Vermillion Reports Third Quarter 2012 Results

                Vermillion Reports Third Quarter 2012 Results

PR Newswire

AUSTIN, Texas, Nov. 12, 2012

AUSTIN, Texas, Nov. 12, 2012 /PRNewswire/ -- Vermillion, Inc. (NASDAQ: VRML),
a leading molecular diagnostics company, reported financial and operational
results for the third quarter ended September 30, 2012.

Q3 2012 Operational Highlights

  oIn Q3, 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 approximately 4,100 tests.
  oSubmitted a manuscript on the OVA500 pivotal study by principal
    investigator, Dr. Robert Bristow of UC Irvine. This second prospective
    study of OVA1 confirmed the test's high sensitivity, at 96% and negative
    predictive value, at 98%, substantiating clinical results reported in the
    previous pivotal study by Dr. Fred Ueland of U. Kentucky. This is
    important since doctors, payers and professional societies make their
    decisions, in part, on the publication of multiple independent clinical
    studies. The study also reported that OVA1 correctly detected 91% of early
    stage cancers. Combined with the result from the first study, OVA1
    correctly identified 78 out of 84 early-stage ovarian malignancies among
    more than 1,000 patients evaluated, for a combined risk stratification
    sensitivity of approximately 93%.
  oInitiated a joint program with Quest Diagnostics focused in six states to
    improve OVA1 physician reorder rates by reestablishing OVA1 as
    'top-of-mind,' as well as launched a Claims Assistance Program to assist
    physicians with the appeals process.
  oPublished a peer-reviewed manuscript titled "A Validated Biomarker Panel
    To Identify Peripheral Artery Disease" in Vascular Medicine, a premier
    international journal featuring primary research articles and reviews on
    vascular disease, diagnosis, and treatment.The 1,025 patient study
    validated earlier biomarker discovery results in an intended use
    population, by identifying 85% (17 of 20) of PAD patients missed by the
    Framingham Risk Score's high-risk cutoff.

Q3 2012 Financial Highlights
Total revenue in the third quarter of 2012 was $319,000, comprised of $205,000
in OVA1 sales and $114,000 in license fees from Quest Diagnostics. Product
revenue from OVA1 sales in the third quarter of 2012 was flat as compared to
the same year-ago quarter.

Total operating expenses decreased in the third quarter to $2.6 million from
$4.8 million in the same year-ago quarter. The decrease was primarily the
result of lower clinical trial costs due to Vermillion's Peripheral Artery
Disease (PAD) multi-marker intended use study having been completed in 2011,
lower legal expenses, and continuing cost containment with improved
operational efficiency. This also resulted in lower operating expenses for the
nine months ended September 30, 2012, which totaled $9.0 million as compared
to $15.5 million in the same year-ago period.

Net loss for the third quarter was $2.0 million or $(0.13) per share, an
improvement from a loss of $4.7 million or $(0.31) per share in the same
year-ago quarter. The third quarter of 2012 net loss included a $0.3 million
gain for a payment received on litigation settlement. For the nine months
ended September 30, 2012, net loss was $5.8 million or $(0.39) per share, as
compared to $14.7 million or $(1.04) per share in the same year-ago period.

As of September 30, 2012, the company's cash and cash equivalents totaled
$16.3 million as compared to $18.3 million at June 30, 2012. The company
utilized $2.3 million in cash in the third quarter of 2012, offset by the $0.3
million payment received on litigation settlement during the third quarter.
Management expects $2.0 million to $2.5 million in cash utilization during the
fourth quarter of 2012 excluding approximately $5.9 million paid to Quest
Diagnostics under the Secured Line of Credit Agreement in October 2012.

Management Commentary
"In Q3, our OVA500 pivotal study further established the valuable clinical
utility of OVA1, with its high sensitivity and negative predictive value,"
said Gail S. Page, Vermillion's president and chief executive officer. "The
manuscript of the study has recently been submitted for publication, and we
plan to use the publication to aid in expanding OVA1's clinical adoption and
increasing positive coverage decisions from national payers.

"Our recent loan repayment to Quest deleverages our balance sheet as well as
demonstrates the success of our partnership agreement, which was designed to
help bring Vermillion to this pivotal stage of its growth and development.
Quest has been an important and supportive partner for many years, and we look
forward to continuing our close relationship. In fact, together we
successfully initiated a program focused in six states to improve OVA1
physician reorder rates by reestablishing OVA1 as 'top-of-mind.'

"Our CPT code becomes effective this January and will be priced for the first
year by CMS using their gap-fill process. CMS uses the gap-fill method when no
comparable molecular diagnostic exists. It determines a reimbursement amount
for the first year by multiple factors, including what other payers might be
paying. In anticipation of this process eventually occurring, during the
early-stage of the OVA1 launch we secured reimbursement from Medicare at
$516.25 per test, which is a common benchmark for reimbursement of a new
diagnostic. We have also established another benchmark from the Department of
Defense list price at $650.00 per test. We expect this new CPT code to
streamline the claims process and strengthen our reimbursement results.

"As we wrap-up 2012 and prepare for the new year, we will work towards greater
adoption by focusing on reimbursement, physician awareness and market
education. Vermillion remains strongly committed to advancing the market
adoption of OVA1 as the most sensitive ovarian cancer diagnostic on the market
today. As we further develop our ovarian cancer franchise, we plan to expand
beyond clinical labs to address the broader market, including hospitals and
other points-of-care."

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. Gail Page will
continue in her role until the new CEO is appointed, and after assisting in
the transition, plans to act as a strategic advisor for the company as
required by the board of directors.

Conference Call and Webcast
Vermillion will hold a conference call to discuss its third quarter financial
results later today, Monday, November 12, 2012 at 4:30 p.m. Eastern time.
Management will host the presentation, followed by a question and answer
period.

Date: Monday, November 12, 2012
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Dial-In Number: 1-800-736-4610
International: 1-212-231-2900
Conference ID#: 21607929
Webcast: http://edge.media-server.com/m/p/saaeq3ma/lan/en

The conference call will be webcast live 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 November 26, 2012.

Toll-free replay number: 1-800-633-8284
International replay number: 1-402-977-9140
Replay pin number:21607929

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)
                                           September 30,       December 31,
                                           2012                 2011
Assets
Current assets:
Cash and cash equivalents                  $     16,328    $   22,477
Accounts receivable                        128                  99
Prepaid expenses and other current assets  263                  317
Total current assets                       16,719               22,893
Property and equipment, net                163                  216
Other assets                               -                    2
Total assets                               $     16,882    $   23,111
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                           $        661  $    1,331
Accrued liabilities                        1,870                2,592
Short-term debt                            7,000                7,000
Deferred revenue                           1,076                553
Total current liabilities                  10,607               11,476
Deferred revenue                           883                  1,224
Other liabilities                          -                    52
Total liabilities                          11,490               12,752
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value,
5,000,000 shares authorized,

 none issued and outstanding at
September 30, 2012 and                     -                    -

 December31, 2011, respectively
Common stock, $0.001 par value,
150,000,000 shares authorized

 at September 30, 2012 and December31,
2011; 15,095,288 and

 14,900,831 shares issued andoutstanding
at September 30, 2012                      15                   15

 and December 31, 2011, respectively
Additional paid-in capital                 327,601              326,796
Accumulated deficit                        (322,070)            (316,299)
Accumulated other comprehensive loss       (154)                (153)
Total stockholders' equity                 5,392                10,359
Total liabilities and stockholders' equity $     16,882    $   23,111

 



Vermillion, Inc.
Consolidated Statements of Operations
(Amounts in Thousands, Except Share and Per Share Amounts)
(Unaudited)
                              Three Months Ended      Nine Months Ended

                              September 30,           September 30,
                              2012        2011        2012        2011
Revenue:
Product                       $ 205       $ 206       $ 611       $ 714
License                       114         114         341         341
Total revenue                 319         320         952         1,055
Cost of revenue:
Product                       33          26          99          105
Total cost of revenue         33          26          99          105
Gross profit                  286         294         853         950
Operating expenses:
Research and development^(1)  429         1,370       1,883       4,219
Sales and marketing^(2)       1,082       1,499       3,722       4,320
General and                   1,073       1,952       3,381       6,982
administrative^(3)
Total operating expenses      2,584       4,821       8,986       15,521
Loss from operations          (2,298)     (4,527)     (8,133)     (14,571)
Interest income               7           18          23          55
Interest expense              (66)        (100)       (197)       (330)
Gain on sale of instrument    50          -           1,830       -
business
Gain on litigation            331         -           710         -
settlement, net
Change in fair value of       -           32          -           374
warrants
Reorganization items          -           (42)        88          (74)
Other expense, net            (45)        (32)        (92)        (109)
Loss before income taxes      (2,021)     (4,651)     (5,771)     (14,655)
Income tax benefit (expense)  -           -           -           -
Net loss                      $ (2,021)   $ (4,651)   $ (5,771)   $ (14,655)
Net loss per share - basic    $  (0.13)  $  (0.31)  $  (0.39)  $   (1.04)
and diluted
Comprehensive loss            $ (2,021)   $ (4,650)   $ (5,772)   $ (14,652)
Weighted average common
shares used to compute basic  15,057,027  14,820,694  14,972,877  14,041,549
and diluted net loss per
common share
Non-cash stock-based compensation expense included
in operating expenses:
(1) Research and development  $ 25        $ 181       $ 99        $ 590
(2) Sales and marketing       55          40          148         122
(3) General and               168         211         552         2,264
administrative



SOURCE Vermillion, Inc.

Website: http://www.vermillion.com