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Vermillion Posts $361K in Q4 Revenues, Large Drop in OVA1 Sales Volume

NEW YORK (GenomeWeb News) – Vermillion today reported $361,000 in fourth quarter revenues, down from $1.6 million in Q4, 2014.

However, due to the way in which revenues were reported under the company's previous agreement with Quest Diagnostics, the two quarters are not directly comparable, the firm said.

OVA1 revenues during Q4 2014 included an additional royalty component of revenue based on 33 percent of the Quest Diagnostics gross margin on the test. Vermillion recognized this portion of revenue when it was reported by Quest Diagnostics in a "true-up" after the end of the calendar year, meaning that Q4 2014 included revenue from tests performed throughout full-year 2014.

Vermillion performed 2,529 OVA1 tests in Q4 2015, down 42 percent from 4,474 in Q4 2014. OVA1 sales accounted for substantially all of its Q4 2015 revenues, the company said.

Vermillion has struggled, with little success, to drive adoption of OVA1 since launching the test in 2010. On a conference call following release of the earnings results, President and CEO Valerie Palmieri noted several recent developments at the company that could provide commercial opportunities beyond OVA1.

Most notably, the company this week announced it has received US Food and Drug Administration 510(k) clearance for Overa, its next-generation proteomic test for the pre-surgical assessment of the likelihood of malignancy of a pelvic mass.

Palmieri said on the call that, in addition to receiving 510(k) clearance, Vermillion has had a peer-reviewed study on Overa accepted for publication in the American Journal of Obstetrics and Gynecology.

Palmieri noted, as well, that Vermillion was launching a new research services business through its Aspira Labs subsidiary, in which the company would aim to partner with IVD firms on the development of new diagnostics with the possible goal of entering the companion diagnostic space.

"Our goal is to invest in our short-term and long-term enterprise value by leveraging our specimen bank, database, FDA experience, laboratory informatics, and operating efficiencies," she said.

Palmieri also raised the near-term possibility of international sales for the company's tests, noting that Vermillion is "in active discussions" with several potential international partners and plans to launch international sales in the second half of the year.

The firm posted a net loss of $5 million, or $.10 per share, for the fourth quarter, compared to a net loss of $4.1 million, or $.11 per share, a year ago.

Vermillion's R&D spending fell 29 percent in Q4 2014 to $853,000 million from $1.2 million in Q4 2014, while its SG&A spending was flat year over year at $4.0 million.

For full-year 2015, the company posted revenues of $2.2 million, down 12 percent from $2.5 million in 2014. Product revenues were down 10 percent to $1.9 million from $2.1 million the previous year, while licensing revenues were down 30 percent to $316,000 from $454,000 in 2014.

Total OVA1 test volume in 2015 was 13,598, down 19 percent from 16,839 in 2014. Of the 13,598 tests performed in 2015, 8,937 were done by Quest and 4,661 were performed by Aspira Labs. According to the company, the decline in test volume was due to the process of transitioning testing from Quest to Aspira.

Eric Schoen, Vermillion's chief accounting officer, also noted on the call that as a new billing entity separate from Quest, the company was experiencing claim denials and delays on tests.

"The payor contracts did not come over with the Quest specimens, so Aspira is in the process of obtaining its own payor contracts," he said, noting that this would affect the timing with which Vermillion recognized test revenue.

Vermillion is also receiving a significant number of claim denials for Medicare patients, he said, adding that the company was working to rectify this situation.

For full-year 2015 Vermillion had a net loss of $19.1 million, or $.41 per share, compared to a net loss of $19.2 million, or $.53 per share, a year ago.

The company's R&D costs in 2015 were down 20 percent year over year to $3.8 million from $4.7 million, while its SG&A costs were down 3 percent to $15.4 million from $15.8 million.

The firm said it aimed in 2016 to reduce operating expenses by roughly 20 percent compared to 2015.

Vermillion finished 2015 with $18.6 million in cash and cash equivalents.

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