NEW YORK (GenomeWeb News) – Vermillion said after the close of the market on Monday that it has sent Quest Diagnostics a notice of termination of their licensing deal covering the OVA1 and Vasclir diagnostic tests.
Vermillion said that it sent its notice on Aug. 23 related to the agreement between it and Quest dated June 22, 2005. In May, Vermillion filed a notice of default alleging "material violations, breaches, and failures to perform" by Quest under the agreement, as ProteoMonitor reported at the time.
As part of the agreement, Vermillion said, if one of the partners failed to cure material defaults within 90 days of the notice, the other could end the agreement. Quest had a deadline of Aug. 21 to do so.
Vermillion said in a document filed with the US Securities and Exchange Commission on Monday, that under the terms of the 2005 agreement, "a termination by Vermillion as a result of Quest's default does not trigger any termination penalties for Vermillion or Quest."
Vermillion has said that termination of the agreement with Quest will allow it to play a larger role in expanding the commercial reach of its OVA1 ovarian cancer test. During the Austin, Texas-based molecular diagnostic firm's recent second quarter earnings conference call, CEO Thomas McLain said that with Quest out of the picture, Vermillion would be able to offer OVA1 through other reference and clinical labs.
In its SEC document, Vermillion noted the "significant role" played by Quest in providing access to the test to physicians and patients and in securing reimbursement for OVA1. It added that it is "committed to continuing discussions with Quest to define a business structure that delivers value for both companies and assures patients can benefit from access to OVA1."
As a result, Vermillion is allowing Quest to continue making the test available to healthcare providers on the same financial terms following the termination of the 2005 deal, "while negotiating in good faith toward an alternative business structure."
The terms of the deal call for Quest to pay Vermillion a fixed payment of $50 per OVA1 test performed, and 33 percent of its gross margin from revenue from performing the test domestically.