Rosetta Genomics Ltd. Executes Binding Term Sheet to Acquire U.S. CLIA-Certified Lab to Expedite Commercialization of Diagnostic Tests
REHOVOT, Israel and JERSEY CITY, New Jersey, June 11 /PRNewswire-FirstCall/ -- Rosetta Genomics Ltd. , a leader in the development of microRNA-based diagnostics and therapeutics, announced today that it has signed a binding term sheet to acquire Parkway Clinical Laboratories Inc. ("Parkway"), a privately-held CLIA-certified lab located in Bensalem, Pennsylvania, for an aggregate purchase price of $2,900,000, consisting of $1,900,000 in cash and $1,000,000 of Rosetta's ordinary shares. An additional $300,000 will be payable upon the achievement of certain milestones. The closing of the acquisition is subject to (i) satisfactory completion of financial, accounting, operating, legal and regulatory due diligence by Rosetta, (ii) receipt of all necessary approvals and consents and (iii) negotiation and execution of a definitive purchase agreement and related agreements. Parkway owns an emerging national CLIA-certified clinical reference laboratory with an expected $3M in revenues and marginal operating income in 2008.
"The acquisition of Parkway Clinical Laboratories is an important strategic addition for Rosetta Genomics which we anticipate will enable us to expedite the commercialization of our first microRNA-based diagnostic tests," said Amir Avniel, President and CEO of Rosetta Genomics. "The lab's wide experience in diagnostic testing and regulatory compliance will provide us with strong commercial infrastructure that will complement our advanced R&D capabilities."
The acquisition is expected to allow Rosetta Genomics to expedite development and validation of its microRNA-based diagnostic tests both in the U.S. and worldwide. In addition, ownership of the CLIA-certified lab will allow Rosetta Genomics to control the commercialization of its diagnostics, including marketing, sales, and reimbursement strategy. The move is an important part of the Company's commercialization and growth strategy.
The 5,000 square foot laboratory will complement two additional CLIA-certified labs in New York and California, Columbia University Medical Center's High Complexity Molecular Pathology Laboratory and University of California Irvine School of Medicine's CLIA lab, which are also expected to offer diagnostics based on Rosetta Genomics' microRNA technology.
Following the acquisition, Rosetta Genomics will be joined by thirty three employees from Parkway, including Dr. Raza Bokhari, MD., Parkway Clinical Laboratories' CEO, President and Chairman of the Board, who will be joining Rosetta Genomics' senior management as Chief Development Officer.
"We are excited to be joining Rosetta Genomics in developing ground-breaking microRNA-based diagnostics," said Dr. Raza Bokhari. "I am confident that the expertise of our laboratory, the sophisticated talent pool available in the mid-Atlantic region, and abundant life sciences opportunities present in the greater Philadelphia area will have a strong and meaningful impact on Rosetta Genomics' worldwide commercialization strategy."
Over the past several years, Dr. Bokhari developed outstanding expertise in aggregating and accelerating multi-specialty pathology companies.
In 2001, Dr. Bokhari took over Lakewood Pathology Associates (LPA), a struggling multi-specialty surgical pathology laboratory in Lakewood, New Jersey. During his term as LPA President and CEO, the company's revenue grew tenfold, its client base expanded to more than 25 states and it created over 100 new jobs in the region. Dr. Bokhari sold LPA in May 2006 to a Chicago-based private equity fund, Waterstreet Healthcare Partners.
In April 2003, Dr. Bokhari acquired Parkway Clinical Laboratories (PCL), a small CLIA-certified laboratory in Bensalem, PA. He has been incubating PCL for the past five years. In that time, revenues have grown from $500k to an expected $3M in 2008 and its employee count has increased from less than ten (10) to more than thirty (30) today.
"This is a critical milestone in the path to commercializing Rosetta Genomics' microRNA-based diagnostics," noted Ronen Tamir, Executive Vice President of Marketing and Communications at Rosetta Genomics. "Parkway Clinical Laboratories' expertise in diagnostic testing, reimbursement, and regulatory compliance, will provide us with the freedom we need to market and sell our microRNA-based tests in the U.S. and around the world. We expect the acquisition of this CLIA-certified lab to significantly streamline the development process of our wide microRNA-based diagnostics pipeline."
The first three of Rosetta Genomics' microRNA-based tests expected to enter development and validation at Parkway's facility are:
As demonstrated in a paper published by Rosetta Genomics and collaborators in the April issue of Nature Biotechnology, Rosetta Genomics has developed a panel of microRNA biomarkers potentially able to identify approximately thirty cancer types. This test is designed to assist clinicians to accurately identify the origin of tumors.
About MicroRNA
MicroRNAs (miRNAs) are recently discovered, naturally occurring, small RNAs that act as master regulators and have the potential to form the basis for a new class of diagnostics and therapeutics. Since many diseases are caused by the abnormal activity of proteins, the ability to selectively regulate protein activity through microRNAs could provide the means to treat a wide range of human diseases. In addition, microRNAs have been shown to have different expression in various pathological conditions. As a result, these differences may provide for a novel diagnostic strategy for many diseases.
About Rosetta Genomics
Rosetta Genomics is a leader in the field of microRNA. Founded in 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 IP 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 and therapeutic tools, focusing primarily on cancer and various women's health indications.
Forward-Looking Statement Disclaimer
Various statements in this release concerning Rosetta's future expectations, plans and prospects, including without limitation, statements relating to the expected completion of the acquisition of Parkway by Rosetta and the expected impact the acquisition, if completed, will have on the commercialization of Rosetta's microRNA-based diagnostics, Parkway's expected revenues and operating income for 2008, the role of microRNAs in human physiology and disease, the potential of microRNAs in the diagnosis and treatment of disease and the expected timing of diagnostic tests using our microRNA technology 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 risks related to: Rosetta's approach to discover microRNA technology and to work on the application of this technology in the development of novel diagnostics and therapeutic tools, which is unproven and may never lead to marketable products or services; Rosetta's ability to fund and the results of further pre-clinical and clinical trials; Rosetta's ability to obtain, maintain and protect the intellectual property utilized by Rosetta's products; Rosetta's ability to enforce its patents against infringers and to defend its patent portfolio against challenges from third parties; Rosetta's ability to obtain additional funding to support its business activities; Rosetta's dependence on third parties for development, manufacture, marketing, sales, and distribution of products; Rosetta's ability to successfully develop its candidate tools, products and services, all of which are in early stages of development; Rosetta's ability to obtain regulatory clearances or approvals that may be required for its products and services; the ability to obtain coverage and adequate payment from health insurers for the products and services comprising Rosetta's technology; competition from others using technology similar to Rosetta's and others developing products for similar uses; Rosetta's dependence on collaborators; and Rosetta's short operating history; as well as 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, 2006 as filed with the Securities and Exchange Commission. 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.
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