Vermillion's ($VRML) latest financial report yielded a mixed bag of results. The company reported a widening net loss due to increased spending for its research and product development, although revenue grew for its software-based ovarian cancer diagnostic.
Net loss for Q4 2013 was $1.8 million or $0.07 per share, as compared to a net loss of $1.4 million or $0.09 per share in Q4 2012. However, total revenue for the fourth quarter of 2013 increased 39% to $1.6 million from $1.1 million in the fourth quarter of 2012.
Vermillion's stock fell 10% on Friday morning following the earnings report.
A majority of Q4 earnings included product revenue from Vermillion's OVA1 diagnostic test, which brought in $1.5 million. Total operating expenses in Q4 2013 increased to $3.3 million from last year's $2.4 million, a change that was due to expanded research and development for its ovarian cancer test, the company said in a statement.
For the full year 2013, revenue increased 23% to $2.6 million from $2.1 million in Q4 2012. The company's OVA1 test garnered $2.1 million in product revenue in 2013, including $1.3 million from the 33% royalty reported by partner Quest Diagnostics ($DGX). Total operating expenses for full year 2013 narrowed slightly--$11.3 million, compared with $11.4 million in 2012.
Vermillion expects a cash outlay between $3.5 million and $4 million during Q1 2014 to offset the costs of R&D, and to expand its sales force, it said in a statement.
All in all, it was a good year for the Austin, TX-based company, which roped in $17.6 million through the sale of warrants and completed a $31 million equity financing in December. Vermillion planned on using the funds to boost sales and reimbursement efforts for its OVA1 test--an innovative diagnostic tool that uses an algorithm to screen for malignant ovarian masses. The company's flagship product won FDA clearance and a CE mark in 2010, and Vermillion has since partnered with Quest to distribute OVA1 globally. It is also working with researchers at Johns Hopkins to develop OVA2, its next-generation test for ovarian cancer.
Vermillion might not have to wait long to gain coveted reimbursement for its OVA 1 test: According to the company's earnings report, the Center for Medicare & Medicaid Services (CMS) issued its final Clinical Lab Fee Schedule determination for the product, saying that the price will be determined through a market value-based method (Gap-Fill). The company plans on pursuing a national price through the CMS for its OVA1 test in 2014. Winning Medicare reimbursement could help the company boost revenue for the diagnostic--and expand its global footprint.
"Our revenue growth in 2013 demonstrates the value of Vermillion's increased efforts in directly promoting the use of OVA1 in the U.S. market," said Thomas McLain, Vermillion's CEO. "With the knowledge and experience gained during the year, we plan to significantly expand our sales efforts in 2014. While we will continue to partner with Quest Diagnostics to make OVA1 available in the U.S., we expect that our direct efforts will lead to a higher volume of tests and increased revenue per test. We plan to apply the proceeds from the warrant exercise in December to support this expanded direct commercialization effort, as well as advance our next-generation ovarian cancer diagnostic."
- read the earnings report