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Vermillion Reports Second Quarter 2018 Financial Results

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Conference Call scheduled for today, August 9, 2018 at 4:30 p.m. ET

AUSTIN, Texas, Aug. 09, 2018 (GLOBE NEWSWIRE) -- Vermillion, Inc. (NASDAQ:VRML), a bio-analytical solutions company focused on gynecologic disease, today reported its financial results for the second quarter ended June 30, 2018.

"We continue to make steady progress in our commercialization efforts and are pleased to see the fundamental building blocks in place.  With the sales force expansion, the hiring of Chris Goulart, SVP of Commercial Operations, and our new platform and portfolio enhancements, we believe we have the core ingredients in place for success," said Valerie Palmieri, President and CEO of Vermillion. "We fundamentally believe in the ability of our OVA1 test to save lives and change the practice of medicine in women's health.  Our two new product enhancements are key milestones that should advance the standard of care in ovarian cancer."

Recent Corporate Developments and Upcoming Milestones

  • Finalizing launch plans for two new offerings:
        •    A new platform and cloud service for decentralizing OVA1 testing. The platform and web service will allow OVA1 and its OVA Calc to be performed locally at hospital systems/integrated delivery networks, regional labs, & large OBGyn super groups. Decentralizing OVA1 allows for increased reach and access in the markets we serve with the goal of accelerating adoption.

        •    A new clinical pathway offering OVA1/Overa Reflex.  OVA1/Overa Reflex is designed to improve accuracy and reduce false positives by nearly 40% by leveraging the strengths of each product: OVA1's sensitivity and Overa's specificity.  This new offering will also be available through a decentralized structure. 
     
  • Named Mr. Chris Goulart as Senior Vice President of Commercial Operations, a newly created position focusing on the Company's growth operations. Added three Senior Large Practice Sales professionals focused on our new platform and cloud service offering. The total number of sales representatives is now 11, all of whom will focus on our new platform in addition to our historical Gynecology practice targets. 
     
  • Completed an equity financing through the public offering of common and preferred stock on April 17, 2018, with net proceeds raised after offering expenses of $13.5 million. The financing enables the Company to drive its commercialization strategy for OVA1 in the U.S.

Q2 2018 Financial Results

  • Total revenue in the second quarter of 2018 was $708 thousand compared to $898 thousand in the prior year quarter.
     
  • Product revenue in the second quarter of 2018 totaled $627 thousand compared to $860 thousand in the prior year quarter, representing a 27% year-over-year decrease. 1,884 OVA1 tests were performed in the second quarter of 2018, versus 2,418 OVA1 tests performed in the prior year quarter. The revenue and volume decrease were attributable to the loss of a significant client bill customer in Q3 2017, as well as reductions in volume in uncovered territories. Despite these reductions, revenue associated with Medicare increased more than five-fold driven by a 19% increase in volume and a 440% increase in price. 
     
  • Revenue on a per-test-performed GAAP basis was $333 in the second quarter of 2018, representing a 15% increase over revenue per test performed on a comparable GAAP basis of $287 in the second quarter of 2017. (This second quarter 2017 GAAP amount reflects Vermillion's first quarter 2018 adoption of a new revenue recognition accounting rule, so it differs from the $356 per-test-performed reported last year for the second quarter of 2017.)
     
  • Cost of product revenue in the second quarter of 2018 totaled $528 thousand, representing a 23% increase from the second quarter of 2017 due to increased postage and kits delivered to physicians, non-recurring lab supply costs for our new offerings and clinical validation, as well as Quest Diagnostics Incorporated project management fees incurred in 2018.
     
  • Total operating expenses in the second quarter of 2018 increased to $2.9 million compared to $2.6 million in the same year-ago quarter, representing an increase of 15%. The increase includes one-time costs for severance, increased consulting costs as well as increased investment in sales resources.
     
  • Net loss for the second quarter of 2018 was $3.0 million or $(0.04) per share, as compared to a net loss of $2.4 million or $(0.04) per share in the same year-ago quarter.
     
  • There were 75.3 million common shares outstanding at June 30, 2018.
     
  • Cash and cash equivalents at June 30, 2018 were $14.1 million.
     
  • The company utilized $2.5 million in cash in the second quarter of 2018, exclusive of the $13.5 million received from the April 2018 public offering net of issuance costs.  

Conference Call and Webcast
Vermillion's President and CEO, Valerie Palmieri, will host a call today to discuss results followed by a question and answer period at 4:30 p.m. Eastern Time.

Thursday, August 9th @ 4:30pm Eastern Time
Domestic:         800-239-9838
International:         323-794-2551
Conference ID:         5791297
Webcast:         http://public.viavid.com/index.php?id=130234
           
Replays, Available through August 23rd:
Domestic:         844-512-2921
International:         412-317-6671
Replay PIN:         5791297

About Vermillion, Inc.
Vermillion, Inc. is dedicated to the discovery, development and commercialization of novel high-value diagnostic and bio-analytical solutions that help physicians diagnose, treat and improve gynecologic health outcomes for women. Vermillion, along with its prestigious scientific collaborators, discovers, develops, and delivers innovative diagnostic and technology tools that help women with serious diseases. The company's initial in vitro diagnostic test, OVA1® (MIA), was the first FDA cleared, protein-based In Vitro Diagnostic Multivariate Index Assay, and represented a new class of software-based liquid biopsy in vitro diagnostics. In March 2016, Vermillion received FDA clearance for Overa™, a Multivariate Index Assay 2nd Generation (MIA2G) test with significantly improved specificity and ease of use. Vermillions tests are intended to characterize and stage disease, and to help guide decisions regarding patient treatment, which may include decisions to refer patients to specialists, to perform additional testing, or to assist in monitoring response to therapy.

Forward-Looking Statement
This press release contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties.  All statements other than statements of historical facts contained in this press release are forward-looking statements, including statements regarding Vermillion's commercialization plans and the results thereof, expected results of the launch of the new platform and cloud service for decentralizing OVA1 testing, future test volumes and the anticipated activities of Vermillion's sales representatives.  Words such as "may," "expects," "intends," "anticipates," "believes," "estimates," "plans," "seeks," "could," "should," "continue," "will," "potential," "projects" and similar expressions are intended to identify forward-looking statements.  These forward-looking statements speak only as of the date of this press release and are subject to a number of risks, uncertainties and assumptions, including the risks and uncertainties inherent in Vermillion's business, including those described in the section entitled "Risk Factors" in Vermillion's Annual Report on Form 10-K for the year ended December 31, 2017.  The events and circumstances reflected in Vermillion's forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.  Vermillion expressly disclaims any obligation to update, amend or clarify any forward-looking statements to reflect events, new information or circumstances occurring after the date of this press release, except as required by law.

Investor Relations Contact:
Ashley R. Robinson
LifeSci Advisors, LLC
Tel 617-535-7742
Arr@lifesciadvisors.com

           
Vermillion, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(unaudited)
 
  June 30,   December 31,
  2018   2017
Assets          
Current assets:          
Cash and cash equivalents  $   14,135     $   5,539  
Accounts receivable, net     707         205  
Prepaid expenses and other current assets      334         459  
Inventories     110         102  
Total current assets      15,286         6,305  
Property and equipment, net      835         1,181  
Other assets     -          11  
Total assets $   16,121     $   7,497  
           
Liabilities and Stockholders' Equity          
Current liabilities:          
Accounts payable  $   783     $   745  
Accrued liabilities      1,686         1,650  
Short-term debt     187         185  
Other current liabilities     10         29  
Total current liabilities      2,666         2,609  
Non-current liabilities:          
Long-term debt     1,387         1,481  
Total liabilities      4,053         4,090  
Commitments and contingencies          
Stockholders' equity:          
Common stock, par value $0.001 per share, 150,000,000 shares authorized at June 30, 2018 and December 31, 2017; 75,274,251 and 60,036,017 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively   75       60  
Additional paid-in capital    413,445       399,400  
Accumulated deficit    (401,452 )     (396,053 )
Total stockholders' equity     12,068         3,407  
Total liabilities and stockholders' equity $   16,121     $   7,497  
           


Vermillion, Inc.
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
(unaudited)
                       
  Three Months Ended June 30,   Six Months Ended June 30,
  2018   2017   2018   2017
Revenue:                      
Product $   627      $    860     $   1,240      $    1,538  
Service     81         38         117         86  
Total revenue     708         898         1,357         1,624  
Cost of revenue:(1)                      
Product     528         428         1,061         850  
Service     280         266         550         571  
Total cost of revenue     808         694         1,611         1,421  
Gross profit (loss)     (100 )       204         (254 )       203  
Operating expenses:                      
Research and development(2)     154         268         296         493  
Sales and marketing(3)     1,478         1,041         2,703         2,064  
General and administrative(4)     1,299         1,241         2,613         2,648  
Total operating expenses      2,931         2,550         5,612         5,205  
Loss from operations      (3,031 )       (2,346 )       (5,866 )       (5,002 )
Interest income (expense), net      (7 )       (10 )       (19 )       (22 )
Other income (expense), net      (11 )       (4 )       (14 )       (9 )
Net loss  $   (3,049 )   $   (2,360 )   $   (5,899 )   $   (5,033 )
Net loss per share - basic and diluted  $   (0.04 )    $    (0.04 )    $    (0.09 )    $    (0.09 )
Weighted average common shares used to compute basic and diluted net loss per common share      69,353,622         56,113,917         64,721,128         55,123,977  
Non-cash stock-based compensation expense included in cost of revenue and operating expenses:                      
(1)  Cost of revenue $ 28     $ 40     $ 58     $ 79  
(2)  Research and development     1         2         2         5  
(3)  Sales and marketing     28         40         71         77  
(4)  General and administrative     304         295         412         510  


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