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Vermillion Shareholders Seek Change in Board Members

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – A trio of Vermillion shareholders have notified the firm that they intend to nominate two people for election to the board of directors as they seek to replace Gail Page and John Hamilton.

Page is Vermillion's president and CEO, and Hamilton is a former VP and CFO of Depomed but is not an executive of the firm.

The shareholders — George Bessenyei, Robert Goggin, and Gregory Novak — issued a statement today and have filed soliciting materials with the US Securities and Exchange Commission. They intend to nominate Novak and Goggin to the board at Vermillion's upcoming annual meeting of stockholders.

Novak is managing partner and CEO of law firm Novak Druce + Quigg and specializes in intellectual property management, while Goggin is an owner and director of law firm Keller & Goggin.

The investors said in their statement that Vermillion has been "plagued by gross mismanagement" and noted that the firm's stock price has declined more than 90 percent over the past two years.

They also noted the revenue potential of Vermillion's OVA1 ovarian cancer test, which was cleared for marketing by the US Food and Drug Administration in 2009, and its peripheral artery disease (PAD) test, which is in development. They said the PAD test "addresses a minimum $1 billion market opportunity, yet it is largely ignored by the investment community."

"[T]he sum of all parts is likely 10 times higher than the current market capitalization of Vermillion, creating a unique opportunity for a turn around that can truly benefit shareholders," the shareholders said.

Vermillion has a market cap of around $21.1 million. The firm's shares closed yesterday at $1.33 and were up nearly 8 percent at $1.43 in early Wednesday trade on the Nasdaq. Its 52-week high was $7.60, reached on May 13.

Last week, the firm reported preliminary results for its fourth quarter. It said OVA1 volume increased 40 percent year over year, while license revenues fell 42 percent. The company is awaiting a 2011 report from strategic partner Quest Diagnostics and a ruling in an arbitration case involving Molecular Analytical Systems before reporting its full Q4 and FY 2011 results.

Late last year, Vermillion completed the acquisition of the assets associated with Correlogic Systems' ovarian cancer diagnostics business for $435,000 in cash.