2014

Vermillion Reports Second Quarter 2012 Results

AUSTIN, Texas, Aug. 14, 2012 /PRNewswire/ -- Vermillion, Inc. (NASDAQ: VRML), a leading molecular diagnostics company, reported financial and operational results for the second quarter ended June 30, 2012.

Q2 2012 Operational Highlights

  • In Q2, the volume of OVA1®, the company's flagship diagnostic test designed to help differentiate benign from malignant ovarian masses, was in line with management's forecast at 4,150, increasing 5% sequentially and 6% over the same year-ago quarter.
  • Expanded payer coverage for OVA1 by 5.5 million lives with the addition of BCBS of Michigan and BCBS of Louisiana. This brought the total of BCBS nationwide covering OVA1 to 27, representing more than 47 million lives. Including Medicare and other regional plans, estimated total coverage for OVA1 is now at about 95 million lives.
  • Reported positive results of Peripheral Artery Disease (PAD) multi-marker clinical feasibility study involving a prospectively collected intended-use population of 1,025 subjects. The results reinforced the validity of the company's PAD biomarkers by identifying 85% (17 of 20) of patients missed by the Framingham Risk Score's high-risk cutoff. A poster authored by Dr. John Cooke of Stanford University titled, "Biomarker Screen to Identify Peripheral Artery Disease," was presented at the Society for Vascular Medicine's 23rd Annual Scientific Sessions in June.
  • Strengthened the company's patent portfolio with the issuance of a new biomarker patent for ovarian cancer. This was the fifteenth biomarker patent granted or allowed for Vermillion, four of which support the company's ovarian cancer franchise.

Subsequent to the end of the second quarter, Vermillion reported outstanding results from the OVA500 multi-center study led by Dr. Robert E. Bristow (U.C. Irvine Healthcare). The 494 subject study confirmed overall sensitivity of OVA1 combined with clinical assessment at 96% for a broad range of adnexal malignancies, with 91% sensitivity for early-stage ovarian cancer (stage I and II). Overall NPV was 98%, a substantial improvement from the previously reported value of 95%. Overall combined specificity was also higher, at 51% in this intended use population, and OVA1 showed 61% specificity as a risk stratification tool in pre-menopausal women. These results independently confirm and extend the evidence of OVA1's clinical utility in the presurgical detection and management of adnexal malignancies.

Q2 2012 Financial Highlights
Total revenue in the second quarter of 2012 was $321,000, comprised of $208,000 in OVA1 sales and $113,000 in license fees from Quest Diagnostics. Product revenue from OVA1 sales in the second quarter of 2012 represented an increase of 9% compared to $191,000 in the same year-ago quarter.

Total operating expenses decreased in the second quarter of 2012 to $4.0 million from $5.9 million in the same period a year ago. The second quarter of 2012 included $0.4 million in non-cash stock-based compensation as compared to $1.3 million in the same year-ago quarter. The remainder of the decrease was due primarily to the company's restructuring program announced in January 2012, as well as lower clinical trial costs as compared to the same year-ago quarter. For the six months ended June 30, 2012, total operating expenses were $6.4 million as compared to $10.7 million in the same year-ago period.

Net loss for the second quarter was $2.0 million or $(0.13) per share as compared to $5.7 million or $(0.39) per share in the same year-ago quarter. The second quarter of 2012 net loss included a $1.8 million gain from the release of an escrow account related to our 2006 sale of the instrument business. For the six months ended June 30, 2012, net loss was $3.8 million or $(0.25) per share as compared to $10.0 million or $(0.73) per share in the same year-ago period.

As of June 30, 2012, the company's cash and cash equivalents totaled $18.3 million, as compared to $19.9 million at March 31, 2012. The company utilized $2.7 million in cash for operations in the second quarter of 2012, offset by the receipt of escrow funds during the second quarter. Management expects $2.5 million to $3.5 million in cash utilization during the third quarter of 2012.

Management Commentary
"During the second quarter, we realized solid momentum in our efforts to expand payer coverage for OVA1," said Gail S. Page, Vermillion's president and chief executive officer. "In fact, as one of the largest independent payers within the Blue Cross Blue Shield system, the addition of BCBS of Michigan alone represents a 10% increase in OVA1 covered lives in the BCBS network. The addition of BCBS Louisiana was also significant, as it demonstrated our success with influential opinion leaders, like Patricia Braly, M.D. of Covington, Louisiana, who provide valuable support for the use of OVA1 by general clinicians."

"We recently reported outstanding top-line results from OVA500, a new prospective, multi-center clinical study of OVA1 that will encourage greater payer coverage and clinical adoption. The study not only demonstrates that OVA1 has exceptional performance in detecting adnexal malignancies in a pre-referral population, it showed sensitivity and negative predictive values that met or exceeded levels reported in OVA1's pivotal trial. These outstanding results further establish the valuable clinical utility of OVA1, and especially how it can help doctors identify high-risk patients with unrivaled sensitivity so that they may refer such patients appropriately to a gynecological oncologist.

"Even more exciting, OVA1 performed exceedingly well for both pre-menopausal women at 94% sensitivity and early-stage ovarian cancer at 91% sensitivity. According to the study leader, Dr. Bristow, these results point to the possibility of a standardized triage protocol using OVA1 for all ovarian malignancies, which includes the most curable early-stage cases and a broad range of subtypes. So, this study lends robust support for further expanding payer coverage of the test, as well as updating current medical guidelines.

"As we begin the second half of 2012, we remain focused on our key initiatives. In addition to advancing our product discovery pipeline, these initiatives involve supporting further clinical research for OVA1, broadening its support by key opinion leaders, and expanding payer coverage. We're confident this will lead to increased clinical usage and, moreover, advance OVA1 toward becoming the standard of care in the diagnosis of ovarian cancer. We expect 4,100-4,400 OVA1 tests to be performed in the third quarter of 2012. As these numbers reflect, OVA1 is still in its early stage of adoption. However, as the results from our broad efforts begin to converge, they are setting the stage for strong growth in fiscal 2013."

CEO Succession Plan
As previously announced, the company's board has formed a succession committee of independent directors to oversee the process of identifying and selecting a new CEO. It has also retained a leading executive search firm with experience in CEO transitions to advise the board on potential candidates. According to Bruce Huebner, company director and chair of the succession committee: "We have met with a number of impressive potential candidates and expect to identify a successor with the ability and experience to take advantage of our tremendous opportunities in the ovarian cancer diagnostics market, as well as continue to develop Vermillion's pipeline of new products.

"Given the amount of interest and our goal of assuring we select the correct candidate, we have extended the timeframe to complete our search from September to October 2012. Gail will continue in her role until the new CEO is named, and then will become a strategic advisor for the company, including assisting in a smooth transition of responsibilities to the new CEO."

Conference Call and Webcast
Vermillion will hold a conference call to discuss its second quarter financial results later today, Tuesday, August 14, 2012 at 4:30 p.m. Eastern time. Management will host the presentation, followed by a question and answer period.

Date: Tuesday, August 14, 2012
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Dial-In Number: 1-800-705-6212
International: 1-303-223-2690
Conference ID#: 21599716

The conference call will be broadcast simultaneously here and available for replay via the investor section of the company's website at www.vermillion.com.

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

A replay of the call will be available approximately two hours after the call and until August 28, 2012.

Toll-free replay number: 1-800-633-8284
International replay number: 1-402-977-9140
Replay pin number: 21599716

About OVA1
OVA1 is a blood test for pre-surgical assessment of ovarian tumors for malignancy, using a unique multi-biomarker approach. In a published clinical trial, OVA1 achieved 99% sensitivity in detecting epithelial ovarian cancers (EOC). This included 96% sensitivity for stage I EOC, the earliest and most curable EOC stage, compared with 57% for the conventional biomarker CA125.(1) In addition, OVA1 found 70% of malignancies missed by non-specialist pre-surgical assessment,(1) and it increased detection of malignancy over ACOG guidelines from 77% to 94%.(2) As the first protein-based, In Vitro Diagnostic Multi-Variate Index Assay (IVDMIA) cleared by the FDA, OVA1 also represents a new class of software-based diagnostics.

Citings:
1)     Ueland, FR, et al. Obstet Gynecol 2011:VOL 117, NO. 6, June 2011
2)     Miller R, et al. Obstet Gynecol 2011:VOL 117, NO. 6, June 2011

About Vermillion
Vermillion, Inc. (NASDAQ: VRML) is dedicated to the discovery, development and commercialization of novel high-value diagnostic tests that help physicians diagnose, treat and improve outcomes for patients. Vermillion, along with its prestigious scientific collaborators, has diagnostic programs in oncology, vascular medicine and women's health. Additional information about Vermillion can be found at www.vermillion.com.

Forward-Looking Statement:
Certain matters discussed in this press release contain forward-looking statements that involve significant risks and uncertainties, including statements regarding Vermillion's plans, objectives, expectations and intentions. These forward-looking statements are based on Vermillion's current expectations. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. In order to comply with the terms of the safe harbor, Vermillion notes that a variety of factors could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. Factors that could cause actual results to materially differ include but are not limited to: (1) uncertainty as to Vermillion's ability to protect and promote its proprietary technology; (2) Vermillion's lack of a lengthy track record successfully developing and commercializing diagnostic products; (3) uncertainty as to whether Vermillion will be able to obtain any required regulatory approval of its future diagnostic products; (4) uncertainty of the size of market for its existing diagnostic tests or future diagnostic products, including the risk that its products will not be competitive with products offered by other companies, or that users will not be entitled to receive adequate reimbursement for its products from third party payors such as private insurance companies and government insurance plans; (5) uncertainty that Vermillion has sufficient cash resources to fully commercialize its tests and continue as a going concern; (6) uncertainty whether the trading in Vermillion's stock will become significantly less liquid; and (7) other factors that might be described from time to time in Vermillion's filings with the U.S. Securities and Exchange Commission (SEC). All information in this press release is as of the date of this report, and Vermillion expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in Vermillion's expectations or any change in events, conditions or circumstances on which any such statement is based, unless required by law.

This release should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent reports on Form 10-K and Form 10-Q. Copies are available through the SEC's Electronic Data Gathering Analysis and Retrieval system (EDGAR) at www.sec.gov.

Investor Relations Contact:
Liolios Group
Scott Liolios or Ron Both
Tel 949-574-3860
vrml@liolios.com

 

 

Vermillion, Inc.

Consolidated Balance Sheets

(Amounts in Thousands, Except Share and Par Value Amounts)

(Unaudited)






June 30,


December 31,


2012


2011

Assets




Current assets:




Cash and cash equivalents 

$   18,290


$         22,477

Accounts receivable 

107


99

Prepaid expenses and other current assets 

335


317

Total current assets 

18,732


22,893

Property and equipment, net 

186


216

Other assets

-


2

Total assets

$   18,918


$         23,111





Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable 

$        582


$           1,331

Accrued liabilities 

2,321


2,592

Short-term debt

7,000


7,000

Deferred revenue

853


553

Total current liabilities 

10,756


11,476

Deferred revenue

997


1,224

Other liabilities

-


52

Total liabilities 

11,753


12,752

Commitments and contingencies




Stockholders' equity:




Preferred stock, $0.001 par value, 5,000,000 shares authorized, none issued and




outstanding at June 30, 2012 and December 31, 2011, respectively

-


-

Common stock, $0.001 par value, 150,000,000 shares authorized at June 30, 2012




and December 31, 2011; 15,040,913 and 14,900,831 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively

15


15

Additional paid-in capital 

327,353


326,796

Accumulated deficit 

(320,049)


(316,299)

Accumulated other comprehensive loss 

(154)


(153)

Total stockholders' equity

7,165


10,359

Total liabilities and stockholders' equity

$   18,918


$         23,111

 

 

Vermillion, Inc.

Consolidated Statements of Operations

(Amounts in Thousands, Except Share and Per Share Amounts)

(Unaudited)










Three Months Ended June 30, 


Six Months Ended June 30, 


2012


2011


2012


2011









Revenue:








Product

$            208


$            191


$            406


$            508

License

113


113


227


227

Total revenue

321


304


633


735









Cost of revenue:








Product 

28


37


66


79

Total cost of revenue

28


37


66


79

Gross profit

293


267


567


656









Operating expenses:








Research and development(1)

1,002


1,631


1,454


2,849

Sales and marketing(2)

1,122


1,503


2,640


2,821

General and administrative(3)

1,840


2,730


2,308


5,030

Total operating expenses 

3,964


5,864


6,402


10,700

Loss from operations 

(3,671)


(5,597)


(5,835)


(10,044)









Interest income 

8


21


16


37

Interest expense 

(66)


(115)


(131)


(230)

Gain on sale of instrument business

1,780


-


1,780


-

Gain on litigation settlement, net

-


-


379


-

Change in fair value of warrants

-


35


-


342

Reorganization items

-


(16)


88


(32)

Other income (expense), net 

(25)


(41)


(47)


(77)

Loss before income taxes 

(1,974)


(5,713)


(3,750)


(10,004)

Income tax benefit (expense)

-


-


-


-

Net loss 

$        (1,974)


$        (5,713)


$        (3,750)


$      (10,004)

Net loss per share - basic and diluted 

$          (0.13)


$          (0.39)


$          (0.25)


$          (0.73)

Comprehensive loss

$        (1,973)


$        (5,712)


$        (3,751)


$      (10,004)









Weighted average common shares
 used to compute








basic and diluted net loss per common share 

14,957,224


14,736,939


14,930,339


13,645,520









Non-cash stock-based compensation expense included in operating expenses:





(1)  Research and development

$              40


$            203


$              74


$            409

(2)  Sales and marketing

57


39


93


82

(3)  General and administrative

314


1,050


384


2,053

 

SOURCE Vermillion, Inc.



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