This story has been updated with comments from a company earnings call.
NEW YORK (Genomeweb News) – Vermillion reported today that its second quarter revenues were $535,000, up 65 percent from $324,000 in Q2 2014 but falling short of the average Wall Street estimate of $1.2 million.
The company posted product revenue of $535,000, up 153 percent from $211,000 in Q2 2014. It had no license revenue, compared to $113,000 in the year-ago period.
The jump in revenue was due primarily to a change in when revenue from the company's OVA1 test is recognized. Under Vermillion's new commercial agreement with Quest Diagnostics, all test revenue is now recognized when the test is performed, as opposed to the prior arrangement, under which recognition of a portion of this revenue was deferred until the end of the year.
The company sold 4,103 OVA1 tests in the quarter, down slightly from 4,223 OVA1 tests performed in Q2 2014.
Vermillion's net loss for the quarter was $4.8 million, or $.11 per share, compared to a net loss of $5.6 million, or $.15 per share, in Q2 2015. This fell short of the average analyst estimate of a loss of $.09 per share.
The company's R&D expenses for Q2 were $919,000, down 13 percent from $1.1 million in Q2 2014. Its SG&A expenses were $3.9 million, down 17 percent from $4.7 million in the same period last year.
As of June 30, Vermillion had cash and cash equivalents totaling $10.9 million.
Shares of Vermillion were up 3 percent at $1.94 in Thursday morning trade on the Nasdaq.
On a conference call following release of the results, Vermillion CEO Valerie Palmieri noted that last month Aspira Labs received its clinical laboratory permit from New York, meaning that the company is now able to transfer all OVA1 testing from Quest to Aspira.
Ending its reliance on Quest for OVA1 testing has been a major aim of Vermillion since it began efforts to terminate its licensing deal with Quest in 2013. Vermillion believed that by having full control of sales, it would be more successful in driving adoption of OVA1 and recoup a larger percentage of testing revenues.
This strategy has not panned out thus far, however, as OVA1 sales have remained flat for several years at around 4,000 per quarter. Of the 4,103 OVA1 tests sold in Q2 2015, Aspira Labs performed 274, contributing $52,000 in revenue. Aspira performed 216 tests in Q1 2015, contributing $26,000 in revenue.
Laura MIller, Vermillion's senior vice president, sales and customer experience said on the call that the Aspira sales team established 118 new accounts in the recently completed quarter compared to 19 in Q1 2015, translating to a 60 percent sequential increase in kits released by the lab in Q2 compared to Q1.
"We believe these are key early indicators of potential growth with new ordering physicians and sites," she said.
She noted, however, that the company anticipates losing some Quest OVA1 customers in the process of moving testing to Aspira.
"We expect some attrition of Quest clients during the conversion process as we are focused on larger hospital systems and regional reference laboratories versus smaller accounts," she said, adding that the company is "continuing to see softness in Quest volumes in Q3."
Palmieri also touched on development of the company's second-generation test OVA2, noting in a statement that the company is "on track with our Q2 2015 milestone plan, which includes marked progress on our OVA2 [US Food and Drug Administration] submission." The firm submitted its 510(k) application to the FDA in March.
Donald Munroe, Vermillion's CSO and senior vice president, business development, said on the call that the test is on track to receive FDA clearance in the second half of the year.