Rosetta Genomics's (ROSG) CEO Ken Berlin on Q1 2016 Results - Earnings Call Transcript

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Rosetta Genomics Ltd. (NASDAQ:ROSG) Q1 2016 Earnings Conference Call May 19, 2016 10:00 AM ET


Anne Marie Fields - LHA

Ken Berlin - CEO

Ron Kalfus - CFO


Bryan Brokmeier - Cantor Fitzgerald

Robert LeBoyer - Aegis Capital

Mike Petusky - Barrington Research


Welcome to Rosetta Genomics First Quarter 2016 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. [Operator Instructions] As a reminder, this conference is being recorded Thursday May, 19, 2016.

I would now like to turn the conference over to Anne Marie Fields. Please go ahead, ma’am.

Anne Marie Fields

Thank you. This is Anne Marie Fields with LHA. Thank you all for participating in today's call. Joining me from Rosetta Genomics are Ken Berlin, President and Chief Executive Officer; and Ron Kalfus, Chief Financial Officer.

Before the opening of trading on the U.S. equity markets today Rosetta filed its Form 6-K with the U.S. Securities and Exchange Commission and issued a press release announcing financial results for the first quarter of 2016. If you'd like to be placed on the company’s e-mail list, please call LHA in New York at 212-838-3777 and ask for Carolyn Curran.

Before we begin, I would like to state that some of the information discussed during this call will contain projections or other forward-looking statements regarding future events or the future financial performance of Rosetta Genomics, including but not limited to, statements regarding the expected timing of products under development, the launch of US commercial operations and comments relating to financial information.

I refer you to the documents the company files from time to time with the SEC specifically its Annual Report on 20-F and all reports filed on Forms 6-F and 6-K. These documents identify important risk factors that could cause actual results to differ materially from those contained in projections or forward-looking statements.

During this call management will refer to non-GAAP financial measures, including gross billings. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. The reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure is available in today’s press release.

Furthermore, the contents of this conference call contain information that is accurate only as of the date of the live broadcast, May 19th, 2016. Rosetta Genomics undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

And now, I'd now like to turn the call over to Ken Berlin. Ken?

Ken Berlin

Thank you Anne Marie and good morning to our participants in the U.S. and good afternoon to those of you joining us from Israel. Throughout the first quarter we continued to build on the momentum we created in 2015 and I'm very pleased to report our continued progress. 2016 is off to a strong start with record clinical testing revenues and reduced cash burn along with other developments that position us for ongoing success. Our work for the balance of the year will continue to focus on driving revenue growth from our base business as well as from our new products, expanding reimbursement, improving collections and advancing our clinical development programs. All of this should position us to achieve a number of important milestones that will enhance shareholder value.

We have an exciting year ahead, but before I go into the detail about our progress and plans let me turn the call over to Ron to review our Q1 financial results. Ron?

Ron Kalfus

Thank you Ken and good day everyone. It's a pleasure to be reporting our first quarter financial results which as Ken mentioned are highlighted by record clinical testing revenues and a reduction in cash burn, the record revenue validate our acquisition or PersonalizeDx last year and built confidence in our future. We revamp our sales force and made important investments in the area of billing and collection and it helped produce the excellent results we are discussing today.

Before moving on to our financials let me first review how Rosetta recognizes revenues from analyzing patient samples received from private patients or third party distributors. We perform testing services in our East Coast or West Coast labs and revenues are recognized in accordance with GAAP, namely when delivery of test results has occurred or services have been rendered, no further obligation exist on our part, the fee is fixed or determinable and collectability is probable These diagnostic services are billed to various payers including Medicare, commercial insurance companies, other direct billed healthcare institutions such as hospitals and to individuals. We report revenues based on the contractual rates or in the case of Medicare the published fee schedules.

In arrangements with patients covered by Medicare we recognize revenue in the accrual basis recorded upon delivery of each test performed net of a provision to the gross billed amount if applicable. In arrangements with non-contracted health plans clients and private patients in which prior to delivery the reimbursement rate has not been contractually set, we recognize revenues on an accrual basis to the extent that the fees that are fixed or determinable by a sufficient collection history and collectability is assured. Otherwise we recognize revenue on a cash basis.

Turning now to our financial results let's start with a review of our revenues, noting that the pro forma comparisons I will be discussing are meant provide a comparison as if the PersonalizeDx acquisition occurred on January 1, 2015. The actual acquisition date was April 13, 2015.

During the first quarter we achieved record clinical testing revenues of $2.6 million a 711% increase compared with clinical testing revenues of $32,000 for the first quarter 2015 and 27% increase compared with pro forma clinical testing revenues of $2.1 million a year ago. Revenues from our urologic cancer testing services in the first quarter of 2016 were $1.4 million which represented approximately 54% of our clinical testing revenues and grew 7% compared with pro forma revenues of $1.3 million for the first quarter of 2015.

Revenue from our solid tumor testing services in the first quarter 2016 of $1.2 million grew 272% from 321,000 for the first quarter 2015 and grew 58% compared with pro forma revenues in the first quarter of last year for $753,000. Our solid tumor testing services represented nearly 46% of our clinical testing revenue with a revenue from RosettaGX Reveal, our thyroid test making up the balance of revenues for the quarter.

Turning now to expenses, cost of revenues for the first quarter 2016 increase to $1.7 million from $352,000 a year ago due to the acquisition of PersonalizeDx leading to a higher volume of processed samples as well as the increases in personnel and infrastructure. Gross margin percentage on clinical testing services hit an all-time record of 36% for the first quarter 2016, driven in part by strong collection and recognition of cash basis revenues.

Research and development expenses for the first quarter 2016 decrease to $842,000 and $748,000 for the first quarter of 2015 primarily due to increase activities in Thyroid and other area. Sales, marketing and business development expenses for the first quarter of 2016 increased to $1.9 million from $1.6 million in the prior year period due to a larger commercial footprints, as a resulted acquisition of PersonalizeDx. General and administrative expenses for the first quarter of 2016 decreased to $2.2 million from $1.4 million for the same period in 2015 primarily due to increase personnel and activities related to the acquisition of PersonalizeDx.

The operating loss for the first quarter of 2016 was $4 million which included $230,000 of non-cash stock-based compensation expense. This compares with an operating loss of $3.8 million for the first quarter 2015 which included $276,000 of non-cash stock-based compensation expense. The net loss for the first quarter of 2016 was $4 million or $0.20 per ordinary share on 20.7 million weighted average shares outstanding. And this compares with a net loss for the first quarter 2015 of $3.9 million or $0.30 per ordinary share on 12.7 million weighted average shares outstanding.

On a non-GAAP basis excluding the $230,000 of non-cash stock-based compensation expense the net loss for the first quarter of 2016 was $3.8 million or $0.18 per ordinary share on 20.7 million weighted average shares outstanding. For the first quarter of 2015 excluding the $276,000 of non-cash stock-based compensation expense the non-GAAP net loss was $3.6 million or $0.28 per ordinary share on 12.8 million weighted average shares outstanding.

Looking now to the balance sheet as of March 31 2016 we had cash, cash equivalents restricted cash and short and long term bank deposits of $12.6 million versus $13.6 million as of December 31 of 2015. We used approximately $2.6 million in net cash to fund operations in the first quarter. Our cash flow during the first quarter benefitted from $2.7 million in collection from our clinical testing services in addition to $1.6 million in cash receipts from our licensing deals that we signed in December of 2015.

Based on our current operations and plans which include a cost reduction plan should we unable to raise sufficient additional capital if necessary we expect our current cash position will fund operations for at least the next 12 months. Finally, we hope to provide commentary on our 2016 financial forecast when we report our six months financial results. That completes the financial overview and I’ll now turn the call back to Ken.

Ken Berlin

Thanks Ron. We made considerable progress during the quarter in each area of our three prong strategic approach. We broadened our differentiated and proprietary content with the addition of new clinical testing services, grew revenue as we move toward sale and made progress in delivering and distributing our clinical testing services, particularly with improving collections.

We completed the revamping of our sales force and invested in our billing and collections department, these changes position us to drive revenue growth throughout the balance of the year and beyond. As Ron just reported, our business is segmented into three main categories, urology, solid tumor and thyroid.

Let me begin with an overview of our urology offering. Our urology portfolio includes FISH, IHC and PCR-based testing services as well as our micro-RNA based offerings to provide clinicians with important information to help guide treatment decisions in urologic cancer such as prostate, bladder and kidney.

During the first quarter these tests represented a little over half of our revenues driven largely by sales of our UroVysion assay for bladder cancer and ERG and PTEN or prostate cancer. There are 75,000 new cases of bladder cancer each year in the U.S. and 500,000 bladder cancer survivors in the U.S. with recurrent rates of 50% to 80%, ongoing surveillance provide for a significant market opportunity. And this attracted commercial opportunity it is the reason why we elected to advance the development of our new bladder cancer assay for risk stratifications of patients with non-multiple invasive bladder cancer. We expect to launch this assay by the end of the first quarter of 2018.

Stratification is necessary to identify patients at high risk for progression to invasive bladder cancer so that lifesaving interventions can be implemented and to classify low risk patients in order to avoid invasive and unnecessary procedures and follow up visits. This is particularly relevant at 70% to 80% of bladder cancers are noninvasive. We’ve begun collecting samples and are initiating studies this year and expect to complete proof of concept studies by the end of the year.

Moving on to our solid tumor portfolio. This business segment consist of a suite of molecular diagnostic tests for cancers that provide comprehensive information for optimizing treatment decisions. It includes our proprietary microRNA-based assay to confirm or determine tumor origin. Next-Gen Sequencing permutational status, tumor specific markers by our best in class FISH platform as well as PCR and IHC based tests and a unique and extensive offering in lung cancer which include our newly launched BRAF Mutation assay. Currently the solid tumor segment accounts for almost half of our revenue, it’s outside of the solid tumor area we’re excited about the revenue opportunity for our Heme FISH panel of tests and expect this new offering to contribute to revenue growth in the second half of this year as well as over the next several years.

Our recognized expertise in FISH and our growing menu of tests serving the oncology and pathology markets will help strengthen our position with leading manage care plants as a provider of choice for high quality FISH testing and should enhance our goal to sign additional participation agreements in 2016. In addition, the centers for Medicare and Medicaid services has implemented significant reimbursement increases for FISH tests effective January 1, 2016 and we expect this will also improve our revenues and margins from these assays.

Looking at our progress and plans for Rosetta Genomics revel, we’re pleased with the traction we are gaining in the market since commencement of the full launch of RosettaGX Reveal earlier this year. Endocrinologists and Pathologists continue to give us favorable feedback specifically due to the test very high negative predicted value and sensitivity and its unique ability to run on the same cytology smear slides used in the original diagnosis. The test is a client and patient friendly assay, has quick turnaround time and has a high success rate.

In addition, our revamp sales team has been able to use RosettaGX Reveal to access new accounts to promote not only our exceptional thyroid offering, but also to promote our urology cancer and solid tumor product lines. Since the beginning of the year these promotional efforts resulted in the acquisition of over 30 thyroid customer accounts with cases received from over 70 positions and over 60 new customers accounts for our urology and solid tumor businesses. Since the beginning of this quarter Q2 we've seen a considerable uptick in demand for Reveal as a result of our sales team gaining more access to accounts as well as the addition of two thyroid experts to the commercial team in March of this year.

The first publication of our validated study for Reveal should appear in a peer reviewed journal in the coming weeks. This should enhance adoption of Reveal and further support our reimbursement efforts. Our participation at last month's Endo meeting garnered considerable interest in Reveal among the endocrinologists in attendance. We're looking forward to having an equally strong presence at the American Association of Endocrinology Surgeons and the American Association of Clinical Endocrinology at the end of this month. The interest and awareness generated at these meetings is important to the success of our test. In addition we are implementing traditional clinical education, marketing and relationship development tactics. I encourage you to watch the video posted to our website which demonstrates the value proposition of RosettaGX Reveal.

This video shows why we're so excited about the opportunities for Reveal in a market estimated to be more than $350 million in the U.S. alone. We're also working on a RosettaGX Reveal 2.0 assay a next generation version which is aimed at enhancing the assay's positive predicted value or PPV. The current version of our assay's negative predicted value is 99% and its PPV is 62% which is better than the market leader's performance. Even today our assay can help avoid 75% of unnecessary surgeries compared to 50% for the market leader.

Now let's turn to our progress in scaling the business. In addition to various marketing and commercial efforts we continue to invest in reimbursement and billings and collections initiatives. We are expanding the reimbursement of payment for our testing services, Medicare and private insurers and have implemented and expanded our direct to provider contracting activities with hospitals, integrated health system and a cannibal care organizations. In addition we have a number of studies planned and underway to build further support for our assays, clinical utility and health economic benefits. For example we are accumulating additional data from our registry study for our RosettaGX Cancer Origin Assay which demonstrates how using and relying on the results of this test improves patient outcomes.

We hope to have this study published later this year. We've also initiated additional studies to support clinician update as well as reimbursement for RosettaGX Reveal. We expect these studies to demonstrate the avoidance of unnecessary surgeries and the health economic benefits of using our assay. We've begun collecting samples for these studies and expect they will continue throughout 2016.

Turning now to delivery of our clinical testing services. In addition to [indiscernible] we've invested in creating efficiencies in our ability to deliver content in order to drive profitability. During 2015 we reduced the turnaround time to process samples and have a faster turnaround than many of our competitors, which is important as we continue to ramp sales. We are also in the process of increasing capacity at our Philadelphia lab as we are seeing demand for Reveal continuing to grow and we expect this growth to accelerate throughout the year. In addition with demand for NeuroVision and other FISH based test increasing we may be looking to expand FISH capacity at our California lab in the second half of this year.

So in closing we have an exciting year ahead, one in which we expect to achieve a number of milestones that will create value as we continue to focus on driving revenue growth and gaining increased traction with RosettaGX Reveal. In the coming months we expect publication of data from our internal studies with RosettaGX Reveal in peer reviewed journals, continued growth of our base urology and solid tumor testing businesses, driving revenue of our new products, RosettaGX Reveal and Heme FISH, continued development of line extensions for RosettaGX Reveal and a second generation version which we call Reveal 2.0 as well as the development of our bladder cancer prognostic tests. And ongoing progress with reimbursement and collection initiatives which includes PPOs, private pay and cures and CMS.

We are building momentum and our team is encouraged and energized by our progress and our potential moving forward. I am confident that the medical need for our clinical testing services combined with the quality of our products and our motivated and passionate team will continue to drive revenue throughout the balance of the year.

Operator, let's open the call up to questions.

Question-and-Answer Session


[Operator Instructions] Our first question is from Bryan Brokmeier from Cantor Fitzgerald. Please go ahead with your question.

Bryan Brokmeier

You already presented your data on thyroid, but you are talking about the publication that you anticipate, how that all allow your sales force to better to drive volume in what they have already have been able to do with the poster presentation?

Ken Berlin

Yes, so good question Bryan, good morning. There are number of docs who are waiting on the sidelines, we talked to them and they are just waiting for our first publication to hit and sort of jump into the pool if you will. So we expect that, once we have a peer review journal article we will see significant acceleration in demand for our test. We see demand increase like I said in my prepared comments significantly this quarter. We expect that to grow specially given a number of conversations we’ve had have with large accounts to have given us so many guidance signals [ph], and also with the publications we expect that we will see some additional increases in demand, because some docs are just waiting for that first peer review publication.

Bryan Brokmeier

Great and you added 30 new thyroid accounts and 60 new accounts for your other services which sounds great, how does that compare to the last couple of quarters?

Ken Berlin

Good question Bryan. So first of all, there is really no comparison for thyroid, right. we really started the launch in Q1, so that’s all incremental and has really nothing to compared it to, as it relates to the solid tumor and urology new account business, I don’t have the information on my fingertips, but I can tell you it's great in excess of what we’ve seen, in fact the first thing that happen when you acquire a business is you try to keep the business together and sometimes you lose some businesses especially when we let some other reps go that were part of the RosettaGX franchise. And we have been able to regain that. So you saw us really bring the clinical testing revenues back up to record levels by virtual of the fact that we’ve been able to retain business from the accounts that were historical accounts and bring in new business. And so we are growing in both and the installed base if you will, by bringing on these new accounts.

Bryan Brokmeier

Great thanks Ken. And Ron, you had a strong improvement in gross margin, are you seeing better mix, improving reimbursement or are there any cost reductions?

Ron Kalfus

It's a mixture -- as I mentioned earlier, it was a great quarter in terms of collection which in turn helped our cash basis revenues. Our cash basis revenues result when we collect the higher amounts on a certain test that we had originally accrued or at the certain test or payer don’t meet our revenue recognition policy for accrual then we report them on a cash basis. Now specifically in reference to Q1 margin, we did a great job collected on receivables from ’15 and ’16 which added to our cash basis revenues and helped our margin reach these high levels that wasn’t necessarily the mix it was more of those collection. There is no assurance that will have that this will held through in Q2. But the PDx acquisition is still there to maneuver us and we’ve only recently [indiscernible] reimbursement team to build and collect more effectively. And so for these reasons margin maybe higher in this quarter than in the next quarter too. So and the mix I don’t think had a big effect there.

Bryan Brokmeier

So you collected a lot of the collections that were out there outstanding, there were low hanging fruit and while you may still have a number of other opportunities to continue collecting. You got a lot -- it is fair to say that you got a lot of that the easy testing volumes that you could collected on already?

Ron Kalfus

Bryan, it's really a matter of low hanging fruit I mean, it's a cycle of business, there is some time it takes a while to collect the new receivables and we did have -- we did have quite a bit in 2015. Since we have had this reimbursement team, we have just done a better job are getting to those receivables. But certainly as the mix shift towards thyroids then we we’ll have a different organic growth in our margin.

Bryan Brokmeier

And another question, going back to FISH maybe for Ken, could you tell us how FISH reimbursement has been and is there a way to quantify that impact? I guess maybe this could be for Ron as well.

Ken Berlin

FISH reimbursement went up this year, it's too early for us to quantify it, it certainly helping us. Some of our -- the way we accrue revenues is we look at historical collection and that’s the way that it set up with auditors. And you got to look at historical collection and based on the historical collections you have certain amount that you can accrue on each test and so historical collection haven't yet -- the increase in FISH hasn’t yet come into effect on historical collections but certainly from Medicare test we can accrue the new rate. But as you know the volume isn’t significant yet, so the effect isn’t felt as much. But I think as we progress we will fill it more during the year.

Bryan Brokmeier

Okay thanks a lot.


[Operator Instruction] Your next question comes from Robert LeBoyer with Aegis Capital. Please go ahead with your question.

Robert LeBoyer

Good morning, thanks for taking the call and congratulations of another quarter of progress, this is really great to see. My question has to do with the growth in revenues and whether you can give any kind of guidance for the full year on revenue side for licensing and you kind of hinted about the margins being somewhat unpredictable and when I look at the accounts receivable, I am just kind of wondering where the gross margin should be for the full year and hoping you can give some guidance on that.

Ken Berlin

Ron, I'll go first. Hey Robert thanks for the kind words that we are very excited about the results for this quarter, shows that we are making significant progress both on the demand generation side, but also on the collection side which is important in this business, right. So as we relates to guidance, if there are couple of variable that we are still working together on around that have a significant impact to how big the topline is going to be.

Ron hit on one of them and answers to the earlier question, which is collections. A fair amount of our revenues or attributable to cash that we collect because of how we are require to recognize revenue and as Ron said we only at the end of last year really got our act together if you will, we got -- we worked through a number of issues that we surfaced that to the acquisition of PersonalizeDx. Kevin and this team really pulled together and were able to get a system in place that really has improved billing the right amount to the right time to the right payer, which is important and so we saw the effect of that in the first quarter with a record collections of $2.7 million.

Now what we’re trying to get to is, is to get some better sense to be able to forecast the collections. And that’s what Ron was saying before, we need a couple of more quarters of experience now with this new structure in place, particularly in California as we relate to billing and collecting, to get a better handle on how to forecast the cash collection, so that’s the first variable.

The second variable is Reveal, right. We saw volume triple from March to April and so we are seeing really, really good trends in the market. We are having good discussions with the very large accounts and have preliminary buy signs from some of those large accounts. So it's very difficult right now to predict how quickly we are going to get these large accounts on board and fully utilizing Reveal. As I was talking about the first questioner, one of the gating items is publications and the timing around those. We have got one publication that’s already been approved, we are just finalized it, so that should be coming out in the coming weeks. We have a second publication has been submitted going back and forth with the viewers and we are hoping that that’s going to get published in the coming weeks as well.

And then the third area was in sort of governs sample flow as it relates to Reveal, the management relates to Reveal is reimbursement. And that’s something we are working on very steadily and we are knocking down these obstacles one-by-one the first obstacle, we face was, our process destroys a slide and so we needed to create a record of the slide, so we have a slide scanner and that’s really been able to away any concerns of the fact that we destroy a slide. So we are working through these other issues as it relates to publications because some docs just wait for publications and we are working through reimbursement.

So for us it's tough to predict but the way we look at the business we think by the end of the year we are going to be somewhere and this is wide range because there are a lot of factors at play between 200 and 400 Reveal samples a month and as you keep the math simple and you assume the market the total market is about 10,000 in determined FNAs that could use molecular testing a month. That equates to 2% to 4% penetration and if you assume that the market -- total penetration of the market is 50% which is a bit high and those numbers that 200 to 400 samples per month, equates to 4% to 8% market share, pretty significant. And I think we certainly expect to hit to low into that range. We would be disappointed if we are not above the mid-point of that range.

So we are very excited about Reveal but there is a wide variability between the low and high end of that range which obviously has an effect on revenues. So that’s why we are not giving guidance right now. We need to get more data points on collections and more data points on Reveal.

Robert LeBoyer

Okay well yes, that’s useful information even though it's not exact guidance but thank you very much and congratulations and great to see this progress. Thank you.


Our next question is from Mike Petusky from Barrington Research. Please go ahead with your question.

Mike Petusky

I just want to make sure I’m understanding this, the actual Reveal revenue for the first quarter, is that about 100,000 am I getting to the right area there?

Ken Berlin

It's less than 100,000. It’s not sebsitive.

Mike Petusky

Alright, so that means it's less than 50?

Ken Berlin

Again it's not that sebsitive so yes, it’s less than 50.

Mike Petusky

Okay alright and then in terms of the -- few people have taken a shot at this, trying to get to kind of normalize gross margin. The normalize gross margins kind of taking out the exceptional collections you guys had this quarter is it still more or like 15%, 20%, 25% somewhere in that range?

Ken Berlin

Yeah, I think that’s a fair range Mike I don’t think we can totally take out all the cash collections obviously because that’s going to be a factor every quarter and that’s just how the business and I think that’s an industry wide thing it’s just that collection signs are just really lengthy the diagnostic space in general, but I think the range you gave is certainly within the vicinity of a normalized margin absolutely.

Mike Petusky

Okay. And then on the 30 new accounts is that 30 new accounts in the first quarter of that 30 new accounts as of today -- for thyroid? I am sorry.

Ken Berlin

Yeah, it’s 30 new accounts as of yesterday.

Mike Petusky

Okay. All right. And how many of those claims that you guys -- when you say new account are those docs that have actually used the tests or those claims that have actually been collected?

Ken Berlin

No, those are number of doctors; we’ve got some doctors who send us multiple samples. So we’ve submitted over a 100 claims by the end of this week and have been paid on about 20 of them so far with average payment being in the $2,000 to $3,000 range and again its early days. So for us really it’s about driving volume which we’re doing.

As I mentioned volume tripled from March to April by virtue of the fact that our reps are now getting better access to the accounts who could utilize the tests plus we brought on two new thyroid experts who were able to convert some big accounts, plus as I mentioned we’ve had some very nice success in the field with some new accounts that we expect to start ordering next month. So that should results and a significant continued growth in sample volume in the lab which is why we think we will be able to hit the numbers that I mentioned by the end of the year.

Mike Petusky

Okay. And then just going back to something you said in the prepared remarks on the revamped sales force, could you talk about specifically what you did there? And then I guess going forward any additional plans you may have to expand or tried to leverage that group?

Ken Berlin

Sure. So it really goes back to the acquisition PersonalizeDx. When we acquired that business that brought in a new portfolio of products and the Rosetta reps, who were part of the Rosetta team before the acquisition had become accustomed to selling essentially one product, our cancer origin assay. And when we added these other portfolio to the mix and we were able to see who is able to sell the whole portfolio who wasn’t we realized that some could and some couldn’t, so we had to make a decision especially in light of the impending launch of Thyroid to really keep those reps who could sell the entire portfolio and then bring in new reps who could also sell the whole portfolio.

So that was really kind of what we get that revamping certainly impacted revenues to the negative in Q4, but we’ve been able to revamp pretty quickly and you could see we’ve brought the clinical testing revenues backup in Q1 and now we’ve got folks who can sell the whole portfolio and why is that important, well I think it shows through the new accounts we’ve been able to acquire by virtue of the fact that we would lead with thyroid it opens the door for us to have conversations about not only thyroid, but the rest of the portfolio and we’re really seeing that play out nicely. And the other thing we’re seeing is by doing this we are getting more and more large accounts up for grabs which can not only impact thyroid volume, but also urology and the solid tumor volume.

In fact, last week myself and several member of the commercial team were out meeting with three large accounts and I am happy to say we converted all three not going to say we’re going to have a 100% hit rate all the time, but the fact is we’re going after much larger account that really can impact the business and that’s what exciting. And that’s what really differentiate us from others in the market. We have a broader portfolio, so therefore when we acquire an account it has opportunity a multi-product line account and therefore we can drive more business at that account.

In fact, today we’ve got one account that buying FISH, thyroid and urology products from us. We had another 15 accounts that are multi-product line accounts that are buying solid tumor as well as urology. So acquiring these large accounts really has a multiplier effect on our revenues and that’s where we’re focused.

Mike Petusky

Okay. All right, great. And last question I guess I want to challenge a little bit on this. Obviously I understand why the marketing expense is going up with what you’re trying of build out there, but the G&A expenses were a little bit higher than we anticipated and given that you guys obviously you had a good cash collections quarter and some of the cash burn was less, but you may not always have that, are you guys doing anything to sum that G&A line to try to keep expenses moderated I guess?

Ken Berlin

Yes, we are obviously, the main reason for the growth as I mentioned earlier, is obviously that we’re a much larger company than we were last year, so it’s kind of hard to compare us if you want to last year. But another item in G&A this quarter was that in according with our receivables policy, we have been cleaning out some pre-acquisition receivables that we felt may not be collectable. And so there was write off when again our G&A expense this quarter as well.

Mike Petusky

Can you quantify that, how much there was?

Ken Berlin

It was approximately 350,000.

Mike Petusky

Okay. So should we kind of rebase that for modeling just going forward, taking that into account or will there be future write offs as well?

Ken Berlin

Well, we have that receivables policy and we are testing it on a quarterly basis. And so to the extent that any age receivables falling to this, I would say write-off policy, then we may have some additional write-offs, but I think that will taper of obviously because, A; we’re getting better at collecting and B; we’ve cleaned out quite a bit of the old age receivables. So I think we are current now. There may be a little more in the future, but I don’t think at these levels.

Mike Petusky

Okay. All right great guys. Thank you so much.


That is all the time we have today for questions. Mr. Berlin, do you have any closing remarks.

Ken Berlin

Thank you for joining us on today's call. We appreciate your interest and support of Rosetta Genomics and look forward to reporting our progress throughout the balance of the year. Have a good day.


Ladies and gentlemen, that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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