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UPDATE: Vermillion Posts Flat Q3 Revenues

The story has been updated to include comments from Vermillion's conference call.

NEW YORK (GenomeWeb News) – Vermillion said after the close of the market on Monday that revenues in the third quarter were virtually flat with the third quarter of 2011.

For the three months ended Sept. 30, the Austin, Texas molecular diagnostics firm reported total revenues of $319,000 compared to $320,000 a year ago. Product revenues slipped to $205,000 — all from sales of its OVA1 ovarian cancer test — from $206,000 a year ago, while licensing fees from Quest Diagnostics were flat at $114,000.

Sales of OVA1 were in line with the firm's forecast of about 4,100 tests in the quarter, Vermillion said. During the fourth quarter, between 4,100 and 4,400 OVA1 tests are expected to be performed, Vermillion President and CEO Gail Page said on a conference call following the release of the earnings results.

The company also said that it and Quest have initiated a joint program focused in six states to improve OVA1 physician reorder rates by reestablishing the test as "top of mind," or the first product when doctors think of considering a test for ovarian cancer.

A Claims Assistance Program has also been started to aid doctors with the appeals process, Vermillion said.

In October Vermillion paid back $5.9 million of its loan from Quest as GenomeWeb Daily News' sister publication ProteoMonitor reported recently. In a statement Page said the repayment deleverages the firm's balance sheet.

She added on the conference call that the payment is "not the result of a lack of interest by Quest in OVA1 but rather an ordinary payment of liabilities as they become due. With the repayment of the Quest loan, both parties are now focused on the broader commercialization of OVA1."

Earlier this year Vermillion was assigned a Category 1 CPT code, and Page said on Monday that the Centers for Medicare and Medicaid Services will use its gap-fill process, used when no comparable molecular diagnostic test exists, to reimburse for the test.

"We expect this new CPT code to streamline the claims process and strengthen our reimbursement results," she said, adding that Vermillion also "established another benchmark from the Department of Defense list price of $650.00 per test."

As for reimbursement from private payors, Page said that the company has been "knocking on the doors of the larger payors" and discussions have gone "very well."

"As we wrap-up 2012 and prepare for the new year, we will work [toward] greater adoption by focusing on reimbursement, physician awareness, and market education," Page said. "Vermillion remains strongly committed to advancing the market adoption of OVA1 as the most sensitive ovarian cancer diagnostic on the market today. As we further develop our ovarian cancer franchise, we plan to expand beyond clinical labs to address the broader market, including hospitals and other points-of-care."

The firm's R&D costs for the quarter dropped sharply to $429,000 from $1.4 million a year ago. Page said that during the firm's second-quarter earnings call it had halted development of its second generation OVA2 test.

Its SG&A expenses of $2.2 million were down 37 percent from $3.5 million a year ago.

The company's net loss in the quarter narrowed to $2.0 million, or $.13 per share, from a net loss of $4.7 million, or $.31 per share, a year ago.

It ended the third quarter with $16.3 million in cash and cash equivalents.

Vermillion announced in May that Page would be stepping down as CEO. At the time she was expected to depart the company by early September. On Monday the company said the search for her successor continues and an executive search firm is advising its board on potential candidates.

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