Vermillion, Inc. has reported operational and preliminary financial results for the fourth quarter and full year of 2011.
• OVA1® volume in Q4-11 increased 40% over the same year-ago quarter to 4,118.
• Performed an estimated 15,225 OVA1 tests in 2011, up 147% from 2010.
• Completed the purchase of substantially all of the assets associated with the ovarian cancer diagnostics business of Correlogic Systems, Inc., including more than 1,800 prospectively collected diagnostic samples from ovarian tumor studies, three biomarker-related pending U.S. patents, proprietary software and other intellectual property.
Key Recent Highlights
• Expanded payer coverage for OVA1 with the addition of Wellmark South Dakota and Wellmark Iowa, increasing coverage by 2.1 million lives. Currently, there are 24 independent Blue Cross Blue Shield plans representing approximately 38 million lives. Including Medicare and other regional plans, total coverage for OVA1 is estimated to be about 85 million lives.
• Reached a settlement in February with a third party related to losses on the company's short and long-term investments in previous years. The total settlement was $1 million and we expect to receive approximately $700,000, net of costs and legal expenses.
Fourth Quarter and Full Year 2011 Preliminary Financial Results
The company's product revenues for the fourth quarter and full year 2011 are subject to change pending receipt of the 2011 annual "true-up" report from Quest Diagnostics Incorporated and are therefore not being reported herein.
In addition, receipt of the ruling in the Molecular Analytical Systems, Inc. (MAS) binding arbitration is pending and could also impact our 2011 results. Therefore, the following financial data is unaudited and preliminary.
License revenue for the fourth quarter of 2011 totaled $113,000, compared to $196,000 in the same year-ago period and related to the company's achievement of certain milestones under the Strategic Alliance Agreement with Quest Diagnostics.
As of December 31, 2011, cash and cash equivalents totaled $22.5 million. The company utilized $5.0 million in cash in the fourth quarter, including $435,000 for the Correlogic asset acquisition.
The company expects to reduce cash utilization to $3-4 million in the first quarter of 2012 and reduce cash-based operating expenses to approximately $12 million in fiscal 2012, as compared to $16.2 million in fiscal 2011.
Total operating expenses decreased to $4.0 million in the fourth quarter of 2011, as compared to $4.5 million in the same quarter a year-ago. Operating expenses for the full year of 2011 were $19.5 million, as compared to $15.7 million in 2010.
The annual increase was due primarily to increased average headcount in sales and marketing and related costs, higher clinical trial and collaboration costs for the ongoing development of the company's ovarian cancer program and VASCLIR®, as well as an increase in legal fees including those associated with the company's MAS litigation.
Research and development expenses for 2011 also included $435,000 for the Correlogic asset acquisition.
Fourth quarter 2011 operating expenses included $314,000 in non-cash stock-based compensation expense, as compared to $1.6 million in the same year-ago quarter.
For the full year, non-cash stock-based compensation expense was $3.3 million, as compared to $4.9 million in 2010.
The company's complete 2011 financial results will be filed in its annual report on Form 10-K with the U.S. Securities and Exchange Commission in March.
"2011 was a year of many accomplishments which provide the foundation for sustainable future growth," said Gail Page, Vermillion's president and CEO.
Page continued, "The 147% increase in OVA1 tests reflects the increasing adoption of this important triage test and particularly our large gains in winning support of gynecologic oncologists, who define the standard of care for women with ovarian cancer. We've also made strong progress among doctors as more than 3,700 ordered OVA1 in 2011, representing 11% of the total number of gynecologists in the U.S. Given the short period of time OVA1 has been on the market, this represents strong traction within the gynecologist community."
"Our 2012 objectives will focus on commercializing OVA1 and advancing the pipeline while prudently managing our cash," said Page. "Payor coverage and reimbursement remain our key strategic initiatives. Working in conjunction with our partner Quest Diagnostics, our territory development managers are engaging with physician offices during the claims process to educate payers and ultimately drive favorable coverage decisions. We've also launched a program to aid local key opinion leaders to work with regional insurance providers to support coverage of OVA1."