Entering into exclusive distribution agreements with Warnex Laboratories, Super Religare Laboratories and AXA Diagnostics for our first three cancer diagnostic tests, miRview mets, miRview squamous and miRview meso

Receiving clearance from the states of California, Maryland and Rhode Island for our CLIA-certified laboratory, bringing the total to 48 U.S. states

Continuing development of our colon cancer screening test

Selling Parkway Clinical Laboratories for up to $2.5 million

Announcing plans for Amir Avniel to step down as chief executive officer of Rosetta Genomics once a successor is in place in order to lead Rosetta Green, the company's early stage, cleantech division

Management Commentary

"Building on distribution agreements covering the U.S., Israel and Turkey, we continued to build commercial momentum by signing three additional agreements for our first microRNA tests, which diagnose cancer metastases and differentiate between two types of lung cancer," said Amir Avniel, chief executive officer of Rosetta Genomics. "Through an agreement with Warnex Medical Laboratories our products are now available in Canada; through an agreement with Super Religare Laboratories we added India and other countries; and through an agreement with AXA Diagnostics we added Italy, marking our entrée into Europe. All of these agreements call for samples to be sent to Rosetta Laboratories for analysis. Our goal is through distribution agreements to provide access to our products to 1.5 billion people around the globe by the end of this year.

"We are continuing the development of miRscreen colon, a minimally-invasive, serum-based test for colon cancer," Mr. Avniel added. "Since reporting in January initial results that showed that two microRNA biomarkers, obtained from a simple blood draw, differentiated colon cancer patients from healthy individuals with 91% sensitivity and 72% specificity in a study of 120 patients, we have continued our efforts to improve the technology. Our goal is to be able to quantify cancer-related microRNA in body fluid samples in a more sensitive and reproducible manner. We expect to spend the rest of this year and the first half of 2010 on additional discovery and validation, and that in the second and third quarters of 2010 we will work with a number of hospitals in the United States to screen approximately 1,000 samples in our lab in Philadelphia. If we are successful in developing and validating this test in this timeframe, we would expect to have the test ready for commercial sale around mid-2010."

Rosetta Genomics is also announcing that Amir Avniel plans to step down as chief executive officer of the company as soon as a successor is in place, and will subsequently lead Rosetta Green, the company's early-stage cleantech division that is utilizing its microRNA technology in energy and agriculture. Research conducted at Rosetta Green has been used to develop algae with increased oil content, and Rosetta scientists have also discovered a promising relationship between certain microRNAs and drought tolerance in corn. Future plans call for this division to be developed into a commercial entity to be spun off or sold.

Financial Overview

Revenues from continuing operations, which derived from the company's core technology, for the second quarter of 2009 were $14,000 as the company began processing samples for its three miRview molecular diagnostics tests at its CLIA-certified laboratory. The company recorded no revenues in the second quarter of 2008. Revenue previously reported from Parkway Clinical Laboratories is now classified in discontinued operations.

Research and development expenses were $1.4 million for the second quarter of 2009, compared with $2.2 million for the second quarter of 2008. R&D expenses decreased mainly due to expense reimbursement for projects in the current quarter and steps taken by the company to reduce costs.

Marketing and business development expenses were $1.4 million for the second quarter of 2009, compared with $434,000 for the second quarter of 2008. The increase resulted primarily from expenses related to the transaction with Prometheus Laboratories.

General and administrative expenses were $749,000 in the second quarter of 2009, compared with $896,000 in the second quarter of 2008.

The operating loss for the second quarter of 2009 was $3.8 million, including $268,000 of non-cash stock based compensation expense. This compares with an operating loss of $3.5 million, including $295,000 of non-cash stock based compensation expense, for the corresponding quarter of 2008.

The company's net loss from continuing operations in the second quarter of 2009 was $3.8 million or $0.27 per ordinary share, compared with a net loss from continuing operations of $3.7 million or $0.31 per ordinary share in the same period of 2008.

In May 2009, the company sold Parkway Clinical Laboratories in a management buy-out for up to $2.5 million, which will be paid as a fixed percentage of revenues over six years. Rosetta Genomics recorded a net loss from discontinued operation of $2.2 million related to this transaction in the second quarter of 2009, and future payments by Parkway's current owners will be recorded as a discontinued operation.

On a non-GAAP basis, excluding stock-compensation expense, the net loss for the 2009 second quarter was $5.7 million, or $0.42 per ordinary share. This compares with the comparable figures for the 2008 second quarter of $3.1 million, or $0.26 per ordinary share.

On a GAAP basis, the net loss for the 2009 second quarter was $6.0 million, or $0.44 per ordinary share. This compares with the GAAP net loss for the 2008 second quarter of $3.7 million or $0.31 per ordinary share.

For the six months ended June 30, 2009 the company reported revenues from continuing operations, of $31,000, compared with no revenues, in the prior year's period. The company's net loss from continuing operations in the first half of 2009 was $7.2 million or $0.55 per ordinary share, compared with a net loss from continuing operations of $7.6 million, or $0.63 per ordinary share in the same period of 2008.

As of June 30, 2009, the company had $16.7 million in cash, cash equivalents, short and long term bank deposits and marketable securities. Cash includes the $8 million received from Prometheus Laboratories, upon the purchase of 2 million of our ordinary shares at a purchase price of $4 per ordinary share.

Details reconciling non-GAAP amounts with GAAP amounts including specified items are provided in the table attached.

2009 Financial Guidance

The company affirms its previous guidance and continues to expect its cash burn from operations for 2009 to be approximately $10 million, exclusive of the potential beneficial impact from any new distribution partnerships.

Conference Call Information

Rosetta Genomics will host a conference call beginning at 4:30 pm. Eastern time today to discuss second quarter results and recent corporate developments. To access the live conference call, U.S. and Canadian participants may dial (866) 239-5859; international participants may dial (702) 495-1913. To access the 24-hour audio replay, U.S. and Canadian participants may dial (800) 642-1687; international participants may dial (706) 645-9291. The access code for the replay is 26563562. The replay will be available through September 10, 2009.

A live audio webcast of the call will also be available on the "Investors" section of the company's website www.rosettagenomics.com. An archived webcast will be available on the company's website approximately two hours after the event, and will be archived for 30 days thereafter.

About microRNAs

MicroRNAs (miRNAs) are recently discovered, naturally occurring, small RNAs that act as master regulators and have the potential to form the basis for a new class of diagnostics and therapeutics. Since many diseases are caused by the abnormal activity of proteins, the ability to selectively regulate protein activity through microRNAs could provide the means to treat a wide range of human diseases.