Below is the Rosetta Genomics Ltd. (NASDAQ:ROSG) LD MICRO “Main Event” Micro-Cap Growth Conference transcript. The conference took place from December 2-4, 2014 in Los Angeles. Rosetta Genomics Ltd. (NASDAQ:ROSG) is a leading developer and provider of microRNA-based molecular diagnostics.
Kenneth A. Berlin, President and CEO of Rosetta Genomics (NASDAQ:ROSG) have presented a corporate overview on Wednesday, December 3, 2014 at 5:00 p.m. PST (8:00 p.m. EST).
Kenneth A. Berlin:
Good evening , welcome to track three of 5 pm presentation with Rosetta Genomics.
Thank you! Welcome to The Hardy Soul Series here at 5 pm. Nice to see you all. So, at Rosetta Genomics, we provide lab testing services by providing cutting edge diagnostic tests to solve very important unmet medical needs. Now, we are not the only company in this space that does this but we are differentiated and I will tell you why.
There are five things that we do and they all begin with the letter P:
No: 1: We have a platform differentiated platform.
No: 2: We have products on the market.
No: 3. Because of our platform, we have got a robust pipeline of new products that we plan to launch.
No: 4. We have a promotional efforts. We have our own sales reps in the field.
No: 5. Last but certainly not the least ,we are getting paid we have medicare coverage for our leave test.
So a number of companies in this space do some of those 5 things, we and a select few others do all five of those things and we are going to leverage those five capabilities and attributes to grow the business to critical scale in the revenue prospective and profitability prospective and for the next 30 minutes I will explain how we plan to do that.
So here is our disclaimers about forward looking statements and duties to update.
So first lets talk about the space:
The market diagnostic space is a great space to be in. It’s a high growth market. It’s going with the grain where we help need to grow moving from one side that fits all to pay other therapeutics and treatments to the Genetics and Genomics of the patients. As I mentioned one of our edges in this space is our platform. We have the leading Micro RNA biomarker platform, we have the most validated most accurate and most politic platform out there and Micro RNAs are central biology so they are exquisite by our markers.
We have products; we have revenue generating products today. Our lead products that can afford as medicare coverage and we continue to get increase commercial coverage which is important.
We’ve built a leading sales force in the oncology and pathology space and we are leveraging that sales force against new opportunities that we are bringing in from the outside to expand our revenue base. As I mentioned we have a pipeline so not only are we bringing in new products for our sales reps to sell but we are bringing to market our own new products .We plan to launch our thyroid assay next year and our bladder Cancer assay in 2016.
In addition, we have another revenue source and that comes through collaboration with pharma and biotech companies .We have announced several collaborations this year and we are starting for the first time to garner revenues from these collaborations.
And then finally we have a management team that has executed consumer spaces in the past. So let say a few words about the management team. We have 7 board members who are extremely engaged in the business. I mentioned a few of them here Brian Markinson our chair was the CEO King pharmaceutical led them to a successful exit and then did the same with Fougera pharmaceutical but before that he was at Bristol-Myers and was leading the oncology business so he has relevant domain expertise. Roy Davis was at a long time “JNJs” Johnson & Johnson’s he ran their diagnostic business very steep with diagnostics business he is able to give us tremendous guidance on some of the things that we are working on our pipeline as well as our commercialization efforts.
With the most recent addition to our board two years ago and just recently was named as chairman of the board of Teva pharmaceuticals and he has a tremendous background in medicine that he brings to bare at the board. I myself came from Johnson and Johnson where I spent fifteen years most recently. I ran their cancer diagnostics business which I took from four million dollars in sales to thirty million dollars in sales in three years and that is what we are looking to do here at Rosetta Genomics.
Our most recent hire to the management team is Doug Sites. Doug brings a breadth of expertise in all the areas that we could have hoped for. Oncology, Micro RNAs and very important for us thyroid because we are about to launch our thyroid test in about six months.
Doctor Robert Wassman was brought in a little over two years ago to really rejuvenate the pipeline building effort which we have done and you will see that in a minute.
So we have been at this for 14 years and we are and we believe we are the leaders in the Micro RNA biomarker space to the mass of hundreds of RND menus in discovering experimenting and developing complex Micron RNA signatures. We have moved the field forward by demonstrating the relevance of Micro RNAs in oncology and in places outside of oncology like cardiovascular disease. And one of the things that we have spent a lot of time and we still spend time on it is optimizing the development engine.
Micro RNAs ,the good thing about Micro RNAs for us is that they are difficult to work with, that’s right they are difficult to work with, so we have a mass a ton of experience on how to work with these tricky molecules and we continue to optimize our development platform, so we can get better and better and more accurate tests and you will see some of that accuracy in the descriptions of these test as we move forward but at the heart of everything we do really of the mass right, so it’s great to generate signals of Micro RNAs from different sample types but you have take those pieces of information and turn them into something actionable and the company was founded on a bioinformatics back bone and so we have cutting edge expertise’s in this fix that allows us to bring to the market valuable information for clinications by taking these pieces of information and turning them into a diagnoses and the proofs and the putting so we have completed the development of six Mircro RNA based assay. There have been only seven launched today so there is only one other Micron RNA based assay that’s has ever been launched outside Rosetta.
So we picked cancer as our first area to play in and that is because there has been a ton of work to demonstrate the relevance of Micro RNAs in cancer. I won’t get through all the technical details on this slide but it is clear that Micro RNAs has played key roles in different aspects of cancer, different ways that cancer is caused and so that’s why cancer was the number one area that we selected. So we have launched our cancer testing services. We have four tests on the market but we will focus on the cancer origin test that’s our lead test. That’s the one that our sales reps primarily detail to both oncologists and pathologists. So we will talk about that so what if that test aimed to solve, to solve the issues that the doctors face actually more commonly then people might think. A patient who has cancer presents with, a medic static lead in other words, it is spread from where it initially started from the primary side and for some reason they cannot determine where the cancer started, knowing where the cancer starts is critical to determining how to treat people.
Today, in cancer by and large, we treat cancer based on the tissue of origin, so if you have “Lung Cancer” there is a specific regiment for “Lung Cancer”, if you have “Colorectal Cancer” there are specific regiments for “Colorectal Cancer”, so knowing the primary tumor of origin is important for treatment decisions, so what we do is we take our test, we run the tissue on our test, we have 64 Micro RNAs and we can determine with a very high level of accuracy 90% of that legion immunated from 1 of 49 different tumor origins and that really helps the doctor hold in on the correct treatment strategy for that patient. So we have done our own internal validation work and we have also taken it to the outside world, I am not going to say so how does our information , how do our answers compared to the answers from the leading cup clinics in the world so we have done five post market validation studies and you see the information here, we have demonstrated concordance of 88-92% accuracy our results verses these cup leaders in the world.
Now, we have competitors who are not looking at Micro RNAs they are looking at Messenger RNAs and their data is far inferior to ours, their accuracy is in the range of 45-75% and we believe that is because Micro RNAs actually regulate Messenger RNAs, so when you are measuring the Micro RNAs you are measuring the main event. Now if you looked at the previous slide all those things going on in cancer those are being caused by Micro RNAs and when you are measuring Messenger RNAs you are measuring the downstream effective Micro RNAs that’s why our accuracy is greater. In addition, the other advantage of Micro RNA is they are very small and they state the enzymes that normally chew up Messenger RNAs so they are very stable, so we have much lower failure rates in our competition. We also give a single answer in most cases, it really helps the doctor to get hold on the treatment strategy and we have a four and half day turnaround time, the fastest in the field. So let’s talk about the market.
It’s a big potential market but we realize market today is still quite small and I will tell you why, so the potential market, we estimate to be in excess of six hundred million dollars in the US alone.
We get there by using the two hundred thousand influences where a test like ours can be used and at average selling price of approximately three thousand dollars but today the market is only being converted to the amount of twenty to twenty five million dollars and the reason for that we think is twofold. Doctors are looking to understand better real outcomes really improved for these patients, if I use this test and that date is starting to come out now and we are seeing some update in the market place.
The other thing, unfortunately is that these are “Metastatic Cancer Patients” and sometimes the doctors takes the attitude that, they are going to die from their cancer anyway, I am not sure I can do much for them whether I want to run this test, so we have to overcome these types of objections and we are doing that and you will see that when I talk more about our sales results. Importantly, we have medicare coverage and that’s not easy to get and we are proud we have it. Medicare pays thirty five hundred dollars a test and in addition we are starting to see more and more payments from commercial payers. As we look at the marketplace in the US about 45% of our cases come from medicare patients, the rest comes mostly from commercial payments, so that’s why any payments from commercial payers is critical and so we are starting to see that increase we brought on-board. I had a reimbursement in February and we are really starting to see some process being made in getting payments from the commercial payers. Today we have over hundred and seventy million covered lives, we have got a managed care contract with one blue plan, and we are looking to get more of those contracts in place.
So as I mentioned before, we have our own selling efforts , we have our own 12 sales reps, strategically positioned around the country where the key hot spots are for cancer .Our biggest states where we see the biggest penetrations are in Florida, Texas, New York, California is at work in process but we are making progress. For all intention purposes, we put the commercial pieces in place most of them in the fourth quarter of 2013 and so we really have the theme in place starting in the year and we saw revenues grow to over half a million dollars in the first half, which was a significant growth over the first half of 2013.
Gross billings is another metric we look to which is simply the number of units we sell at times the price we bill out for, we do not collect on everything that’s what we are working towards on the commercial side, so the difference really is between I am in those commercial claims, we built forth and you will see that growing significantly a 3x increase in the first half of this year verses the first half of the last year, so are making progress. As I mentioned we have other tests that we offer through our lab in Philadelphia. I just point you to the accuracy of this test. We have a “Kidney Cancer” test that sub classifies the primary kidney tumor into the four main sub classifications we have some samples for this we are not promoting it heavily because we haven’t got medicare coverage yet, we are working towards getting medicare coverage for this test this year. 95% accuracy our lung cancer test also sub classifies primary lung cancers into the four main sub types 95% accuracy and then we have a “Rosetta Mesothelioma Test” which differentiates from other cancers in the long and plural approaching a 100% accuracy . That really speaks to the accuracy of Micro RNA as biomarkers and we see that throughout our testing.
We have recently announced a deal with the company called “Admera” . Admera is a spin off of a leading contract research organization that has built a very nice business in the sequencing space. The company is called “Genewiz” .They decided that they did not want to commercialize in the clinical space so they really were looking for partners so we have partnered up to take these sequencing tests into the clinical market place for them. It is a great opportunity for us to leverage our relationships with oncologists and it also offers us an ability to offer more full answer to the oncologist it’s not only do they want to know where did the tumor start but then what are the relevant mutations for that tumor. So if it’s a lung cancer does it have a high level of PJFR it does there is a certain drug perceive for example that you might put a patient on. So it reflects and fits nicely with our cancer origin test but also opens up new segments unrelated to our cancer organ test.
We can go right to the primary cancer marketplace and offer these mutation testing services and we will put sales on these testing services. So we are excited to get this going and excited to see our revenues grow from this collaboration. So moving the on oncology Micro RNAs play essential role in almost every major disease area. We cannot play in every major disease area we aren’t big enough nor do we want to do that because we need to focus on certain things but we picked of a few areas where we think we might be able to make some progress. So cardiovascular disease we’ve got two publications in heart failure and the role of Micro RNAs in heart failure genomic disease I will talk a little bit about our work in all timers transplantation. We have a small project in this area around predicting or diagnosing transplant projection and CMV, diabetes and Obesity. So we’ve got this platform and now we are trying to turn on the new indications and we have been able to build a pretty nice pipeline. So we’ve got a thyroid product which I will spend most of our time on because the primary focus the R&D group is on this thyroid product. The next product that we selected to move into oncology is “Bladder Cancer” which I will talk about. We’ve done some work in the past on Bladder Cancer actually have a couple of publications around Micro RNAs and Bladder Cancer so I will tell you a little bit about that opportunity.
All Timers as I mentioned heart failure and kidney rejection. So the thyroid marketplace is a very interesting one, it is a very simple question you are trying to answer here you are trying to answer whether this lump on somebody’s thyroid is Benign or Malignant and it is not so easy to do in upwards of 150, 000 cases a year in the US and historically what’s been the case is that if you are not sure if its Benign or Malignant, the reflex was just take it out if in doubt take it out so take either hard all thyroid with all the associated comorbidities that go along with that and the expense. Well it turns out in a large number of these cases these Nodules are Benign. So we are doing a lot of unnecessary surgeries in this space. So we have been able to demonstrate that Micro RNAs can do this very well discriminate Benign from Malignant and we are working on moving our test into the marketplace in the middle of next year.
We have several competitive advantages vs what’s currently in the marketplace one of which is we can work right off of this mirror. Basically, what happens when a patient presents with a nodule is they stick a fine needle into the nodule and the thyroid. They smear that on a slide and then they look under a microscope this is 19th century technology I am telling you about to see whether or not it looks cancers. I’ve looked at a lot of these slides and I don’t know how they make these calls its very difficult and in a lot of cases they can’t make these calls. Well we can take the material right off of that smear and run a Micro RNA based test and give you an answer nobody else can do that. So we are in the process of commencing larger studies and we are looking to launch this product in the first half of next year.
So the market isn’t small. We think there are about 150, 000 indeterminate cases in the US alone that equates to about a $400 million market opportunity and in terms of converted market we think that the converted market is in the range of $45 to $50 Million dollars today led by Variscite and you may see a consistent theme here. They have a Messenger RNA based test. We are going to come to market with a Micro RNA based test so we think we will have some competitive advantages over them in the marketplace. Bladder cancer is the next product we are going to bring to market. This is really about risk stratifying those people with super facial Bladder Cancer to determine who is likely to progress or recur to invasive Bladder Cancer the kind that will kill you. As I mentioned we’ve had two studies in this area we are very excited to get going on this after we finish the thyroid project we expect to launch this in 2016.
We are working on all timers with a partner a large pharma partner who has Therapeutics in the space who has great access to samples which is the critical piece to everything we do and has a lot of knowledge in this space. We have just started working on determining whether or not we are going to find a Micro RNA signature here but I don’t think I have to tell anybody here the opportunity is huge. So this is a very worth wile shot on goal for us so more to come on this as we have more data to share. There are a whole bunch of other indications but I don’t have time to go in them right now. So in terms of the IP space we’ve got three levels of IP protection, composition of matter, the technologies and methods of use and these have a number of patterns issued.
We are licensed in some of the seminal IP in this space so we have those barriers but in addition there is a lot of know how as I mentioned before Micro RNAs are difficult to work with so we have developed a lot of know how and we are using that capability to sell to pharmaceutical companies to really leverage our capabilities in collaboration with them. So we have announced several collaborations already this year one in the self therapy area with a large biotech company, a strategic alliance with Marina Biotech.
We have recently announced we are picking on DMD as the first area to look for new drug targets for Micro RNAs. We’ve got research collaborations and all timers as I mentioned and we recently announced a strategic alliance with Moffitt Cancer Center a leading academic center that’s really got a tremendous amount of expertise in the area of cancer a tremendous sample back they will really help us move our portfolio in oncology forward. So in terms of the foot print of the company we have just over 50 employees, 33 in the US and 19 in Israel. In Israel we do all of our R&D we do our discovery, our development and then everything gets moved to our lab rotary in Philadelphia cap and clear certified we have New York certifications for all of our tests and all the samples from around the world come to Philadelphia for processing if they are commercial samples and because Micro RNAs is so stable there is no special handling they just get sent by federal express and we have the leading turnaround time.
So from sample arrival to our lab to report out its an average four and a half days and in terms of the footprint in the lab we have plenty of opportunity to expand in place no need to move the lab anywhere else there is plenty of room in Philadelphia to expand to meet any anticipated demand. So briefly on financials we have just under $12 million shares out got a million ones are in options, no converts, no debt. We had $21 million in cash and short term bank deposit in the middle of the year and we announced publicly that cash as of September of this year was sufficient to fund operations in 2016. So in terms of key milestones and achievements one of the things that we set out to do this year is really leverage our platform against other opportunities for pharma and biotech companies. We have done that we have initiated three.
Critically as it continue to ramp up our revenues and we are on that path and we are looking forward to sharing with the street our latest results continue to progress our pipeline and our current collaborations because now it’s important to get the collaborations in place you’ve got to execute on them and that’s critical and we are looking to execute additional deals with pharma and biotech companies. So in short we like the space we are in, we’ve got a leading platform in this space, we have four sources of revenue growth today from our current products, new products, products from third party collaborations and these additional revenues from currently pharma and biotech collaborations. We’ve got a management team that’s executing in this space before. Thank You.
Question. (inaudible)
Answer: Am I so different because we have these five things we have platforms we have products its only unique part of point two in exact comparison so you can say you can look at the cancer genetics they don’t have the platform although are in the same sort of revenue space you’ve got response genetics from here who are a bit different but similar in some respects there is not a great compare because we’ve got products but also a platform that will continue to deliver new products so we are kind of unique in that regard.
Question: (inaudible)
Answer: Well capack isn’t a big deal for us its more about the obex so we’ve got R&D spent that we are growing which is important because we have this great platform who will continue to grow so we will see R&D grow a little bit as we finish up the Thyroid project and begin the Bladder Cancer projects and some other projects on the commercial side it is relatively stable we have the team we want in place we hired a new commercial lead but I think that is going to be pretty stable it is not going to grow that much the burn rate is going to be fairly stable and hopefully climbing as we start bringing in more cash on our commercial efforts.
Question: (inaudible)
Answer:That could happen we’ve had medicare coverage for two years and we have had no issues so our competitors are getting 3100 maybe 3300 because we do a better job of describing the value of the test.
Question: (inaudible)
Answer: No the miscellaneous code which is good news and bad news it doesn’t create a problem with medicare but it creates a problem with the commercial payers because when they give you the miscellaneous code they automatically take them out so it’s not house to house commercial payers.
Question: (inaudible)
You know, it’s one of the things where if it is not broke don’t fix it. The medicare thing is working for us right now it’s something we’ve looked at we’ve decided not going to touch it right now.
Question: (inaudible)
Answer: It’s just know that the local contractor that we deal with for medicare in Philadelphia just decided to go the miscellaneous code.
Question: (inaudible)
Answer: It is an azulnet platform where they custom make the chips on the recipe. So it’s a proprietary chip that has only our printed Micro RNAs so they are sent to the public but we have our own proprietary that are on that chip.
Question: (inaudible)
Answer: Don’t know I think there were some investors that came in on heavy probably in that time period but there was no specific event it would have triggered us actually the big event happened in January where we announced our first collaboration just at the beginning JP Morgan stock was up 40% and traded about 2 million shares but there was no particular event that it was released on the mag.
Alright, we are out. Thanks everybody.
