Vermillion announces total revenue of $1.6 million for fourth quarter 2014

Vermillion, Inc. (NASDAQ: VRML), a bio-analytical solutions company focused on gynecologic disease, reported on its results for the fourth quarter ended and full year ended December 31, 2014.

"We are very pleased to have completed our new commercial agreement with Quest Diagnostics as well as increase the market in which we offer ASPiRA Labs' OVA1 testing service," stated Valerie Palmieri, President and CEO of Vermillion, Inc.

Key 2015 Developments

• March 11- Executed a new business relationship with Quest Diagnostics whereby all OVA1 testing in the United States will migrate to ASPiRA Labs while Quest Diagnostics will continue to provide its blood draw, courier and logistics network to its customers.
• March 6- Successfully completed validation of OVA2, which is a product improvement to OVA1 on the Roche Cobas 6000 platform, and submitted our 510(k) clearance application to the FDA. Our goal is to launch OVA2 commercially in the second half of 2015.
• March 6- Received our CE mark for OVA1 which complements our recent ISO certification and will allow us to distribute and offer OVA1 outside the US. Our plan is to market OVA1 outside the U.S. in 2016.
• March 5- Received our National Provider Identifier from CMS, which allowed ASPiRA Labs to commence Medicare billing for OVA1 in March 2015.
• February 6- Received our ISO 13485 Certification, which is our first milestone for our planned international expansion.
• January 1- Valerie Palmieri named as President and Chief Executive Officer. Ms. Palmieri had served as Chief Operating Officer since October 2014. Jim LaFrance remains Chairman of the Board of Directors.
• January 2015- Key additions to our management team joined us--Laura Miller as Senior Vice President of Sales and Customer Experience and Patrick Carpenter as General Manager of ASPiRA Labs.

Q4 2014 Financial Results

Total revenue in the fourth quarter of 2014 was $1.6 million, consistent with the same year-ago quarter. The OVA1 product revenue in both quarters includes an additional royalty component of revenue from Quest Diagnostics. Vermillion recognized this portion of revenue when reported by Quest Diagnostics in a 'true-up' after the end of the calendar year.

Fourth quarter of 2014 product revenue was comprised of $214,000 from 4,474 OVA1 tests performed and $1.2 million from the royalty on 16,563 OVA1 tests reported by Quest Diagnostics as resolved in 2014. The resolved tests include both reimbursed and unreimbursed tests for which Quest Diagnostics considers the payment status as final.

By comparison, the $1.6 million in revenue in the fourth quarter of 2013 included $211,000 of product revenue from 4,218 OVA1 tests performed, and $1.3 million from the royalty on 16,745 OVA1 tests reported by Quest Diagnostics as resolved in 2013.

Of the 4,474 OVA1 tests in the fourth quarter 257 were performed by ASPiRA Labs, Vermillion's wholly owned national CLIA-certified laboratory, up from the 152 OVA1 tests performed by ASPiRA Labs in the third quarter of 2014.

Cost of product revenue for the fourth quarter of 2014 increased to $412,000 compared to $74,000 in the same period in 2013 due to costs of ASPiRA LABS which opened in June 2014.

Total operating expenses in the fourth quarter of 2014 increased to $5.2 million from $3.3 million in the same year-ago quarter. The increase was primarily due to expanded sales and marketing headcount compared to the prior year quarter as well as increased research and development headcount and Johns Hopkins University collaboration costs to complete Vermillion's platform migration and next generation test.

Net loss for the fourth quarter was $4.1 million or $(0.11) per share, as compared to a net loss of $1.8 million or $(0.07) per share in the same year-ago quarter.

Full Year 2014 Financial Results
Total revenue for the full year of 2014 was $2.5 million, consistent with the prior year. Total revenue in 2014 was comprised of $2.1 million in product revenue from OVA1 and $454,000 in license revenue. Product revenue from OVA1 in 2014 included $825,000 from 16,839 OVA1 tests performed and $1.2 million from the royalty reported by Quest Diagnostics for 2014.

By comparison, revenue in 2013 was comprised of $2.1 million in product revenue from OVA1 and $454,000 in license revenue. Product revenue from OVA1 in 2013 included $851,000 from 17,004 OVA1 tests performed and $1.3 million from the royalty reported by Quest Diagnostics for 2013.

For the full year of 2014, total operating expenses were $20.5 million as compared to $11.3 million in 2013. The increase in expense was driven primarily by an increase in sales and marketing headcount, research and development costs for OVA2 as well as the lab build-out costs for ASPiRA Labs.

For the full year of 2014, net loss was $19.2 million or $(0.53) per share as compared to a net loss of $8.8 million or $(0.42) per share in 2013.

The winter weather in our Northeast and Great Lakes regions has adversely impacted our volumes in the first quarter of 2015, since doctors' offices were closed between 10% and 25% of the normal working days during the quarter, depending on the region.

As of December 31, 2014, cash and equivalents totaled $23.0 million including the $10.5 million gross proceeds from our private placement of common stock and warrants in December 2014. The company utilized $4.3 million in cash in the fourth quarter of 2014, and expects between $5.7 million and $6.0 million in cash outlay during the first quarter of 2015, which includes the final repayment of debt to Quest Diagnostics totaling $1.1 million.