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Vermillion Q3 Revenues Up 66 Percent

NEW YORK – Vermillion reported after the close of the market on Tuesday a 66 percent year-over-year jump in its third quarter revenues.

For the three months ended Sept. 30, the Austin, Texas-based cancer diagnostics firm said that total revenues rose to $1.3 million from $774,000 in the year-ago quarter.

Product revenues were $1.2 million, up 68 percent from $738,870 in Q3 2018. Service revenues from the company's Aspira IVD business were up 26 percent to $44,000 from $35,000 in Q3 2018.

Product revenues for the recently completed quarter were derived from 3,602 OVA1 ovarian cancer tests performed, up 82 percent from 1,981 OVA1 tests performed in Q3 2018. Revenue per test performed was down 8 percent to $345, compared to $373 in the year-ago period.

The results mark the second quarter in a row where Vermillion has shown strong OVA1 sales growth, following a 61 percent increase in Q2 revenues. This comes after roughly half a decade of essentially flat sales following the transition of OVA1 sales from its former partner Quest Diagnostics to its subsidiary Aspira Labs in 2014.

On a conference call following release of the earnings report, Vermillion President and CEO Valerie Palmieri said the company expected revenue growth in Q4 2019 to exceed 100 percent.

Chris Goulart, Vermillion's senior vice president of commercial operations, noted that the company saw 540 physicians order OVA1 for the first time during the quarter.

Despite the strong recent quarters, Vermillion's stock has performed poorly with the company still working to regain compliance with Nasdaq listing requirements following a notice from Nasdaq it received on August 2. Robert Beechey, the company's CFO, addressed its stock performance during the call, noting that Vermillion's management team was "very disappointed."

He said the company aimed to improve its stock price in part by reducing cash utilization, which he said was expected to decline as sales increase and the company sees a return in its investments in its sales force and other areas.

Beechey also said that Vermillion is closing its in vitro diagnostics services business. Of that business he said the company's "offering is too narrow, and the business would require a significant investment to expand the offering."

"We are no longer accepting new assignments in the IVD business and will finalize all IVD contractual customer commitments in the fourth quarter," he said, adding that the business has "generally had negative margins" and that closing it would eliminate a financial drag on the company while allowing management to focus exclusively on growing the ovarian testing business.

Vermillion's plans to expand its ovarian business include the launch this summer of a genetic testing product that includes a hereditary breast and ovarian cancer panel. Goulart said the company plans to launch studies next year to determine whether incorporating this genetic information into the OVA1 report can improve the test's assessment of a patient's ovarian cancer risk.

The company is also working on a seven-protein panel for monitoring patients with suspected benign pelvic masses who are in surveillance programs that Goulart said it aims to launch following completion of a study next year.

Vermillion had a net loss attributable to its common stockholders for the quarter of $3.8 million, or $.04 per share, compared to a net loss of $2.7 million, or $.04 per share, in Q3 2018.

Its R&D expenses were up 164 percent to $340,000 from $129,000, while its SG&A spending rose 53 percent to $3.8 million from $2.5 million.

The company finished the quarter with $14.6 million in cash and cash equivalents.