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Vermillion Posts 6 Percent Rise in Q2 Revenues, Halts OVA2 Development

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This story originally ran on Aug. 16.

Vermillion this week reported $321,000 in revenues for the second quarter of 2012, up 6 percent from $304,000 in same period last year.

The rise was driven by an increase in sales of the company's OVA1 ovarian cancer diagnostic. Test volume for OVA1 was 4,150 during the quarter, up 6 percent compared to Q2 2011 and in line with the company's forecast.

Vermillion's license revenues, collected through its agreement with Quest Diagnostics, were flat year over year at $113,000.

During the quarter, the company added 5.5 million lives of payor coverage for OVA1 with the additions of Blue Cross Blue Shield of Michigan and BCBS of Louisiana. In total, 27 BCBS organizations representing 47 million lives now cover OVA1 and, including Medicare and other regional payers, total coverage for OVA1 is now around 95 million lives, the company said.

On a conference call following release of the results, Vermillion president and CEO Gail Page noted that the company was using recently released data from its OVA500 clinical trial (PM 8/3/2012) for the test to step up its pursuit of coverage from two national payors.

Page also said during the call that the company was no longer pursuing its second-generation ovarian cancer diagnostic, OVA2. She suggested that the company was still pursuing additional opportunities in the ovarian cancer space, but declined to offer specifics, citing "competitive reasons."

With the expiration of Vermillion's licensing deal with Quest coming in October, the task of developing and commercializing tests beyond OVA1 looms as a key issue for the company.

Under its deal with Quest, Vermillion has received a $10 million line of credit, forgivable upon the achievement of various milestones related to the development, regulatory approval, and commercialization of diagnostic tests. The company has received forgiveness of $3 million from OVA1, leaving its current outstanding balance at $7 million, which is due upon expiration of the licensing agreement on Oct. 7.

The agreement, which was originally signed in 2005, has been extended in the past, most recently in October 2009. In May, Page said it was unclear whether Quest would extend the agreement again. This week she declined to comment on the status of the agreement.

As it had previously disclosed, Vermillion's board has formed a succession committee to seek a new CEO for the firm (PM 5/18/2012). It expects to complete its search in October, and after a new CEO is named Page is expected to become a strategic advisor to the company.

Vermillion posted a net loss of $2 million, or $.13 per share, compared to a net loss of $5.7 million, or $.39 per share, for Q2 2011. The most recent quarter included a $1.8 million gain from the release of an escrow account related to the 2006 sale of its instrument business.

The firm's R&D costs for the quarter dropped 38 percent to $1 million from $1.6 million, and its SG&A spending fell 29 percent to $3 million from $4.2 million.

It finished the quarter with $18.3 million in cash and cash equivalents.

In its Form 10-Q for the second quarter, Vermillion noted that it would need to raise additional capital in order to continue its operations "as currently planned through 2013 and beyond," adding that "there is substantial doubt about the company’s ability to continue as a going concern."

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