Rosetta Genomics Ltd (ROSGQ)

[bullmarket2222]

I agree with the Medicare reimbursement rate -- it's on par with that of ROSG's two direct competitors (PathWork Dx's Test of Origin and bioTheranostics CancerTYPE ID. But ROSG said itself that the market size for mets2 is about 200,000 tests per year. Considering that ROSG is third to market with medicare coverage, 350,000 per year minimum is a bit far-fetched. Even 100,000 in the next 12 months is far-fetched, considering that both PathWork and bioTheranostics have much more money backing their sales forces.

To value ROSG, I would look to how industry experts valued the competitors at some point or another. This is what I have so far:

BioTheranostics (formerly AviaraDx)
CUP test: CancerType ID
Medicare coverage announced in mid-2011
Acquired by BioMerieux in 2008 for $60 million (before Medicare coverage)
http://www.reuters.com/article/2008/09/1...

PathWork Diagnostics
CUP test: Tissue of Origin test
Medicare coverage in mid-2011
Series C financing of $30 million (typically for 15-20% of the company)
--- series C valuation happened after medicare coverage was announced

*** both of these tests originally cost somewhere between $3500-$4000. Medicare reimbursement is in the $2500 neighborhood. Very similar pricing to mets2.


So how might ROSG be valued? At least $60 mil (Aviara without Medicare coverage), and at most $200 mil (upper end of PathWork valuation). PathWork had a lot more literature on their test, was first-to-market and is FDA-approved (their first generation test). That's a broad range and reality probably lies at the lower-middle end of it. Still, with the current market cap at ~ $35 mil (~ 2.4 mil shares) and no fund raising for at least 16 months, ROSG should be a safe bet. However, form 6k did say 'Based on current operations'… if they hire more reps, the cash won't last nearly as long and dilution may occur.