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Vermillion Reports $73K in Q1 Revenue After Posting No Revenue in 2009

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Freemont, Calif.-based proteomics diagnostics firm Vermillion reported this week that it had first-quarter 2010 revenues of $73,000.

The Q1 revenues came from the forgiveness of $3 million in principal on a $10 million secured line of credit provided to the company as part of an agreement with Quest Diagnostics.

Vermillion had no revenues for all of 2009, according to figures provided in its annual 10-K filing with the US Securities and Exchange Commission. The company spent nine months of 2009 in Chapter 11 bankruptcy protection while waiting for approval from the US Food and Drug Administration on its 510(k) submission for its triage ovarian cancer test, OVA1.

The FDA approved the test in September, and in January of this year, Vermillion emerged from Chapter 11.

The company commercially launched the OVA1 test in March. However, none of its Q1 revenue came from sales of the OVA1 test. Rather, the revenue was derived from a $3 million principal reduction on its $10 million line of credit from Quest Diagnostics.

In its SEC filing, Vermillion said that it "accounts for forgiveness of principal debt balances as license revenues over the term of the exclusive sales period that Quest receives upon commercialization of an approved diagnostic test."

It added that this license revenue is recognized "over the period of Quest’s sales exclusivity since product sales cannot be reasonably estimated at this time."

The $3 million reduction was triggered by the OVA1 FDA clearance received last September, but Vermillion was unable to apply the reduction until it emerged from bankruptcy this year. The company is in talks with Quest regarding an additional $1 million in forgiveness as a result of the FDA approval.

For the three months ended March 31, Vermillion posted a net loss of $11.6 million, four times its Q1 2009 net loss of $2.8 million. R&D spending was $748,000, up 39 percent from $538,000 in Q1 2009.

In January, the company received $43.1 million from a private placement sale of common stock. As of March 31, it had $37.7 million of cash and cash equivalents, compared to $748,000 in Q1 of 2009.

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