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Vermillion Announces Second Quarter 2008 Financial Results and Business Progress

2008-08-14 06:30:00

    FREMONT, Calif., Aug. 14 /EMWNews/ -- Vermillion, Inc.

(Nasdaq: VRML), a molecular diagnostics company, today announced financial

results for the second quarter ended June 30, 2008, and provided an update

on recent corporate and clinical developments.

    Vermillion continues to demonstrate significant clinical and

commercialization progress in each of its diagnostic programs and, with the

recent retention of ThinkPanmure, an Investment Bank, the Company is

working to maximize its strategic options to bring its proteomic tests to

the market.

    In June 2008, the Company filed a 510(K) Application for the OVA1(TM)

Test for ovarian tumor triage with the U.S. Food and Drug Administration

(FDA). Additionally, Vermillion is working on clinical studies and building

market awareness of its PAD risk assessment blood test, now named

VASCLIR(TM) the PAD test. Throughout the remainder of 2008, the Company

will focus on commercializing these tests.

    Second Quarter 2008 Financial Results

    Total operating expenses decreased in the second quarter of 2008 to

$3.4 million, from $5.9 million in the same period last year. The decrease

was due primarily to restructuring of the company and reduced general and

administrative expenses.

    The Company's net loss for the second quarter of 2008 was $4.5 million,

compared to $6.8 million for the same period in 2007. Basic and diluted net

loss for the second quarter of 2008 was $0.70 per share based on 6.38

million total shares outstanding, compared to a basic and diluted net loss

of $1.74 per share based on 3.93 million total shares outstanding for the

same period in 2007. Earnings per share calculations are on a post reverse

stock split basis.

    At June 30, 2008, the Company's cash, short- and long-term investments

totaled $9.9 million, compared to $20.4 million at December 31, 2007. Net

cash used in operating activities in the second quarter of 2008 was $4.2

million. Vermillion continues to conscientiously manage expenses and cash


    Recent Highlights and Accomplishments

    During the first half of 2008, Vermillion achieved the following

milestones in its diagnostic programs and continued to progress in its

corporate development efforts.

    -- Ovarian Cancer Diagnostic Program:

    -- Submitted data to the FDA from its OVA1 prospective clinical trial.

The trial met its primary endpoint of improved sensitivity for malignant

ovarian tumors.

    -- Hosted a roundtable teleconference focusing on Vermillion's ovarian

cancer diagnostic program and the need for tools that can better triage

women with ovarian tumors. The teleconference featured keynote speaker Fred

Ueland, M.D., Associate Professor of Gynecologic Oncology at the University

of Kentucky, who is the Principal Investigator in Vermillion's OVA1

clinical trial.

    -- Presented data at the annual meeting of the American Society of

Clinical Oncology (ASCO) demonstrating that Vermillion's markers, in

conjunction with CA125, improved detection of early stage ovarian cancer.

    -- PAD Diagnostic Program:

    -- Established a clinical steering committee to provide advice on

studies to support registration of VASCLIR with the FDA and to further

potential market adoption.

    -- Engaged the Colorado Prevention Center as its academic research

organization for assistance in designing its prospective clinical trial to

support clearance of its VASCLIR test.

    -- Presented data from a study providing further confirmation that the

Company's test may aid in the diagnosis of PAD. The research, which was

presented at the annual meeting of the Society of Vascular Medicine and

Biology (SVMB), suggests that such a test may be useful in helping

determine a patient's risk for developing PAD.

    -- Hosted a roundtable teleconference focusing on Vermillion's PAD

diagnostic program and the need for improved detection of this life- and

limb- threatening condition. The teleconference featured keynote speaker

John Cooke, M.D., Ph.D., Professor of Medicine at Stanford University,

whose research forms the basis of Vermillion's VASCLIR test.

    -- Conducted market-development activities, including working with the

PAD Coalition and implementing an online physician survey to gather market-

based information, helping to define the Company's commercialization

strategy and broaden future clinical use of VASCLIR.

    -- Corporate Developments:

    -- Retained ThinkPanmure LLC., a global growth-company investment bank,

to assist the Company in identifying and evaluating strategic alternatives

to advance our commercialization strategies.

    -- Appointed John F. Hamilton, former Vice President and Chief

Financial Officer of Depomed, Inc., to the Vermillion Board of Directors.

    About Vermillion

    Vermillion, Inc. 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, hematology, cardiology and women's health. Vermillion is based in

Fremont, California. Additional information about Vermillion can be found

on the Web at

    Forward Looking Statements -- This news release contains

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. There are

no guarantees that Vermillion will succeed in its efforts to commercialize

PAD, ovarian cancer or hematology diagnostics products in 2008 or during

any other period of time. Factors that could cause actual results to

materially differ include but are not limited to: (1) uncertainty in

obtaining intellectual property protection for inventions made by

Vermillion; (2) unproven ability of Vermillion to discover, develop, and

commercialize PAD, ovarian cancer or hematology diagnostic products based

on findings from its disease association studies; (3) unproven ability of

Vermillion to discover or identify new protein biomarkers and use such

information to develop PAD, ovarian cancer or hematology diagnostic

products; (4) uncertainty as to whether Vermillion will be able to obtain

any required regulatory approval of its PAD, ovarian cancer or hematology

diagnostic products; (5) uncertainty of market acceptance of its PAD,

ovarian cancer or hematology 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; and (6) other factors

that might be described from time to time in Vermillion's filings with the

Securities and Exchange Commission. All information in this press release

is as of the date of the release, 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.

- Financial statements follow - Vermillion, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Amounts in Thousands) (Unaudited) June 30, December 31, 2008 2007 Assets Current assets: Cash and cash equivalents $5,307 $7,617 Short-term investments, at fair value - 8,875 Accounts receivable 51 19 Prepaid expenses and other current assets 1,245 1,064 Total current assets 6,603 17,575 Property, plant and equipment, net 1,305 1,938 Long-term investments, at fair value 4,626 3,902 Other assets 149 638 Total assets $12,683 $24,053 Liabilities and Stockholders' Deficit Current liabilities: Accounts payable $1,690 $2,975 Accrued liabilities 2,542 3,595 Current portion of convertible senior notes, net of discount 2,494 2,471 Total current liabilities 6,726 9,041 Long-term debt owed to related party 10,000 10,000 Convertible senior notes, net of discount 16,287 16,196 Other liabilities 150 278 Total liabilities 33,163 35,515 Stockholders' deficit: Common stock 6 6 Additional paid-in capital 228,240 227,895 Accumulated deficit (248,449) (239,142) Accumulated other comprehensive loss (277) (221) Total stockholders' deficit (20,480) (11,462) Total liabilities and stockholders' deficit $12,683 $24,053 (1)The condensed consolidated balance sheet at December 31, 2007, has been derived from the audited consolidated financial statements at that date included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007. Vermillion, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Amounts in Thousands, Except Share and Per Share Amounts) (Unaudited) Three Months Six Months Ended June 30, Ended June 30 2008 2007 2008 2007 Revenue: Products $- $- $5 $- Services - - 48 21 Total revenue - - 53 21 Cost of revenue: Products - - 2 - Services - - 20 15 Total cost of revenue - - 22 15 Gross profit - - 31 6 Operating expenses: Research and development 1,252 2,219 3,127 4,209 Sales and marketing 503 353 1,396 830 General and administrative 1,654 3,339 3,481 6,536 Total operating expenses 3,409 5,911 8,004 11,575 Loss on sale of instrument business - (382) - (382) Loss from operations (3,409) (6,293) (7,973) (11,951) Interest and other expense, net (1,050) (537) (1,382) (920) Loss before income taxes (4,459) (6,830) (9,355) (12,871) Income tax benefit (expense) (2) 4 48 (2) Net loss $(4,461) $(6,826) $(9,307) $(12,873) Loss per share - basic and diluted(1) $(0.70) $(1.74) $(1.46) $(3.28) Shares used to compute basic and diluted loss per common share(1) 6,381,507 3,925,623 6,380,847 3,924,466 (1)Adjusted for March 3, 2008, 1 for 10 reverse stock split.

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