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Vermillion Q1 Revenues Down 7 Percent

This story has been updated to include comments from the company's earnings call.

NEW YORK (GenomeWeb News) – Vermillion reported after the close of the market Thursday that its first quarter revenues fell 7 percent to $305,000 from $328,000 in Q1 2013.

Vermillion posted product sales of $191,000, down 11 percent from $214,000 year over year. Those sales are based on 3,817 OVA1 ovarian cancer tests performed in Q1 versus 4,274 tests performed in the year-ago period.

These revenue figures, the company noted, do not include the additional royalty component of revenue based on 33 percent of Quest Diagnostics' gross margin, which Vermillion receives once a year under the two parties' licensing agreement for OVA1.

License revenue in Q1 was flat at $114,000.

On a conference call following the release of the company's earnings, Vermillion VP of Finance and Chief Accounting Officer Eric Schoen attributed the drop in OVA1 sales primarily to reorganization of sales staff in advance of the launch of the firm's Aspira Labs clinical reference laboratory as well as having several unfilled sales representative positions in key territories during the quarter.

Schoen said that the company "roughly tripled [its] field sales presence at the beginning of the second quarter," adding that it expected to begin seeing the results of these additions in the third quarter of this year.

James LaFrance, Vermillion's chairman, president, and CEO, noted that the company has established a sales plan focused on 20 cities. He added that the company is also making a push to significantly up its number of lives covered for OVA1 from the current 56 million.

Vermillion's net loss for the first quarter was $4.0 million, or $.11 per share, compared to a net loss of $2.6 million, or $.17 per share, in Q1 2013.

The company's R&D expenses for Q1 were $1.2 million, up 148 percent from $484,000 in Q1 2013. Its SG&A expenses were $3.1 million, up 28 percent from $2.4 million in the same period last year.

This increase in expenses, Schoen said, was due primarily to greater R&D headcount and increased costs related to Vermillion's collaboration with Johns Hopkins University on its OVA1 platform migration and next-generation test, as well as to the Aspira launch.

He added that given the company's increased R&D activity and sales force headcount, it anticipates operating expenses of between $4 million and $5 million per quarter for the remainder of 2014.

Regarding the OVA1 platform migration, LaFrance said Vermillion during the quarter completed US Food & Drug Administration 510(k) pre-submission steps and that it is targeting launch of OVA1 on the new platform in early 2015. Vermillion has not disclosed what platform it is migrating the test to, but LaFrance said the company planned to announce its choice of platform next quarter.

As of March 31, Vermillion had cash and cash equivalents totaling $26 million.

In Friday morning trading on the Nasdaq, shares of Vermillion were down 2 percent at $2.87.