Financing will support commercial expansion of OVA1 test and R&D on additional diagnostics.

Vermillion agreed to sell 4,000,000 shares of its common stock in an underwritten public offering at a price of $5.45 per share. The company expects net proceeds will be approximately $20.21 million after deducting underwriting discounts and expected offering expenses.

Vermillion intends to use the money to expand its U.S. sales organization, fund associated reimbursement activities, and bolster international opportunities. The firm has one product on the market, OVA1™, which is used to determine the likelihood of malignancy in women with pelvic mass for whom surgery is planned.

The firm also plans on using the offering proceeds to accelerate clinical trials of its diagnostic test for peripheral arterial disease and OVA2, to develop additional diagnostic tests, to pursue product diversification opportunities, and for other general corporate purposes.

OVA1 is a qualitative serum test that combines the results of five immunoassays into a single numerical score. Biomarkers under evaluation are transthyretin, apolipoprotein A-1, beta 2-microglobulin, transferring, and cancer antigen 125.

The blood test was cleared by the FDA in September 2009 and launched in March 2010. Quest Diagnostics, which invested in the development of the technology, has U.S. marketing rights. The EU sanctioned OVA1 about a year after the FDA, in September 2010.

Vermillion states that it performed an estimated 2,935 OVA1 tests during the fourth quarter of 2010, representing a volume growth of 49% over the third quarter of last year. For full year 2010, the firm performed an estimated total of 6,155 tests. Vermillion has secured payor coverage with 12 insurance providers.

Vermillion says that it received $903,000 from Quest Diagnostics for OVA1 tests performed in 2010. Of this $308,000 were recognized as product revenues, which reflects the $50 per test payment under the companies’ strategic alliance. The remaining $595,000 of payments reflect the 33% royalties as of December 31, 2010.

The company is evaluating and validating biomarkers that may expand its ability to enter into other diagnostic arenas in the field of ovarian cancer. Vermillion is collaborating with Johns Hopkins University to develop OVA2, with the aim of enhancing OVA1’s predictive value and specificity.

Vermillion is also partnered with Stanford University to develop a blood test to stratify an individual’s risk of developing peripheral artery disease. The test, which is called Vasclir™, has been evaluated in four studies comprising almost 1,000 patients. Quest Diagnostics has reportedly accepted Vasclir™ as a development program.

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