Vermillion and Quest Diagnostics have had a sometimes tumultuous business relationship, but the two companies recently came to terms on a new distribution deal of the former’s assay for ovarian cancer. Under the terms of the agreement, the OVA1 test will be distributed to Quest’s customers in 39 states. Quest will collect and transport specimens in those states and transport them to labs owned by the Vermillion subsidiary Aspira Labs. In the other 11 states, Quest will perform the testing in its own labs until Aspira receives the approvals to operate laboratories on its own. Quest will receive a payment from the Texas-based Vermillion to perform the logistics and testing. The financial terms of the deal were not disclosed. “We are pleased that we are taking steps to offer OVA1 testing through ASPiRA on behalf of Quest Diagnostics clients,” said Vermillion Chief Executive Officer Valerie Palmieri in a statement. The new agreement comes on the heels of a settlement between the two companies of a dispute that began in 2013. Vermillion had terminated an agreement that it had entered with the New Jersey-based Quest in 2005 to distribute OVA1 and another test, claiming Quest was in breach of that agreement. […]
Vermillion and Quest Diagnostics have had a sometimes tumultuous business relationship, but the two companies recently came to terms on a new distribution deal of the former’s assay for ovarian cancer.
Under the terms of the agreement, the OVA1 test will be distributed to Quest’s customers in 39 states. Quest will collect and transport specimens in those states and transport them to labs owned by the Vermillion subsidiary Aspira Labs. In the other 11 states, Quest will perform the testing in its own labs until Aspira receives the approvals to operate laboratories on its own.
Quest will receive a payment from the Texas-based Vermillion to perform the logistics and testing. The financial terms of the deal were not disclosed.
“We are pleased that we are taking steps to offer OVA1 testing through ASPiRA on behalf of Quest Diagnostics clients,” said Vermillion Chief Executive Officer Valerie Palmieri in a statement.
The new agreement comes on the heels of a settlement between the two companies of a dispute that began in 2013. Vermillion had terminated an agreement that it had entered with the New Jersey-based Quest in 2005 to distribute OVA1 and another test, claiming Quest was in breach of that agreement. Quest continued to distribute the test while both sides negotiated a new pact.
According to documents filed with the Securities and Exchange Commission the day the companies entered into the new pact, Vermillion agreed to pay Quest $1.07 million to settle the dispute. It also received a $100,000 credit against any royalty payments owed under the new contract.
Vermillion is heavily dependent on the Quest pact for its revenue. In 2014, $1.2 million of its $2.5 million in total revenue came from royalty payments from Quest.
Vermillion also agreed not to market any test that competes against Quest unless it is proprietary in nature, or to market the OVA1 test to any company in the U.S. whose annual sales exceed $2 billion.
Takeaway: Vermillion and Quest have smoothed over some of the more contentious aspects of their relationship.
