This is the fifth in a series of posts analyzing Rosetta Genomics stock.

Most drugs that target proteins work by inhibiting the protein’s function. It’s simply a function of biology; it’s much easier to design a drug that will interfere with a protein’s function than it is to make it overactive. But sometimes (many times actually), it would be nice to make a protein overactive in order to fight a disease. For instance, overexpressing a tumor suppressor might kill tumor cells. Sometimes this is possible if the protein has a natural protein inhibitor. By inhibiting the inhibitor, you can stimulate the protein whose function you want to increase.

Since miRNAs are natural inhibitors of protein expression, inhibiting them causes increased activity of the protein. In cancers, miRNAs are often overexpressed, so they make good potential drug targets. Rosetta Genomics is working with Isis Pharmaceuticals, who has experience with inhibiting RNA molecules in vivo, on miRNA inhibitors to treat liver cancer. The inhibition is carried out by complementary synthetic molecules that bind to the miRNAs and prevent them from binding to the mRNA, resulting in expression from those mRNAs. To date they have discovered 5 miRNAs that have elevated levels in tumor samples compared to normal tissue. They are currently trying to inhibit these miRNAs in tissue culture cells (in vitro) before they move into mouse models (in vivo). I’m a little worried that the level of miRNA inhibitors required for them to see an effect on tumor growth might be greater than is achievable in vivo, but Isis Pharmaceuticals has been able to inhibit miRNAs in the liver of mice, so perhaps my fears are unwarranted.

If anyone reading this is at the AACR meeting in LA this week, stop by Rosetta’s poster and get the current information on the project. Then leave a comment or e-mail me at hotmail.com with biologyfool before the @ with the scoop.

Rosetta Genomics is also working on miRNA inhibitors for infectious disease. Some viruses encode miRNAs and others cause overexpression of human miRNAs after infection. Both of these can serve as potential targets to attack the infection. For instance, they have demonstrated in vitro that the inhibition of Epstein-Barr virus (EBV) microRNAs inhibits viral replication. With collaborators (mostly in academia), they are also working on finding miRNA inhibitors to fight infection of HIV and hepatitis C virus.

All of their research on therapeutics is still in initial stages. Since microRNA inhibitors are fairly innocuous, Rosetta Genomics might be able to do a combined phase 1/2 trial. But even in that case, the therapeutics are still many years away. Hopefully some of their diagnostic test will gain approval and fund their clinical trials.

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This is the fifth in a series of posts analyzing Rosetta Genomics stock.

Currently most tests for diseases look at protein (or sometimes mRNA) levels in the cells to determine if the cells are diseased. A good example of this is the prostrate specific antigen (PSA) test for prostrate cancer. The test looks at the amount of PSA in the blood stream and then tries to gauge the likelihood of cancer based on the amount of the protein. The problem with this (and many other) diagnostic tests is that they only look at a single marker and there can be a wide variation between normal patients leading to high level of false positives and false negatives.

Rosetta Genomics is attempting to build a better mouse trap. Since a single miRNA often affects the expression of multiple proteins, measuring the miRNA levels in cells may allow for increased specificity in diseases where miRNAs have been shown to have altered expression. Rosetta Genomics is primarily designing tests to detect cancer and/or predict how aggressive the tumor may be. By combining a panel of several miRNAs whose levels are changed in the diseased tissue relative to the normal tissue, they can increase the specificity of the test.

Prostrate, Lung, and Colorectal Cancer

Rosetta Genomics is working on separate tests for the detection of these three types of cancer. So far, they have found four miRNAs whose expression are different in tumor samples vs normal tissue for each of the three tumor types. When combined, they have a p-values in the 0.002-0.006, so there is a very low chance that the difference in the miRNA expressions are due to chance alone. They don’t say what percent of the tumors that they have tested have these particular expression patterns, so it’s difficult to determine how high the false negative rate will be.

Breast Cancer

Research on diagnostic tests for breast cancer are in early stages. Rosetta Genomics is looking for differentially expressed miRNAs in patient samples that had a high recurrence rate vs those with a low recurrence rate to develop a test to predict if a tumor is likely to come back. As you can imagine, predicting the likelihood of recurrence would be helpful for doctors to determine the best treatment options. Like the above tests they are also testing normal vs tumor tissues to develop an early detection test for breast cancer.

Cancer of Unknown Primary site (CUP)

About 70,000 malignacies a year are diagnosed as metastases of unknown primary tumor (CUP). It’s exactly what it sounds like; the doctor discovers a secondary tumor (metastases), but the primary tumor is unknown. There are a variety of expensive tests that can be run to try to find the primary tumor, but in 70-80% of the cases, the primary tumor is never found.

Since miRNAs have different expression profiles for various cell types, it may be possible to determine the cell type (origin of the primary tumor) by measuring miRNAs levels in the cells of the metastatic tumor. Using 6 different miRNAs they can identify the origin of the primary tumor in 80% of the tumor samples with 90% accuracy. This is based on 6 different cell types, so I think they will probably need to add a few more miRNAs in order to increase the ability of the test to detect other cell types and to increase the accuracy of the test.

None of the tests are in the clinical validation stage yet, but fortunately, the time frame for approval is much shorter for diagnostic tests than for drugs. Rosetta Genomics is actually working on some therapeutic drugs as well, and I’ll get to those next time.

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This is the second in a series of posts analyzing Rosetta Genomics stock. If you haven’t already, you may want to read my primer on what a micro RNA is and how companies can capitalize on them.

There’s really two ways to find a miRNA. The first is to isolate RNA from the cells of tissue (or a cell line grown in the laboratory). Then purify the relatively small miRNAs from the rest of the RNA molecules. Reverse transcribe the miRNAs to make DNA molecules and ligate the newly synthesized DNA molecules into a vector and transform that into bacteria. Grow up enough bacteria to isolate the vectors with the miRNA sequence inserts and sequence them. After all these steps, you’ll have the most abundant miRNAs in the one tissue that you isolated them from. You’ll miss the miRNAs that aren’t highly expressed and you’ll need to repeat the process for every different cell type that you want to find miRNAs in. As you can see, it’s a relatively inefficient and fairly costly way to find a lot of miRNAs.

Rosetta Genomics has decided to take a different line of attack. They used a computer approach to define potential miRNAs based solely on sequences in the human genome database and then tried to figure out whether they were real (were expressed). The approximately 10,000 potential miRNAs they identified due to their sequence were put on microarrays and their expression was tested in multiple tissues and body fluids. They have identified 1,500 potential miRNA sequences that showed expression in one or more tissues. Since the microarray can have a high background which may lead to false positives, they further confirmed them through either quantitative RT-PCR or by cloning and sequencing them. To date, they’ve confirmed 320 through this method, which is half of all the miRNAs that have been discovered. And, since they have certainly not tested every tissue possible, there’s potential for them to identify even more tissue specific miRNAs by checking additional tissues with their array.

With patents on each of the miRNAs they’ve discovered, Rosetta Genomics certainly has a lot of intellectual property. I’ll look at exactly what they’re planning on doing with that IP in the next couple of posts.

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Aside: I have a post up in the Festival of Stocks at Investor Trip. If you’re looking for ideas of non-biotech stocks to investigate further, go check out the festival.

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Before we get into investigating Rosetta Genomics in detail, I thought I would give a little background on micro RNAs since it’s the molecule that Rosetta has based its entire platform on.

Micro RNAs (miRNA) were discovered in worms about 14 years ago, but they have been found in a wide range of organisms (including humans) in the last few years. A subset of our genes encode miRNAs which are transcribed in the usual fashion creating primary transcripts (pri-miRNA). These long single stranded pri-miRNAs fold back on themselves to create hairpin stem-loop structures. The hairpins in the pri-miRNA are cleaved into short 70 nucleotide pre-miRNAs through drosha processing. These Pre-miRNAs are then exported from the nucleus. In the cytoplasm, dicer processing takes place where the RNA-induced silencing complex (RISC) binds to the hairpin RNAs and further cuts the RNA to make the final miRNA.

The miRNA is partially complementary to a messenger RNA (mRNA) that has been transcribed. This allows the miRNA/RISC complex to bind to the mRNA and inhibit its translation (production of proteins) either by directly blocking the translation machinery, or by stimulating the degradation of the mRNA. In essence, miRNAs work the same way as transcription factors in that they can control protein expression.

Interestingly, miRNAs have been observed to be overexpressed in some cancers. Increasing miRNAs should decrease protein expression, so you can imagine that these miRNAs might inhibit the expression of tumor suppressors although it is difficult to determine what genes miRNAs target.

How can biotechnology companies make money from miRNAs?

• Reagents-The easiest way for scientist to understand the function of a protein is to eliminate it from the cell and see what happens. The synthetic equivalent of miRNAs is small interfering RNAs (siRNAs) which can be used to inhibit translation and thus expression of a protein. Since miRNAs occur naturally in the cell, they may be favored by researchers if for no other reason than that they have been validated (ie they have been shown to lower protein levels). Additionally since understanding the impact of miRNAs on the cell is important, kits that measure the concentration of miRNAs may be marketable.

• Diagnostics-Currently protein levels are measured as an indication of disease in many diagnostic tests. Since miRNAs control the protein levels, the amount of miRNA in cells could also be used as a test for diseases like cancer where the levels of miRNAs have been shown to be altered.

• Therapeutics-miRNAs could be used to decrease a protein’s level in a diseased cell by overexpressing the miRNA that controls it. Conversely the level of the protein could also be up-regulated by inhibiting the miRNA in the cells with molecules that are capable of binding to (and inhibiting) the endogenous miRNAs.

Are miRNAs going to cure every disease? Probably not, but I’m looking forward to digging deeper into Rosetta Genomics plan for monetizing their intellectual property.

With the holiday weekend eating up my free time, the next report will likely be delayed until Tuesday or Wednesday.

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Basic Info

Stock symbol:ROSG
Website:http://www.rosettagenomics.com/
IPO date: 2/27/07
Total shares outstanding: 11.8 million
Market Cap: $77.5 million as of 4/4/07
Other reviews: History of attempts at Rosetta Genomics’ IPO and some background info
If you know of others please add them in the comments.

Drugs/Platforms

Diagnostics:
Cancer of Unknown Primary (CUP) diagnostic test using miRNAs
Prostate cancer diagnostic test using miRNAs (with Asuragen)

Drugs in development:
Drugs that regulate miRNAs in liver cancer (with Isis Pharmaceuticals)

Financials

Income: Yeah Right!
Money on hand: $37 million including $26.2 million from the IPO
Burn Rate: about $7.6 million in 2006

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