Vermillion, Inc. (NASDAQ:VRML) is a diagnostics firm with strong growth on the top line in its latest reports. The stock has started to rip higher recently. The big catalyst appears to be a recent announcement that investors, including several Vermillion directors and members of management as well as certain significant stockholders, have agreed to purchase approximately $5.6 million of unregistered shares of Vermillion’s common stock and warrants to purchase unregistered shares of Vermillion’s common stock in a private placement. The placement closed on Friday.
Traders will note 34% during the past month in terms of shareholder gains in the company. The situation may be worth watching. VRML has a track record that includes a number of dramatic bounces. What’s more, Vermillion has registered increased average transaction volume recently, with the past month seeing a bit over 280% over what the stock has registered over the longer term.
Vermillion, Inc. (NASDAQ:VRML) bills itself as a company that, together with its subsidiaries, discovers, develops, and commercializes diagnostic and bio-analytical solutions that help physicians to diagnose, treat, and enhance outcomes for women. It is developing novel diagnostic tests for gynecologic disease with focus on ovarian cancer.
The company’s lead in vitro diagnostic test is Overa, a blood test to aid physicians in pre-surgical assessment of ovarian tumors for malignancy, using an ialgorithmic approach. It serves clinical reference laboratories, hospital laboratories, and physician offices in the United States. Vermillion, Inc. was founded in 1993 and is headquartered in Austin, Texas.
According to company materials, “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.”
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According to the company’s latest release, under the terms of the private placement, Vermillion has agreed to sell an aggregate of 3,747,125 shares of its common stock at the price of $1.40 per share, the closing price quoted on NASDAQ on February 10, 2017. In addition, the investors will receive warrants to purchase up to an aggregate of 2,810,338 shares of Vermillion’s common stock at an exercise price of $1.80 per share.
The warrants become exercisable six months after the closing of the private placement and expire five years from the date of issuance or, if earlier, five business days after Vermillion delivers notice that the closing price per share of its common stock exceeded the exercise price for 20 consecutive trading days during the exercise period.
Apparently, the closing of the private placement occurred on Friday (February 17, 2017), subject to customary closing conditions. At the closing, Vermillion received $5.6 million in gross proceeds. If all of the warrants are exercised, Vermillion would receive an additional $5.1 million in gross proceeds, resulting in total proceeds from the private placement of up to $10.7 million before transaction costs.
Vermillion intends to use the net proceeds from the private placement for general corporate and working capital purposes. That working capital will likely go towards further development of product potential for its OVA1 and Overa diagnostic tools. Recent accolades for the company’s asset base have management understandably excited.
“We believe these new reimbursement updates for OVA1 and Overa, combined with the ACOG recommendation, NCCN inclusion, and the Society of Gynecologic Oncology position statement, now makes OVA1 the only pelvic mass risk assessment tool which has received recommendations and statements from all three medical societies which oversee ovarian cancer detection. We believe this will be key to driving positive medical policy and managed care contract decisions in 2017 and beyond,” said Valerie Palmieri, President and CEO of Vermillion, Inc.
Now commanding a market cap of $91.5M, VRML has a significant war chest ($8.1M) of cash on the books, which compares with about $182K in total current liabilities. One should also note that debt has been growing over recent quarters. VRML is pulling in trailing 12-month revenues of $2.2M. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 88.8%. As more color becomes clear on the name, we will review the situation and update our take. For continuing coverage on shares of $VRML stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!