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Rosetta Genomics, Genoptix Sign New Merger Agreement

NEW YORK (GenomeWeb) – Rosetta Genomics has agreed to a $9 million buyout by Genoptix, marking the companies' second attempt at a merger.

In December, Genoptix signed an agreement to acquire Rosetta for $10 million in cash. The deal came at a key time for Rosetta, which has undergone a series of organizational changes in recent months — including layoffs — and expects to run out of cash before the end of the year. 

Last week, however, Rosetta disclosed that it had failed to secure the necessary shareholder approval for the merger and that it would be obligated to reimburse Genoptix $750,000.

The companies have now agreed on another merger deal, under which Genoptix would acquire Rosetta's PersonalizeDx business for $1 million in cash and then buy the remainder of Rosetta for $8 million in cash. Rosetta had previously said that it would sell PersonalizeDx to healthcare business group Pragmin Prognosis for $2.9 million in cash.

The companies said that — after deducting expected payments for outstanding debt, convertible debentures, warrant termination payments, professional fees, expenses and other items — the purchase price is estimated to value Rosetta's shares at $.40 to $.45 each. Rosetta would become a subsidiary of Genoptix.

The boards of both companies have unanimously approved the transactions, but they remain subject to Rosetta shareholder approval at a meeting slated for April 6.

"We ... strongly urge shareholders to support this new agreement, as our cash position is insufficient to fund operations moving forward," Rosetta President and CEO Kenneth Berlin said in a statement. "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."

During early morning trading on Wednesday, shares of Rosetta were up about 6 percent to $.35.