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Vermillion Q3 Revenues Down 2 Percent

NEW YORK (GenomeWeb News) – Vermillion reported after the close of the market Thursday that its third quarter revenues were down 2 percent year over year at $323,000 versus $330,000 in Q3 2013.

The company posted product revenue of $209,000, down 3 percent from $216,000 in Q3 2013. That revenue was based on 4,325 OVA1 ovarian cancer tests performed in Q3 2014 versus 4,328 tests performed in the year-ago period.

License revenue was flat at $114,000.

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

In addition to selling OVA1 through Quest, Vermillion also offers the test out of its own Aspira Labs facility. However, on a conference call following release of the results, Eric Schoen, the company's vice president of finance and chief accounting officer, said that test volumes performed by Aspira were not yet "meaningful" enough to break out separately from the company's overall OVA1 sales. He added that the company expected to begin breaking out Aspira OVA1 sales in Q4 2014.

Vermillion's net loss for the quarter was $5.6 million, or $0.16 per share, compared to a net loss of $2.3 million, or $0.10 per share, in Q3 2013.

The company's R&D expenses for Q3 more than doubled to $1.3 million from $553,000 in Q3 2013. Its SG&A expenses were $4 million, up 93 percent from $2.1 million in the same period last year.

On the conference call, Vermillion Chairman, President, and CEO James LaFrance announced a shift in the company's strategy, saying that it planned to expand beyond its focus on OVA1 and ovarian cancer and become a "bio-analytic solutions company focused on gynecologic disease," more broadly.

As part of this shift, which comes after the company has for several years struggled with little success to drive increased adoption of OVA1, Vermillion plans to "expand beyond biomarkers and pure diagnostic measurement to include other modalities such as imaging, clinical risk factors, and patient data" in its testing.

These additional measures, LaFrance said, will allow Vermillion to boost the specificity of its testing – something that has been a concern among some physicians regarding OVA1.

Vermillion also plans to build a gynecologic disease sample and data registry, which, LaFrance said, will allow company researchers to retrospectively search for correlations and do prospective validation.

The company will continue development of its second generation ovarian cancer test OVA2, which LaFrance said it plans to submit to the US Food & Drug Administration for 510(k) clearance in January with an eye toward a commercial launch in the second half of 2015.

As of Sept. 30, Vermillion had cash and cash equivalents totaling $16.8 million.

In early Friday trade on the Nasdaq, shares of Vermillion were down 16 percent to $1.46.

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