 million, or $0.62 per ordinary share, compared with a net loss for the first six months of 2013 of $5.9 million, or $0.64 per ordinary share.

 

Details reconciling non-GAAP amounts with GAAP amounts are provided below.

 

Balance Sheet Highlights

 

As of June 30, 2014, Rosetta Genomics had $19.8 million in cash and cash equivalents, restricted cash and short-term bank deposits, compared with $24.5 million as of December 31, 2013. The Company used approximately $7.5 million in cash to fund operations during the first six months of 2014. During the first half of 2014 the Company raised net proceeds of $3.0 million from the sale of approximately 750,000 ordinary shares through the previously announced Sales Agreements with Cantor Fitzgerald & Co.

 

 
 

   

Cash Guidance

 

Throughout the balance of 2014 Rosetta Genomics plans to continue to invest in the expansion of its U.S. commercial operations and to fund further clinical development of its microRNA technology. As a result, the Company estimates that total net cash requirements to fund operations for the 2014-year will be between $14 million and $15 million, which includes the $7.5 million in net cash used to fund operations for six months ended June 30, 2014. Rosetta Genomics believes that its cash balance as of June 30 2014, combined with projected revenue growth, will be sufficient to fund operations into 2016.

 

Conference Call

 

Rosetta Genomics management will host a conference call on September 18, 2014 at 10:00 a.m. Eastern time to discuss these financial results and recent corporate developments, and to answer questions. Individuals interested in listening to the conference call may do so by dialing (866) 239-5859 from within the U.S. or (702) 495-1913 from outside the U.S. The conference ID number is 2341327.

 

A telephone replay will be available through September 24, 2014 by dialing (855) 859-2056 from within the U.S. or (404) 537-3406 from outside the U.S., and entering the Conference ID number 2341327. The webcast will be available for 30 days following the completion of the call.

 

A live audio webcast of the call will also be available in the "Investors" section of the Company's website at www.rosettagenomics.com. An archived webcast will be available on the Company's website for 30 days beginning approximately two hours after the event.

 

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 release, Rosetta provides gross billings, non-GAAP net loss and non-GAAP net loss per share data 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 net loss or net loss per share prepared in accordance with GAAP.

 

Pursuant to the requirements of Regulation G promulgated by the SEC, 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 Cancer Testing Services

 

Rosetta Cancer Tests are a series of microRNA-based diagnostic testing services offered by Rosetta Genomics. The Rosetta Cancer Origin Test can accurately identify the primary tumor type in primary and metastatic cancer including cancer of unknown or uncertain primary (CUP). The Rosetta Mesothelioma Test diagnoses mesothelioma, a cancer connected to asbestos exposure. The Rosetta Lung Cancer Test accurately identifies the four main subtypes of lung cancer using small amounts of tumor cells. The Rosetta Kidney Cancer Test accurately classifies the four most common kidney tumors: clear cell renal cell carcinoma (RCC), papillary RCC, chromophobe RCC and oncocytoma. Rosetta’s assays are designed to provide objective diagnostic data; it is the treating physician’s responsibility to diagnose and administer the appropriate treatment. In the U.S. alone, Rosetta Genomics estimates that 200,000 patients a year may benefit from the Rosetta Cancer Origin Test, 60,000 from the Rosetta Mesothelioma Test, 65,000 from the Rosetta Kidney Cancer Test™ and 226,000 patients from the Rosetta Lung Cancer Test. The Company’s assays are offered directly by Rosetta Genomics in the U.S., and through distributors around the world. For more information, please visit www.rosettagenomics.com. Parties interested in ordering the test can contact Rosetta Genomics at (215) 382-9000.

 

About Rosetta Genomics

 

Founded in 2000, 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 and therapeutics. Rosetta currently commercializes a full range of microRNA-based molecular diagnostics.  Rosetta’s cancer testing services are commercially available through its Philadelphia-based CAP-accredited, CLIA-certified lab.  For more information, please visit www.rosettagenomics.com.

 

Forward-Looking Statement Disclaimer

 

Various statements in this release concerning Rosetta’s future expectations, plans and prospects, including without limitation, the anticipated timing of Rosetta’s clinical development programs, including its thyroid neoplasia assay and its bladder cancer diagnostic, the potential of Rosetta’s third-party collaborations to be significant contributors to long-term value creation, Rosetta’s plans to continue to invest in the expansion of its U.S. commercial operations and to fund further clinical development of its microRNA technology, that the master service agreement with an undisclosed global biopharmaceutical company is expected to generate revenues by the end of 2014, Rosetta’s estimate that total net cash requirements to fund operations for the 2014-year will be between $14 million and $15 million and that Rosetta’s cash balance of $19.8 million as of June 30, 2014, combined with projected revenue growth, will be sufficient to fund operations into 2016, 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 Annual Report on Form 20-F for the year ended December 31, 2013 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.

 

 
 

  

Company Contact:     

Rosetta Genomics    

Ken Berlin, President & CEO    

(609) 419-9003   

investors@rosettagenomics.com

 

Investor Contacts:

LHA

Anne Marie Fields

(212) 838-3777

afields@lhai.com

or

Bruce Voss

(310) 691-7100

bvoss@lhai.com

-Tables to Follow-

 

 
 

 

   Six Months ended 
   June 30, 
USD in thousands  2014   2013 
Net loss after discontinued operations  $7,184   $6,293 
Stock-based compensation   471    467 
Revaluation of warrants related to share purchase agreement   (22)   (56)
non-GAAP net loss  $6,735   $5,882 

 

   Six Months ended 
   June 30, 
Basic and diluted per share data  2014   2013 
Net loss after discontinued operations  $0.66   $0.68 
Stock-based compensation   0.04    0.05 
Revaluation of warrants related to share purchase agreement   (0.00)   (0.01)
non-GAAP net loss  $0.62   $0.64 
           
Weighted average number of Ordinary shares used to          
compute basic net loss per Ordinary share   10,806,738    9,215,175 

 

   Six months ended June 30, 
   2014   2013 
Revenues  $553,779   $193,012 
Unrecognized billings   757,910    223,499 
Gross billings  $1,311,689   $416,511 

 

   Year ended 
   December 31, 2013 
Revenues  $405,323 
Unrecognized billings   685,965 
Gross billings  $1,091,288 

 

 
 

 

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS    
U.S. dollars in thousands        
         
         
   June 30,   December 31, 
   2014   2013 
   Unaudited     
         
ASSETS          
           
CURRENT ASSETS:          
           
Cash and cash equivalents  $9,057   $16,774 
Restricted cash   59    24 
Short-term bank deposits   10,670    7,667 
Trade receivables   444    224 
Other accounts receivable and prepaid expenses   645    309 
           
Total current assets   20,875    24,998 
           
LONG-TERM ASSETS:          
           
Long-term account receivable   8    8 
Property and equipment, net   790    874 
           
Total long-term assets   798    882 
           
Total assets  $21,673   $25,880 

 

 

   June 30,   December 31, 
   2014   2013 
   Unaudited     
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
CURRENT LIABILITIES:          
           
Trade payables  $752   $906 
Other accounts payable and accruals   758    1,032 
           
Total current liabilities   1,510    1,938 
           
LONG-TERM LIABILITIES:          
           
Warrants related to share purchase agreements   59    81 
Deferred revenue   228    228 
           
Total long-term liabilities   287    309 
           
COMMITMENTS AND CONTINGENCIES          
           
SHAREHOLDERS' EQUITY:          
           
Share capital:          
Ordinary shares of NIS 0.6 par value: 40,000,000 shares authorized at June 30, 2014 and December 31, 2013; 11,234,720 (unaudited ) and 10,473,488 shares issued at June 30, 2014 and December 31, 2013, respectively; 11,231,462 (unaudited) and 10,470,230 shares outstanding at June 30, 2014 and December 31, 2013, respectively   1,739    1,609 
Additional paid-in capital   133,720    130,423 
Accumulated deficit   (115,583)   (108,399)
           
Total shareholders' equity   19,876    23,633 
           
Total liabilities and shareholders' equity  $21,673   $25,880 

 

 
 

 

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS    
U.S. dollars in thousands (except share and per share data)        
         
   Six months ended 
   June 30, 
   2014   2013 
   Unaudited 
         
Revenues  $554   $193 
Cost of revenues   770    434 
           
Gross loss   216    241 
           
Operating expenses:          
           
Research and development, net   1,011    877 
Marketing and business development   3,393    3,563 
General and administrative   2,620    1,989 
           
Total operating expenses   7,024    6,429 
           
Operating loss   7,240    6,670 
Tax expenses   8    - 
Financial income, net   64    104 
           
Loss from continuing operations   7,184    6,566 
Net income from discontinued operations   -    273 
           
Net loss after discontinued operations  $7,184   $6,293 
           
Basic and diluted net loss per ordinary share from continuing operations attributable to Rosetta Genomics' shareholders  $0.66   $0.71 
           
Basic and diluted net income per ordinary share of discontinued operations attributable to Rosetta Genomics' shareholders  $-   $(0.03)
           
Basic and diluted net loss per ordinary share attributable to Rosetta Genomics' shareholders  $0.66   $0.68 
           
Weighted average number of ordinary shares used to compute basic net loss per ordinary share   10,806,738    9,213,633 
Weighted average number of ordinary shares used to compute diluted net loss per ordinary share   10,806,738    9,215,175 

 

 

 


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