Vermillion, Inc. has reported on its financial results for the third quarter ended September 30, 2013.
Q3 2013 Financial Results
Total revenue in the third quarter of 2013 was $330,000 compared to $319,000 in the same year-ago quarter. Third quarter 2013 revenue was comprised of $216,000 in OVA1® product sales and $114,000 in license revenue.
Third quarter of 2013 product revenue was derived from 4,328 OVA1 tests performed at the fixed $50 per test as reported by Quest Diagnostics. This represents a 5.6% increase in test volume compared to approximately 4,100 OVA1 tests performed in the year-ago quarter. Although covered lives have decreased to approximately 67.0 million due to the previously announced BlueCross BlueShield Technical Evaluation Center position, it did not affect test sale volumes for the quarter.
The OVA1 product revenue in both periods does not include the additional royalty component of revenue based on 33% of Quest Diagnostics gross margin. Vermillion recognizes this portion of revenue when it is reported by Quest Diagnostics in an annual 'true-up' after the end of the calendar year. The true-up is based on reimbursed and unreimbursed tests for which Quest Diagnostics considers the payment status as final.
Total operating expenses were $2.6 million in both the third quarter of 2013 and the same year-ago quarter. For the nine months ended September 30, 2013, total operating expenses were $7.9 million as compared to $9.0 million in the same year-ago period.
Net loss for the third quarter was $2.3 million or $(0.10) per share, as compared to a net loss of $2.0 million or $(0.13) per share in the same year-ago quarter. For the nine months ended September 30, 2013, net loss was $7.0 million or $(0.36) per share as compared to a net loss of $5.8 million or $(0.39) per share in the same year-ago period. The prior year included one-time gains on a sale of an instrument business and a litigation settlement totaling $2.5 million. As of September 30, 2013, the company had 23.5 million common shares outstanding.
As of September 30, 2013, cash and equivalents totaled $14.6 million. The company utilized $1.8 million in cash for operations in the third quarter of 2013, and expects $2.4 million to $2.9 million in cash outlay during the fourth quarter of 2013 including $0.3 million for the purchase of an IVD platform for research and development.
Q3 2013 Key Developments
• Advanced Vermillion's OVA1 platform migration and Next-Generation product development. The company selected a top-tier IVD instrument for development as well as expanded its agreement with Johns Hopkins' Center for Biomarker Discovery and Translation (CBDT). The company will fund $1.6 million to CBDT through June 2015 for assistance with these programs.
• Continued steps to expand the market for OVA1. Vermillion sent Quest Diagnostics a notice of termination of the Strategic Alliance Agreement on August 23, 2013, with the proviso that Quest Diagnostics can continue to provide OVA1 under the existing financial terms while negotiating in good faith towards an alternative business structure. Quest Diagnostics has disputed the effectiveness of the termination.
• Broadened Vermillion's sales and reimbursement team by adding an additional field representative and two managed care directors. The company now has a total of 10 experienced sales professionals as well as a team of four reimbursement professionals.
• Appointed Dr. Eric Varma to the board of directors, bringing to the company significant financial and commercial experience in the Life Sciences. Dr. Varma is currently a partner at Oracle Investment Management, Vermillion's largest stockholder.
"We have continued to make progress on the commercialization of OVA1," commented Tom McLain, Vermillion's president and CEO. "In sales regions covered by Vermillion sales reps, test volumes were up more than 15% from the third quarter of 2012. This reflects the positive impact of the SGO statement issued in May, new clinical data and our expanded commercial presence.
"In the fourth quarter, our operational focus continues to be on four key areas: collaborations to develop additional clinical and economic data, treatment guidelines, favorable coverage decisions and expanding access to our OVA1 test. We remain confident that the foundation we are building for our novel diagnostic test will support strong future growth."