Vermillion this week reported that fourth-quarter OVA1 sales increased 40 percent year over year in preliminary results.
During an earnings call following release of the results, however, CEO Gail Page said that the company has in recent quarters "observed a plateau in OVA1 growth" and suggested that reimbursement problems could be behind this slowdown.
"Insurance coverage and patient bills are a concern to the physician and can disrupt the ordering pattern of a generalist who is supportive of OVA1," Page said. "This is evident in the [company's] analysis of [OVA1] order and reorder statistics."
With these struggles in mind, the company has embarked on several new initiatives that it hopes will improve OVA1 coverage and reimbursement, she said,
Specifically, it has filed with the American Medical Association to obtain a Current Procedural Terminology code for OVA1, which, Page said, would "help streamline claims, processing, and payment" for the test "and may accelerate further coverage and adoption by private payors."
Vermillion is also seeking "to enlarge [its] body of peer-reviewed publications supporting [OVA1's] medical necessity and efficacy," she said. To this end, the company has launched a new clinical study of OVA1 focused on its performance in premenopausal women that it plans to submit to a peer-reviewed journal in late 2012.
It has also launched a new program through which it will "offer limited support for well-qualified principal investigators" interested in doing clinical research on OVA1, Page said. This support will take the form of "materials, testing services, and scientific consulting," she noted, adding that the company is "currently in discussion with a number of investigators to support new research publications on OVA1's clinical utility, cost-effectiveness, and potential line extension."
OVA1's reimbursement numbers have been a source of investor concern lately, with Switzerland-based investment advisor George Bessenyei asserting in December that he had learned “from persons with knowledge” that Medicare has been denying OVA1 claims at a rate of more than 80 percent.
In a document filed with the US Securities and Exchange Commission, Page responded that a figure Bessenyei cited regarding Vermillion's Medicare billings was incorrect. However, her response did not rebut or otherwise address the 80 percent denial rate Bessenyei claimed in his letter (PM 12/23/2011).
Page said in the filing that Vermillion hasn't provided payer-level denial rates or reimbursement data to its shareholders for several reasons, including the fact that "this is indirect information from Quest and proprietary to Quest."
Under Vermillion’s licensing deal with Quest, the company receives an upfront fee of $50 for every OVA1 test performed plus 33 percent of Quest's gross profit. It is this latter portion that could be affected by reimbursement rates. Vermillion receives from Quest cash each month representing an estimated payment of this variable rate revenue, and once a year the parties go through a “true-up” process to determine the precise amount of variable rate revenue owed.
According to Vermillion, these "true-up" figures for 2011 are due at the end of the month, after which the company will be able to provide better clarity on OVA1 reimbursement levels for the year and their effect on revenues.
In the meantime, the company declined to provide total revenue figures or its profit/net loss for either the fourth quarter or full year 2011.
OVA1 sales climbed to 4,118 in the quarter, a 40 percent increase over Q4 2010 figures, but flat with 4,108 sold in the third quarter of 2011.
Licensing fees dipped to $113,000 from $196,000.
Operating expenses during the quarter totaled $4 million, down 11 percent compared to $4.5 million in the year-ago period. The company spent a total of $5 million during the quarter including $435,000 to complete the acquisition of Correlogic (PM 12/2/2011), Vermillion said, adding it plans to reduce its expenses to $3 million to $4 million in the first quarter of 2012.
Operating expenses for full-year 2011 increased 24 percent to $19.5 million from $15.7 million in 2010.That increase was largely due to extra headcount in sales and marketing, higher clinical trial and collaboration costs, and increased legal fees, Vermillion said.
As of the end of the year, Vermillion had $22.5 million in cash and cash equivalents.