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VRML > SEC Filings for VRML > Form 8-K on 26-Aug-2013All Recent SEC Filings

Show all filings for VERMILLION, INC.



Termination of a Material Definitive Agreement

Item 1.02 Termination of a Material Definitive Agreement.

On August 23, 2013, Vermillion, Inc. (the "Company" or "Vermillion") sent Quest Diagnostics Incorporated ("Quest") a notice of termination of the Strategic Alliance Agreement dated as of June 22, 2005 between the Company and Quest (as amended from time to time, the "Strategic Alliance Agreement").

Vermillion previously sent Quest a notice of default under the Strategic Alliance Agreement, as reported in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 24, 2013. The Strategic Alliance Agreement provides that if a party fails to cure material defaults within 90 days of the date of a notice of default, the other party has the right to terminate the Strategic Alliance Agreement. The Company believes that Quest failed to cure the violations, breaches, and/or failures to perform identified in the notice of default during this period. Under the terms of the Strategic Alliance Agreement, a termination by Vermillion as a result of Quest's default does not trigger any early termination penalties for Vermillion or Quest.

Notwithstanding the termination, Vermillion recognizes that Quest has played a significant role in providing physicians and patients with access to OVA1 and securing reimbursement for this test. An ongoing commercial relationship with Quest is important to Vermillion and the Company is committed to continuing discussions with Quest to define a business structure that delivers value for both companies and assures patients can benefit from access to OVA1. As a result, Vermillion has agreed that Quest can continue to make OVA1 available to healthcare providers on the same financial terms following this termination while negotiating in good faith towards an alternative business structure.

Additional required disclosure

Under the terms of the Strategic Alliance Agreement, Quest was required to pay Vermillion a fixed payment of $50 per OVA1 performed, as well as 33% of its gross margin from revenue from performing OVA1 domestically. Quest had the non-exclusive right to commercialize OVA1 on a worldwide basis, with exclusive commercialization rights in the clinical reference lab marketplace in the United States, India, Mexico, and the United Kingdom through September 11, 2014, with the right to extend the exclusivity period for one additional year. Quest is also a stockholder of the Company.

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