Genoptix is paying $10 million in cash to buy Rosetta Genomics. The onetime cancer diagnostics pioneer settled for a takeout offer below its share price, resulting in its stock sliding once news of the deal emerged.
Carlsbad, California-based Genoptix, formerly part of Novartis, offered $10 million gross for Rosetta. Once debt, fees and other costs are knocked off the price, the per-share offer comes in around $0.60, a few cents below where the stock was at prior to the takeout news. The share price has since fallen to $0.53.
Rosetta’s willingness to accept the deal reflects its diminished status, which is also demonstrated by the near-100% decline in its stock price since its 2007 IPO. Back then, Rosetta looked poised to capitalize on growing knowledge of the genetics of cancer. Today, it is a cautionary tale.
Rosetta introduced a clutch of miRNA-based cancer diagnostic tests in the years following its IPO but never gained significant traction commercially. That led to liquidity problems and ultimately to the company’s position becoming untenable.
“Our current cash position is sufficient to fund operations only until the end of 2017, and given our current market capitalization, potential for pending delisting from the Nasdaq Capital Market and the difficult financing environment for microcap molecular diagnostics companies, we do not believe we could raise sufficient capital to continue as a going concern for an extended period of time,” Rosetta CEO Kenneth Berlin said in a statement.
Fellow cancer diagnostics firm Genoptix is the beneficiary of Rosetta’s woes. Genoptix swooped on the floundering business in the belief its commercial team can squeeze more sales out of a thyroid cancer test. And that Rosetta’s microRNA-based technology could be a source of other tests.
The deal follows a period of upheaval at Genoptix. The company was bought by Novartis in 2011. But the Swiss pharma decided to offload the laboratory side of the business to private equity firms earlier this year.