Vermillion (Formerly Ciphergen Biosystems; filed for Chapter 11 bankruptcy in April 2009)

47350 Fremont Blvd.
Fremont, CA 94538    USA
Website: http://www.vermillion.com/

Profile
(Public NASDAQ:VRML) Proteomics • Diagnostics
Vermillion, originally Ciphergen, is engaged in the discovery, development and commercialization of novel high value diagnostic tests that help physicians diagnose, treat and improve outcomes for patients. Vermillion has ongoing diagnostic programs in oncology/hematology, cardiology and women's health with an initial focus in ovarian cancer. Original venture investors in Ciphergen Biosystems include Falcon Technology Partners, S.R. One, Forward Ventures, and MDS Capital.

In January 2010, Vermillion closed a private placement transaction with a group of investors for approximately $43.05 million in gross proceeds from the sale of approximately 2,328,000 shares of its common stock at a price of $18.4932 per share. Also, the U.S. Bankruptcy Court for the District of Delaware issued a confirmation order approving Vermillion's plan of reorganization.

In December 2009, Vermillion entered into securities purchase agreements in connection with a private placement with a group of investors. Under the terms of the agreements, Vermillion will receive approximately $43.05 million in gross proceeds from the sale of approximately 2,328,000 shares of its common stock at a price of $18.4932 per share, which is equal to 90% of the average closing sale price of Vermillion's common stock for the 5 trading-day period ending December 23, 2009. The transaction is expected to close on or about January 7, 2010, subject to the receipt of a confirmation order by the United States Bankruptcy Court for the District of Delaware approving Vermillion's plan of reorganization and the satisfaction of other customary closing conditions. Net proceeds from the transaction will be used to finance in part the distributions to be made under Vermillion's plan of reorganization, to pay administrative fees and expenses associated therewith, to repay in full Vermillion's obligations under its debtor-in-possession financing agreement with Quest Diagnostics, and for working capital and other general corporate purposes. Vermillion expects this transaction to provide sufficient capital to allow it to accomplish a successful restructuring.

In November 2009, Vermillion filed a Plan of Reorganization and Disclosure Statement with the United States Bankruptcy Court for the District of Delaware. The Plan calls for the company to pay all claims in full. The Plan is expected, if approved, to allow holders of the company's common stock to retain their equity interests in the company.

In April 2009, Vermillion filed a voluntary petition for reorganization under Chapter 11 bankruptcy. The company plans to continue operating without interruption as it focuses on obtaining regulatory clearance respecting the company's ovarian tumor triage test (OVA1) 510(k) pre-market notification to the FDA.

In August 2007, Vermillion closed an equity financing with new and existing investors, including several accounts managed by OppenheimerFunds or its controlled affiliates, Quest Diagnostics, and Falcon Technology Partners, a fund affiliated with James L. Rathmann, Vermillion's Executive Chairman of the Board of Directors. Vermillion received approximately $20.6 million in gross proceeds from the sale of 24.5 million shares of its common stock and the issuance of warrants for the purchase of 19.6 million additional shares of Vermillion's common stock with an exercise price of $0.925 per share. Oppenheimer & Co. acted as the placement agent.

In August 2007, Ciphergen Biosystems completed the company's name change to Vermillion.

In November 2006, Ciphergen Biosystems completed the exchange of its outstanding 4.50% Convertible Senior Notes due 2008. $27.5 million aggregate principal amount of Outstanding Notes were exchanged for $16.5 million of a new series of 7.00% Convertible Senior Notes due 2011 and $11.0 million of cash.

In November 2006, Ciphergen Biosystems completed the sale of its life science research instrument and related products to Bio-Rad Laboratories (Hercules, CA). Bio-Rad purchased the business for up to $20 million in cash and made a $3 million equity investment in Ciphergen.

In November 2004, Ciphergen Biosystems closed the sale of it's BioSepra process chromatography business to Pall Corporation for a purchase price of approximately $32 million, net of cash and debt.

In August 2003, Ciphergen Biosystems closed the sale of $30 million of Convertible Notes due 2008 to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (including $5 million aggregate principal amount of the notes which were subject to the initial purchaser’s over-allotment option). The notes will bear interest at a rate of 4.50%.The notes will be convertible into the Company’s common stock at a conversion rate of 108.8329 shares per $1,000 principal amount of the notes, subject to adjustment in certain circumstances.

In June 2001 Ciphergen Biosystems acquired BioSepra from Invitrogen $12 million in cash.

Ciphergen became public in Oct 2000, issuing 6,325,000 shares of common stock, including an over-allotment of 825,000 shares, at $16 per share for gross proceeds for the company of $101.2 million before underwriting discounts, commissions and other offering expenses.

In July 2000, Ciphergen Biosystems opened its first Biomarker Discovery Center (BDC) in Palo Alto, CA. The BDC is dedicated to proteomics research and protein biomarker discovery including differential protein expression, protein characterization, assay development and validation and protein interaction studies using Ciphergen's current and next-generation ProteinChip System and Arrays. The BDC plans to establish corporate and customer relationships to discover, characterize and validate novel protein biomarkers from biological samples provided by Ciphergen's collaborators. The BDC will be supported by Ciphergen's experienced scientific research staff and provide paid services to Ciphergen customers and collaborators. The BDC's initial projects include collaborations in the field of bladder cancer with MD Anderson Cancer Center, and in prostate cancer with the Prostate Cancer Center at Eastern Virginia Medical School. The BDC expects to establish significant additional academic and pharmaceutical collaborations this year. The Biomarker Discovery Center is located at Ciphergen's headquarters in Palo Alto, and will be relocated to Ciphergen's expanded facilities in Fremont, CA in mid-July, 2000.

In Vitro Diagnostic Products
Vermillion has multiple ovarian cancer diagnostic tests in development. The most advanced of Vermillion's programs is the OVA1 test, which is designed to use a panel of biomarkers to help identify women with a higher likelihood of malignancy. Vermillion filed a 510(K) application with the FDA for the OVA1 test in June 2008. The OVA1 test is part of a strategic alliance with Quest Diagnostics to jointly develop and commercialize diagnostic tests. Vermillion is developing a diagnostic test designed to distinguish between benign and malignant pelvic masses. Additionally, studies are underway to develop tests to detect early stage ovarian cancer, predict prognosis and recurrence, and identify women considered at high risk for the disease. Vermillion's comprehensive diagnostic development program is being conducted with several leading collaborators at Johns Hopkins School of Medicine, M. D. Anderson Cancer Center, Rigshospitalet (Copenhagen, Denmark), and the University of Kentucky.

In November 2009, the USPTO issued Vermillion patent # 7,605,003 titled "Use of biomarkers for detecting ovarian cancer" that covers biomarker combinations for both the diagnosis and management of ovarian cancer and covers measurement of the markers by a variety of methods, including mass spectrometry and immunoassay approaches.

In September 2009, the FDA cleared the OVA1 Test, the first blood test that, when combined with other clinical information, can help assess the likelihood of ovarian cancer with high sensitivity prior to biopsy or exploratory surgery, even if radiologic test results fail to indicate malignancy. Quest Diagnostics, which is a long time investor in R&D of the OVA1 technology, has exclusive rights to offer the test to the clinical reference laboratory market in the USA for 3 years. The OVA1 Test is a qualitative serum test that combines the results of five immunoassays into a single numerical score. It is indicated for women over age 18, with an ovarian adnexal mass present for which surgery is planned, and not yet referred to an oncologist. The test uses 5 well established biomarkers, transthyretin (TT or prealbumin), apolipoprotein A-1 (Apo A-1), beta2-microglobulin (Beta2M), transferrin (Tfr) and CA 125 II, and a proprietary algorithm to determine the likelihood of malignancy in women with pelvic mass for whom surgery is planned.

In February 2009, the USPTO issued a notice of allowance (WO/2006/099126) to Vermillion for the discovery of hepcidin as a biomarker for ovarian and endometrial cancer. The discovery could ultimately lead to the development of an improved, next generation assay that might provide additional, valuable information to diagnose ovarian cancer. The patent also covers the measurement of hepcidin by a variety of methods, including SELDI mass spectrometry and other immunoassay approaches. In particular, it has been found that hepcidin is a biomarker for both ovarian cancer and endometrial cancer and that a panel of biomarkers, including hepcidin, transthyretin and optionally others are useful to classify a sample as ovarian cancer.

In February 2009, data was presented from the prospective OVA1 clinical trial at the Society of Gynecologic Oncologists' (SGO) 40th Annual Meeting on Women's Cancer in San Antonio, TX. This multicenter (n=27), nonrandomized, open label clinical trial (protocol ID: OVA-001-C01; NCT00436189) was initiated in February 2007, at the University of Kentucky (Lexington, KY), under PI Fred Ueland, MD. The trial’s primary objective was to determine the proportion of actual ovarian cancer cases among OVA1-positive patients is higher than the proportion of actual ovarian cancer cases among referred patients. A secondary objective was to evaluate the OVA1 assay plus standard clinical practice. Patients scheduled for surgery, were asked to provide a blood specimen once prior to surgery. The blood specimen was then tested with the Ova1 assay. The ovarian tumor triage test was designed to assist physicians in distinguishing between benign and malignant pelvic masses. This prospective clinical trial successfully collected blood samples from women who were candidates for surgery to remove an ovarian tumor. In October 2007, Vermillion completed clinical trial enrollment of this trial. Completion of this trial, which is one of the largest of its kind ever conducted in the USA, was a major milestone achievement for the company. Improved predictive value over the baseline prevalence of ovarian cancer is the primary endpoint of this trial. The trial enrolled 550 patients at 27 clinical trial sites that were demographically mixed to include large and small medical centers (universities/ community hospitals), small gynecology/obstetrics groups, gynecology/oncology practices, and patients from HMO groups. The ovarian tumor triage test is designed to assist physicians in determining whether patients should be referred to specialists prior to their initial surgery. Studies show that women with ovarian cancer who are initially operated on by a gynecologic oncologist or at specialist medical centers survive longer and have a better chance of being cured, compared to those whose surgeries are performed by a non-specialist. The primary aim of the trial was to determine the ability of the company’s proprietary OvaCalc algorithm to estimate the risk of malignancy in pre and postmenopausal women with an ovarian mass scheduled for surgery. The OvaCalc software was used to import the values5 markers, transthyretin, apolipoprotein A1, transferrin, beta-2 microglobulin, and CA125, that were measured using standard immunoassays, reconcile, and numerically combine the values from these biomarker assays, and use the OVA1 algorithm to generate an ovarian malignancy risk index score for each individual specimen. Two sets of samples were used to train and test the OvaCalc algorithm, and the algorithm was then applied to an independent validation set. According to the results of the trial, the OvaCalc algorithm can effectively identify women with a higher likelihood of malignancy. The output of the OVA1 algorithm is a numeric index between 0.0 and 10.0. Cut-off values at 5.0 for pre-menopausal women and at 4.4 for post-menopausal women were determined based on the training data. The cutoff value classifies a patient based on her OVA1 test score into one of two ovarian malignancy risk zones, low or high. Within the trial population, among both premenopausal and postmenopausal patients, the OvaCalc algorithm also detected 90% of cases of Stage I epithelial ovarian cancer and 100% of Stage II/IV malignancies while maintaining a >90% negative predictive value.

In February 2009, Vermillion renewed a long standing collaboration with Johns Hopkins University on the development of novel biomarkers that can be applied toward disease detection, classification and monitoring of prevalent malignancies including ovarian, breast and prostate cancer. Vermillion will have access to exclusive commercial rights to the discoveries made through the partnership. Vermillion has been working in tandem with Daniel W. Chan, PhD, Director of the Clinical Chemistry Division in the Department of Pathology and Director for the Center for Biomarker Discovery, and his team at Johns Hopkins University. As part of the collaboration, Vermillion will continue to provide financial support, technical assistance and access to its advanced technology platforms, while Johns Hopkins will continue to contribute cancer serum samples and the clinical and scientific expertise of its physicians and scientists.

In October 2008, Vermillion and Quest Diagnostics extended the strategic alliance agreement between the parties through October, 2009, to enable the companies to continue work on the development and commercialization of two tests, OVA1 and VASCLIR. In July 2005, Ciphergen Biosystems and Quest Diagnostics formed a strategic alliance to develop and commercialize novel proteomic diagnostic tests based on Ciphergen's proprietary SELDI ProteinChip technology. The strategic alliance will focus on the commercialization of selected assays chosen from Ciphergen's pipeline over the next three years. In addition, for an aggregate purchase price of $15 million, Quest Diagnostics has purchased 6.2 million shares of Ciphergen common stock, or approximately 17% of shares outstanding, and a 5-year warrant to purchase an additional 2.2 million shares for $3.50 per share. Quest Diagnostics also has agreed to loan Ciphergen up to $10 million to fund certain development activities. The loan would be forgiven based on achieving certain milestones. Additional terms of the agreements were not disclosed.

In November 2007, the USPTO issued a Reexamination Certificate of patent #6,734,022, which is directed to a fundamental process of SELDI mass spectrometry. As a result of the patent reissuance, Bio-Rad Laboratories is expected to pay Vermillion $2.0 million pursuant to the terms of the Asset Purchase Agreement entered into in connection with the sale of Vermillion's instrumentation business to Bio-Rad on November 13, 2006.

In May 2007, the European Patent Office (EPO) issued Ciphergen EU Patent # 1 354 203, entitled "Biomarkers of Transitional Cell Carcinoma of the Bladder," for aiding in bladder cancer diagnosis when used in conjunction with cystoscopy the current standard of care. The patent describes using mass spectrometry to detect certain protein biomarkers that are specifically present in patients with bladder cancer. These discoveries were made under a collaborative agreement between Ciphergen and Eastern Virginia Medical School. Ciphergen retains exclusive rights to these discoveries for diagnostic development.

In April 2007, Ciphergen Biosystems presented data on the discovery of several protein biomarkers that may be potential diagnostic markers in detection of early stage ovarian cancer. These findings presented at the 2007 meeting American Association for Cancer Research (AACR) support one of three diagnostic programs that Ciphergen currently has under development for ovarian cancer. Ciphergen and its collaborators discovered 4 proteins in urine that separate women with early cancer from healthy individuals with a sensitivity of 56% and a specificity of 95%. These results suggest the possibility that these proteins in combination with other biomarkers, could aid in the diagnosis of early stage ovarian cancer. To elucidate these findings Ciphergen employed protein expression profiling methods to analyze urine samples from 400 women, including 288 women with epithelial ovarian cancer, 52 with early stage disease and 176 with late stage disease, 74 women with benign ovarian disease, and 98 healthy controls. Ciphergen has multiple ovarian cancer diagnostic tests in development, including an ovarian cancer triage test designed to distinguish between benign and malignant pelvic masses, one to predict recurrence of ovarian cancer and a test to aid physicians in identifying women considered at high risk for ovarian cancer. These findings support Ciphergen's diagnostic program with high risk, early stage disease. Ciphergen is currently enrolling patients in a prospective clinical trial (protocol ID: NCT00436189) for its ovarian cancer triage test to evaluate whether the positive predictive value of the test is better than the current standard of care, physical and radiologic exam, for distinguishing benign from malignant ovarian tumors. Ciphergen's comprehensive diagnostic development program is being conducted with several leading collaborators at Johns Hopkins School of Medicine, M. D. Anderson Cancer Center, University College London, and the University of Kentucky.

Current as of January 07, 2010