Rosetta Genomics

Kurta Law is investigating potentially unsuitable broker recommendations of Rosetta Genomics. It belongs to a group of more than 180 stocks underwritten by Aegis Capital Corp. that may have been excessively risky for investors. Under regulations like FINRA Rule 2111 and Regulation Best Interest, brokers must recommend investments that are suitable for their client’s risk profile.

If you suffered losses on Rosetta Genomics, a securities attorney can help you recover financially via FINRA arbitration. Investors are usually required to pursue arbitration rather than suing in a civil court.

What is Rosetta Genomics?

According to the prospectus, Rosetta Genomics Ltd. (ROSG) is a medical technology company that develops diagnostic tests based on microRNAs (miRNA), which are a type of gene. The company has developed several miRNA tests for the identification of cancerous tumors in different parts of the body.

Rosetta Genomics was delisted from the Nasdaq Stock Market in May 2018.

What are the Risks Associated with Rosetta Genomics?

Companies in the pharmaceutical, biotechnology, and healthcare sectors face similar challenges when it comes to developing and commercializing their products.

Rosetta Genomics lists many of these risks in its prospectus, such as potential difficulties in protecting its intellectual property or keeping up with innovations in these highly competitive industries, as well as risks unique to the company.

Yearly Losses, Debt, and Need for Additional Funds

In its prospectus, Rosetta Genomics discloses key information about its financial history: “We have experienced significant operating losses since our inception in 2000, and as of December 31, 2011, we had an accumulated deficit of $85 million.”

The company states that it will require “substantial additional funds to continue our operations,” and that it may need to reduce its operations or file for bankruptcy if it is unable to acquire enough capital.

Additionally, Rosetta Genomics discloses two debt obligations:

• Final payment of $750,000 plus interest pursuant to a settlement agreement with Prometheus Laboratories, due May 22, 2012
• $1.75 million debenture, maturing January 26, 2013

Failure to meet these obligations would have severe financial consequences for the company, and could similarly lead to the end of its operations.

Potential Regulation of miRNA Tests

The biopharmaceutical and medical device industries are heavily regulated, and companies must maintain compliance with existing laws while keeping an eye on potential changes in regulations.

For Rosetta Genomics, this means maintaining CLIA (Clinical Laboratory Improvement Amendments of 1988) compliance for its Philadelphia, Pennsylvania laboratory, and possibly seeking out FDA approval for its miRNA devices if necessary.

The prospectus notes that the FDA has chosen not to regulate clinical laboratory tests in the past, but that it may choose to apply medical device regulations to these tests in the future.

The process of receiving FDA approval is lengthy and may require clinical trials, which could place substantial financial strain on Rosetta Genomics.

Other Risks

Investors should also keep in mind several other risks associated with Rosetta Genomics:

• Volatile stock price, fluctuating from $0.13 to $41.32 between February 27, 2007, and March 30, 2012
• Dependence on third parties for tissue samples and the distribution of tests
• Potential for increased costs due to changes in healthcare regulations or policies

Aegis Capital Corp. Underwriting    

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm.  

Do You Have Concerns Related to Your Shares of Rosetta Genomics?

If you believe Rosetta Genomics was too risky for your risk profile, consider contacting our experienced securities attorneys for a consultation. Kurta Law attorneys have a proven track record of winning fair settlements in cases of unsuitable investment recommendations. Call (877) 600-0098 or email info@kurtalawfirm.com.