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Cannacord Genuity Initiates Vermillion Coverage with Buy Rating

NEW YORK (GenomeWeb) – Canaccord Genuity today initiated coverage of Vermillion with a Buy rating and a $4 price target. 

In a research report, analyst Mark Massaro said, "We believe [Vermillion] is on track to expand into a high-value, diversified women's health diagnostics company and is focused initially on ovarian cancer." 

He noted that at the American Society of Clinical Oncology conference in the spring, Vermillion presented data showing its OVA2 test for ovarian cancer had a 29 percent improvement in specificity over its first-generation OVA1 test and said that he anticipates a "relatively smooth" US Food and Drug Administration evaluation process, and FDA clearance for the test by the end of Q3 2015 or early Q4 2015. 

Vermillion submitted a 510(k) application to the FDA for OVA2 in March.

Vermillion has also changed its commercialization relationship with Quest Diagnostics to have greater control over the marketing and sale of the OVA1 test, and Massaro estimated that as a result of the changes, the revenue per OVA1 test that Vermillion will receive will increase to about $750 from $125.

He further said that changes in the company's management team, including new CEO Valerie Palmieri and CMO Judy Wolf, "breathes new life into Vermillion." 

Lastly, Massaro said that new products in the firm's pipeline could expand its total addressable market to $2.5 billion from $250 million. In addition to OVA2, Vermillion plans to launch a series of laboratory-developed tests called OVAx, and a blood-based test for diagnosing endometriosis. 

In afternoon trading on the Nasdaq, shares of Vermillion rose 1 percent to $1.92.

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