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Vermillion Q4 Revenues Up 123 Percent

NEW YORK (GenomeWeb News) – Vermillion reported after the close of the market on Wednesday that its fourth quarter revenues rose 123 percent, thanks largely to an increase in its average revenue per test, year over year.

The company reported Q4 revenues of $805,000, up from $361,000 in Q4 2015.

Vermillion posted $680,000 in product revenues from sales of its OVA1 ovarian cancer test, and $125,000 in service revenue from its Aspira IVD business. All of Vermillion's revenues in Q4 2015 came from OVA1 sales.

The company performed 2,258 OVA1 tests in Q4 2016, down 11 percent from 2,529 in Q4 2015, but generated $301 per test, compared to $143 per test in the year-ago period.

The firm's Q4 net loss narrowed to $2.8 million, or $.05 per share, from $5.0 million, or $.10 per share, a year ago.

Since transferring OVA1 sales from Quest Diagnostics to its Aspira Labs subsidiary in August 2015, Vermillion has seen test volumes decline significantly. The 11 percent drop in Q4 OVA1 sales from 2015 to 2016 follows a 42 percent drop the year before, as sales fell from 4,474 in Q4 2014 to 2,529 in Q4 2015.

On 2015's Q4 call, the company said that the volume decline was due in part to claim denials and testing delays as part of the transition from Quest to Aspira. Speaking on a Wednesday conference call following release of the Q4 results, Vermillion President and CEO Valerie Palmieri indicated that the company was still struggling with these issues.

She said the firm had identified clinical utility concerns as the main issue affecting OVA1 reimbursement, adding that the company published its first clinical utility study in April 2016 and is preparing additional studies.

These studies include a health economic study that the company and its collaborators submitted to the journal American Health & Drug Benefits in February, and another study looking at the management of patients with low OVA1 scores that the company submitted for review earlier this month, Vermillion Chief Medical Officer Marra Francis added on the call.

Despite its reimbursement struggles, Vermillion did notch some new coverage agreements for OVA1 during the quarter, including with Blue Cross Blue Shield of Michigan and Medi-Cal.

The company also announced Thursday morning that it has signed an in-network, contracted agreement for OVA1 with TriCare South, which covers around 2.5 million patients in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, Texas, and Kentucky.

Vermillion also continues to prepare for a wider launch of its second-generation ovarian cancer test Overa, which is currently in limited release. It received a CPT code for the test in December 2016, and is currently in the process of submitting for publication two studies looking at the test's clinical performance.

Palmieri also noted on the call that the company's Aspira IVD services business recently completed a study looking at the inter-lab reproducibility of the CCR4 immunohistochemistry companion diagnostic assays for determining CCR4 status in cutaneous T-cell lymphoma tissue. She added that the company recently signed a deal to conduct a global companion diagnostic study, which she said was its first study "co-sponsored by a major IVD client as well as a major pharmaceutical company."

Vermillion's R&D spending fell 64 percent in Q4 2016 to $304,000 from $853,000 in Q4 2015, while its SG&A spending was down 35 percent year over year to $2.6 million from $4.0 million in the year-ago period.

For full-year 2016, the company posted revenues of $2.6 million, up 18 percent from $2.2 million in 2015.

Product revenues were up 21 percent to $2.3 million from $1.9 million the previous year, while service revenues were $322,000 in 2016, compared to no service revenue in 2015. Vermillion posted no license revenue in 2016, compared to $316,000 in license revenue in 2015.

Total OVA1 test volume in 2016 was 9,125, down 33 percent from 13,598 in 2015.

For full-year 2016, Vermillion's net loss narrowed to $15.0 million, or $.29 per share, from $19.1 million, or $.41 per share, a year ago.

The company's R&D costs in 2016 were down 42 percent year over year to $2.2 million from $3.8 million, while its SG&A costs were down 17 percent to $12.7 million from $15.3 million.

Vermillion finished 2016 with $5.2 million in cash and cash equivalents. In February, the company also raised around $5.6 million from the sale of stock and now has roughly $7.9 million in cash, Vermillion's Chief Accounting Officer Eric Schoen said on the call.

In Thursday morning trading on Nasdaq, Vermillion stock was down nearly 2 percent to $2.19