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Vermillion Q2 Revenues Dip 9 Percent

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Vermillion reported today a 9 percent drop year over year in second-quarter revenues as licensing revenues retreated 62 percent.

For the three months ended June 30, total revenues were $304,000, down from $344,000 a year ago. While product revenues — comprised completely of sales of the company's OVA1 ovarian cancer test — rose more than 300 percent year over year to $191,000 from $45,000, license revenues fell to $113,000 from $299,000 a year ago.

License revenues are related to Vermillion's achievements of certain milestones under an agreement with its marketing partner on the OVA1 test, Quest Diagnostics.

During the quarter, 3,920 OVA1 tests were performed, exceeding guidance of between 3,200 and 3,500 tests and representing 27 percent growth from the first quarter, Vermillion said. For the third quarter, the company said it expects between 4,000 and 4,300 OVA1 tests to be performed.

On a conference call following the earnings release, company President and CEO Gail Page said that in addition to Medicare, 22 independent Blue Cross Blue Shield plans nationally now reimburse for OVA1, up from 17 at the end of the first quarter. She added that not all health plans publish their coverage policies, "and we are aware of additional health plans reimbursing Quest Diagnostics for OVA1."

In total, about 82.5 million patients are covered for OVA1 through their health plans, Page said.

During the quarter, R&D spending increased 71 percent to $1.6 million from $938,000 a year ago, and SG&A costs spiked 35 percent to $4.2 million from $3.1 million.

Vermillion CFO Sandra Gardiner said on the call that the year-over-year increase in operating expenses during the quarter were due primarily to the increase in enrollment in the company's intended-use study for its planned peripheral artery disease test called Vasclir; continuing education of physicians about OVA1 and promotion of the test; the addition of four territory managers; and costs associated with Vermillion's annual meeting.

On the development of Vasclir, which will be based on a multimarker algorithm for use in the primary care population, Page said that Vermillion continues progressing on its intended-use study in collaboration with the Colorado Prevention Center. The study is in the final stages of target enrollment and is in line to yield top-line data in the third quarter of 2011.

The firm's net loss for the second quarter increased to $5.7 million, or $.39 per share, from $698,000, or $.07 per share, a year ago.

Vermillion had $36.3 million in cash and cash equivalents at the end of the second quarter.

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