Valerie Palmieri - President and CEO Marra Francis - CMO Eric Schoen - SVP, Finance and CAO

Mark Massaro - Canaccord Genuity George Kafkarkou - Private Investor

Good morning, ladies and gentlemen and welcome to the First Quarter 2017 Vermillion Earnings Conference Call. My name is Jennifer and I’ll be your coordinator for the call today. With me today are Valerie Palmieri, President and Chief Executive Officer; Dr. Marra Francis, Chief Medical Officer; and Eric Schoen, Senior Vice President of Finance and Chief Accounting Officer. This morning, they’ll discuss Vermillion’s Q1 2017 performance. Before we get started, I’d like to point out that there will be a replay of this conference call available via telephone and internet. Please refer to today’s press release for replay information. This presentation contains, and answers to today’s questions may contain forward-looking statements including statements regarding Vermillion’s research trial services business, ASPiRA IVD, Vermillion’s plans to commercialize Overa, including its targeted launch program, Vermillion’s plans to use the GOFF System Index and the potential effects thereof. Vermillion’s plans to launch its second bioinformatics product, Vermillion’s plans to implement its cloud web service platform, anticipated test volumes in future periods, our ability to capture market share, expected progress with respect to Vermillion’s strategic plan, expected results from Vermillion’s sales initiative, Vermillion’s ability to expand payer coverage for its test, the effects of receiving our AMA CPT cod, the impact of scientific publications and study outcomes on expanding use of and access to OVA1 and Overa, the anticipated number of specimens in our pelvic mass data repository, the ability of our pelvic mass data repository to facilitate the development of future algorithms for early detection, symptom management, diagnosis and prognosis of gynecologic diseases, the effects of anticipated output from clinical utility studies, anticipated cash utilization, international commercialization, and the anticipated effects thereof, anticipated effects of agreements with strategic lab partners, trends with respect to OVA1 and Overa testing volumes, anticipated revenue and the anticipated timing of the recognition thereof, and the metrics Vermillion will use to define its success in 2017. You are cautioned not to place undue reliance on forward-looking statements. Vermillion is providing this information as of the date of this conference call and does not undertake any obligation to update any forward-looking statements contained on this call as a result of new information, future events or otherwise except as required by law. Forward-looking statements reflect management’s current estimates, projections, expectations or beliefs and involve risks and uncertainties that could cause actual results and outcomes to be materially different. Risks and uncertainties that may affect the future results of the Company include, but are not limited to, the competitive environment, the speed of market adoption of Vermillion’s products, Vermillion’s ability to commercialize Overa inside and outside of the United States, changes in government regulations, Vermillion’s ability to obtain and maintain required regulatory approvals, payer reimbursement and other factors as described in the Vermillion annual report on Form 10-K for 2016 and quarterly report on Form 10-K for the first quarter of 2017. Following the Vermillion teams' remarks, we will open-up the call for your questions. Now I'd like to turn the call over to Ms. Palmieri. Please go ahead.

Thank you, Jennifer. Good morning, everyone and thanks for joining us today. This morning I will provide you the highlights of the quarter, some early Q2 results, and a review of the progress we’ve made towards implementing our strategy. Vermillion has had a milestone quarter highlighted by year-over-year revenue growth of 44%, year-over-year and quarter-over-quarter average per day volume increases of 23% and 8%, respectively in territories with sales coverage and year-over-year gross product margin improvement from negative margins to positive 38%. This morning we will discuss the details of our first quarter performance, the large market opportunity that remains for OVA1 and Overa and the investments we’re making in the business to maximize our ability to capture that opportunity as well as our progress on our strategic plan. We are proud of the impact that OVA1 and Overa are having on patients’ lives. Since OVA1 launched in 2010, OVA1 has impacted over 90,000 women with zero safety or efficacy issues. And as we build out our patient outcomes program, we should be able to better understand the number of cancers detected even at an early-stage and the number of low risk patients managed accordingly. Today OVA1 is FDA cleared, covered by Medicare and included in major society guidelines. It is covered and/or has positive medical policy for 30% of the population, and during the first quarter of 2017 we received payment 54% of the time versus less than 17% in the first quarter of 2016. During Q1, we achieved a trajectory change in the business in terms of revenue, volume and cash collections. We are confident in our prospects for long-term growth of the business. Our goal is to change the standard of care for managing the 1 million plus women with a pelvic mass. This will take time and require further investments in people and our infrastructure. To discuss our first quarter financial review, I’d like to introduce Eric Schoen, our Senior Vice President of Finance and Chief Accounting Officer.

Thanks, Valerie. Today we furnished our first quarter 2017 financial results in a press release and filed our form 10-Q with the Securities and Exchange Commission, which is available for download via the Investor section of our Web site at www.vermillion.com. Total revenue increased 44% in the first quarter of 2017 compared to the prior year quarter. Our total revenue in the first quarter of 2017 was $726,000 compared to $505,000 in the same year-ago quarter. The first quarter 2017 revenue included $678,000 from product sales of OVA1 by ASPiRA LABS and $48,000 of service revenue from ASPiRA IVD. Our product revenue increased 34% in the first quarter of 2017 compared to the prior year quarter. All prior year revenue was from product sales of OVA1 as ASPiRA IVD began operations in June 2016 and thus there was no comparable service revenue in the prior year quarter. While we expect IVD service revenue to increase over time, we realized that the timing of contracts in revenue will initially be lumpy and thus temper expectations for significant growth in the second and third quarters of 2017. There were 2,293 OVA1 test performed during the first quarter of 2017 compared to 2,265 OVA1 test performed in the prior year quarter. We will discuss the breakout of volume between covered and non-covered territories in the sales review section of this call. However, revenue on a per test performed basis increased to $296 in the first quarter of 2017 compared to $223 in the first quarter of 2016, representing an increase of 33%. This number compared to $281 in the fourth quarter of 2016, which was normalized for a one-time item of approximately 45,000 or $20 per test attributed to the resolution of billing issues with Novitas, our Medicare contractor. Revenue for ASPiRA LABS contractual clients, Medicare revenue and revenue for certain other customers that can be regionally estimated is recognized when the OVA1 test is performed. All other ASPiRA LABS revenue is being recognized on a cash basis unless there continues to be a lag period between performing the test and being able to recognize revenue for some tests. We intend to continue to transition to accrual-based revenue in 2017 when revenue from certain customers becomes estimable. Cost of product revenue for the first quarter of 2017 totaled $422,000 representing a 20% decrease from the comparable prior year quarter due to the lower consulting and personnel costs. In the first quarter of 2017, cost of service rev -- cost of service revenue totaled $305,000 for ASPiRA IVD services. Our gross product margin was 38% in the first quarter of 2017 compared to a negative margin in the comparable prior year quarter. Total operating expenses in the first quarter of 2017 decreased to $2.7 million compared to $4.9 million in the same year-ago quarter, representing a decrease of 46%. The decrease was due primarily to commercial operating efficiencies as well as lower research and development costs following the expiration of our collaboration agreement with the Johns Hopkins University School of Medicine and the clearance of Overa in March 2016. Net loss for the first quarter of 2017 was $2.7 million or $0.05 per share as compared to a net loss of $4.9 million or $0.09 per share in the same year-ago quarter. There were 56.1 million common shares outstanding at March 31, 2017. Cash and cash equivalents at March 31, 2017 were $7.9 million, including the $5.1 million in net proceeds from our private placement of common stock and warrants in February 2017. The Company utilized $2.6 million in cash in the first quarter of 2017 including some one-time payments of expenses incurred in prior years. Thus, we reiterate our guidance for cash utilization to continue to decrease in the second quarter of 2017 with the goal of reducing our cash utilization to under $2 million per quarter over the balance of 2017. Now I'll turn it back to Valerie.

Thanks, Eric. We will now review our core strategy. Our strategy had three phases: a rebuild phase, a transformation phase and now a growth phase. We’ve completed the rebuild and transformation phase. In 2017, we’ve begun our growth phase with focusing on regional specific sales efficiency, key payer publications in coverage, as well as overall growth through our revenue diversification. The three key objectives of the growth phase are as follows: first, the successful deployment of our domestic and international commercialization strategy based on focused clinical utility and health economics to drive sales, payer coverage, as well as continued momentum with guidelines. Second, delivering key results from our new revenue channels, including international partnership and ASPiRA IVD. And third, laying the foundation for our one-of-a-kind pelvic mass repository which is intended to be the core of our big data engine and pelvic mass portfolio. We will now review our first objective, which is the publication of foundational peer reviewed papers to support payer and guideline adoption including clinical utility studies and a 360 degree review of health economics. I’d like to hand the call over to Dr. Marra Francis, our Chief Medical Officer to provide this update.

Thank you, Valerie. We continued to maximize test coverage and clinical adoption. And this is directly driven by our core clinical utility and health economic publication. Currently we have three publications in process and one already published that addresses the following benefits of choosing Multivariate Index Assay, such as OVA1 and Overa. Some of these publications are: first, the superior of Multivariate Index Assay over other available biomarker test. The benefit of incorporating Multivariate Index Assay with other prognostic factors such as patient symptoms and finally the [indiscernible] Multivariate Index Assay for payers. The final two publications will be reviewed in detail on this call. I'd like to begin by reviewing in detail our Symptom Index study performed in conjunction with The University of Washington and the impact we believe it will have on women as an adnexal mass diagnose -- with an adnexal mass diagnosis. In February 2017, the manuscript titled evaluation of a validated biomarker test in combination with a Symptom Index to predict ovarian malignancy with lead author Dr. Renata Urban, was published in the International Journal of Gynecological Cancer. Ovarian cancer was previously believed to be a silent killer. However, based on the study it is now known that patients ultimately diagnosed with ovarian cancer have a specific set of symptoms that present prior to their ultimate diagnosis. According to the latest ACOG Practice Bulletin on the management of adnexal masses, besides a personal medical history with detailed gynecologic history, a review of symptoms is a critical component of the patient evaluation. In this latest study a positive GOFF Symptom Index combined with OVA1 was shown to have a sensitivity of a 100% for the detection of ovarian cancer in women. Vermillion [technical difficulty] to helping improve the lives and outcomes for women with ovarian cancer. In furthering our mission to ensure all women with the potential diagnosis of ovarian cancer, get the proper care that they need with a specialist. We plan to expand upon the value provided by an OVA1 result and couple that result with the GOFF Symptom Index to improve ovarian cancer detection sensitivity and negative predictive value. I will now review the last publication, which is in process, The Economic Advantage. [Indiscernible] In this publication which was submitted last quarter, we modeled the economic impact of the use of OVA1 guide treatment for ovarian cancer. Using commercial and Medicare claims data, we constructed a budget impact model to estimate the economic consequences of substituting OVA1 versus a single biomarker assay CA-125, in assessing the likelihood of pelvic mass malignancy in both premenopausal and postmenopausal women. Estimates of future health plan expenditure is calculated from base case model assumptions projected overall per member per month or PMPM savings of $0.05 for commercially insured members and $0.01 for Medicare beneficiaries associated with increased utilization of OVA1. Sensitivity analysis revealed potential per member per month savings of up to $0.17 for the commercially insured and $0.05 for Medicare beneficiaries. For example, in a commercial plan with 20 million members, this savings could total as much as $3.4 million per month and as much as $40 million per year. The results of the budget impact model support the use of OVA1 by indicating that cost savings can be achieved, while reaping the clinical benefits of improved diagnostic accuracy, early disease detection, and reductions in multiple and possibly unnecessary referrals to gynecologic oncologists. Lastly I want to conclude with an update on the progress with the National Medical Society. First, our submission to NCCN for the practice guidelines [indiscernible] treatment of ovarian cancer made in October 2016 is currently under review. Second, the completion of the ACOG District II series on both the adnexal mass and ovarian cancer have been completed and are currently being presented to women's healthcare providers in grand rounds at major medical institutions. These Education Index include OVA1 indications for use and high sensitivity to detect ovarian cancer. Lastly, we just returned from the National ACOG Meeting, in San Diego and had many productive conversations with providers about the clinical use of OVA1 as a level B recommendation from the latest ACOG Practice Bulletin. Our new informatics report was well received by providers who express that using OVA1 would be the most comprehensive biomarker test to not only detect ovarian cancer, but manage women with informed consent and optimal surgical care. You will hear more about ACOG National Meeting in Valerie's update. I will now hand this back to Valerie.

Thank you, Marra. I will now give you an update on our three revenue channels: domestic, international, and ASPiRA IVD. On the domestic front, physician education is key to our success and needs to be multifaceted. As part of our education process we're attending both national and regional ACOG meeting. As Marra mentioned, we just attended the National ACOG Conference from May 6 through 9 in San Diego California. At this conference, we re-launched OVA1 MIA. This re-launch provided reinforcement that OVA1 is now included in ACOG guidelines for adnexal masses as well as we formally launched our new informatics product OVA1 plus which is OVA1 combined with transvaginal ultrasound providing a risk of malignancy counseling report. As Marra highlighted, our new report is a valuable tool for providers to properly manage women with adnexal masses, and we will continue to improve upon our product to make OVA1 the only test physicians use when working up in adnexal mass. From national, regional meetings to upcoming CME courses and national OB/GYN publications, we are providing -- we are educating providers on the fact that we are the only FDA cleared and guideline approved technology capable of providing the highest sensitivity and negative predictive value available to diagnose women with adnexal mass. Additionally, our technologies performed across all stages, ages and subtypes of ovarian cancer, something that no other diagnostic company or technology can offer to patients today. We believe that we can capture significant market share over time. To reach that target, we are continuing to educate healthcare providers about the OVA1 and its benefits. During the first quarter, we focused on retention with an 18% increase in base customers year-over-year. Our published studies show a real impact of OVA1 on detection of early-stage ovarian cancer, a phase of the disease were intervention can really save lives. OVA1 combined with clinical assessment has been shown to detect greater than 30% more early-stage cancers, the CA-25 and the same cohort of patients. Based on findings from previous studies and the epidemiology of ovarian cancer in this quarter alone for a test volume of 2,300, we estimate that with clinical assessment OVA1 help detect nearly 35 early-stage ovarian cancers that would have otherwise been missed by CA-125. Those 35 women would have been diagnosed at later stages and their survival would have been greatly diminished. As a result, we believe that OVA1 is making an impact on patient life. In terms of sales adoption, a year-ago, we focused the sales force to focus on increasing same-store growth and enhancing new customer retention. By embracing the shift, the team is driving increased adoption of OVA1 within our existing customer base. The new sales efforts and refocus is driving our change in paying dividend. Through the changes in our sales force, we are able to grow our base customers by 18%, while increasing our specimens per MD by a 125%. We plan to expand our sales force in two key areas, so that the reps can reach more providers and accelerate OVA1 sales growth in key geographic areas. We are confident that our new customers will continue to adopt OVA1 at a strong pace where we’ve sales force or partner presence. We completed 2,293 tests during the first quarter. If you compare the growth and territories with field representatives versus territories with no field coverage, covered territories grew 23% year-over-year per day, while non-covered territories low touch areas decreased 20% year-over-year. For example, in our Michigan territory, we experienced 32% year-over-year growth per quarter, while our Maryland territory grew 51% year-over-year per quarter. We are currently in the process of adding reps in well vetted focused areas to allow for reps to cover smaller territories, leverage payer contracts, and increase cover -- territory coverage, while shoring up non-covered territories. In addition to supplementing our organic sales force, we are actively expanding domestic regional partnerships, building upon established and developing new relationships. Our technology has documented strength over alternative technology such as CA-125 and ROMA and we are on active partnerships and planning partnerships with specific partners to complement our existing sales force. Agreements with the right strategic partners will help us cover the gaps in our organic sales force coverage and allow us to report results via the lab partners existing client connectivity. This will enhance our sales and operational efficiency in the short-term and better position us for decentralized ovarian testing in the future via our strategic lab partners. We anticipate this will enhance our sales and operational efficiency overall. While we are growing quarter-over-quarter, in the coming quarters we will expand our current sales capacity by over 25% as well as continue to make progress with partners in key regional market. The sales, operations, and medical teams have achieved their goals in transforming the business over the last year since the transition from Quest, our commercial team has been effective and we want to recognize them for increasing OVA1 test volume and improving service levels. While we have laid the groundwork for true care pathway integration, tying level A transvaginal results and level B OVA1 diagnostics together, we are also embarking unwrapping into the program our Symptom Index tool, which Marra discussed in detail. Our goal is to launch our second bioinformatics product in Q3. In addition to the launch of OVA1, OVA1 plus, we have also launched our second generation test Overa with our targeted launch program. Our targeted launch program is focused on driving protocol and practice integration with select strategic customers and healthcare systems and has three primary goals. Number one, to enhance our commercial opportunity in studies where OVA1 has not gained traction or is not been commercialized. Number two, to pilot customized local practice protocols, which may improve care with Overa, and number three to begin building prospective evidence of Overa clinical utility targeted to demonstrating improved patient outcomes and health economics to support national payer endorsement. We are seeking to tackle the first two goals with commercialization efforts focused on strategic accounts and healthcare systems. We now have select accounts established and are now offering Overa MIA2G in this limited launch. The last goal to be achieved is Overa clinical utility studies. We identified several healthcare systems and partners that we continue to work with. We anticipate that study outcomes will support payer messaging and reinforce Overa's value in the healthcare system. I will now turn to insurance coverage. The number of lives under positive medical policy increased to almost 96 million in the first quarter, which is about 30% of the covered lives in the U.S. Our market access team has performed well and is now focused on turning these positive medical coverage decisions in the contracts allowing patients to assess OVA1 as an in network benefit. Since our last earnings call, Vermillion announced and ASPiRA LABS in-network agreement with Humana Military, the administrator of TRICARE South region contract covering about 2.5 million lives. In addition, we're happy to report that OVA1 is now covered nationally by TRICARE and has -- ASPiRA LABS is now certified provider status with TRICARE North and West regions. These three TRICARE regions combined have added approximately 9.4 million covered lives for OVA1. We expect to make continued steady progress on expanding the coverage of OVA1 in the remainder of 2017. I am now going to move on to our other revenue channels, international and ASPiRA IVD. For international, we continue to rollout two international business models: centralized and decentralized, designed to meet the unique needs of each country outside the U.S. We expect to implement our web services platform, better known as our cloud platform by the end of calendar year 16 -- '17. In the near-term, we expect the impact of our initial international contracts to be minimal as we work through market regulatory and payer issues in those local jurisdictions. But we expect sales outside of the U.S to have a positive impact on our volume and revenue in late 2017 and beyond. We believe Overa's proving diagnostic technology with the ability to utilize the Roche Cobas platform, will be a solid foundation for global commercialization so women worldwide can more easily benefit from our technology. Keep in mind that about 90% of the ovarian cancers worldwide are outside of the U.S and we have just started to enter that market. Now moving on to ASPiRA IVD. ASPiRA IVD continues to progress among the development pathway towards a fully functioning clinical trial testing site with the following accomplishments. We have further developed our expertise in the key immunotherapy biomarker, PD-L1 by participating in a PD-L1 IHC reproducibility study. We have successfully launched the global DLL-3 companion diagnostic enrolling trial sponsored by a major pharmaceutical company for patients with small cell lung cancer. As we continue to perform the DLL-3 and PD-L1 associated studies, we are seeing studies focused on oncology therapies to have a slower patient enrollment than previously budgeted. This represents the potential risk to our Q3 revenue realization as noted in other press releases by majors CROs and reference laboratories. Our last objective is building a one-of-a-kind pelvic mass repository, which is intended to be the core of our big data engine and pelvic mass portfolio. The goal of this repository is to support the development of new products and predictive analytics in ovarian cancer, as well as the differential diagnosis of benign pelvic conditions. We have a specimen repository database that have close to 5,000 specimens with known pathology. In addition, we have added an IRB approved protocol for specimen and data collection of 7,000 plus clinical laboratory specimens. When we are complete, we will have a total of 12,000 plus specimens in the repository. To date we are seeing approximately 20% return rate on patient consent, which is much higher than we anticipated. Keep in mind, patient consent will allow us to receive additional clinical and diagnostic data, as well as pathology reports which are the gold standard in diagnostics. As we all know ovarian cancer remains one of the most challenges -- challenging diagnoses to make early in disease process. We believe that harnessing this data will be key to truly understanding the origin, contributing factors, prevention and successful treatment of this disease through the development of future bioinformatics solutions. The end goal of our program will be the incorporation of our data and specimen as well as the collaboration of top academic institutions to share clinical, epidemiological, genetic, proteonomic data on various types of benign and malignant pelvic mass conditions. In closing, we believe that the first quarter of 2017 was a milestone quarter in terms of revenue, growth in specific regions, and payer success to set the stage for the rest of 2017. In 2017, we plan to define our Company's success using these four metrics. Number one is revenue growth. Revenue growth will be how we measure the effectiveness of our newly integrated sales process a as well as how we leverage U.S partner laboratories in our decentralized platform. Number two is reimbursement expansion, including a national payer. Number three is the continued development of scientific and clinical evidence, which will serve as the foundation for additional guideline inclusion, payer coverage policies and test adoption. And number four is our profitability as we grow revenue and improve our operating efficiency with the eventual goal of profitability and continued investment back into the business. We look forward to keeping you apprised of our progress during 2017. Our goal is to enhance stockholder value by saving lives and saving money for the overall healthcare system. We are now happy to answer your questions.

Thank you. [Operator Instructions] And we will go ahead and take our first question from Mark Massaro with Canaccord Genuity.

Hey, guys. Thanks for taking the question.

Our pleasure Mark.

Great. My first question is on the trajectory of volumes, certainly up year-over-year, it’s positive and the increase sequentially looks nice. With the new covered lives or I should say with the new -- yes, new covered life up to 96 million, I was just wondering if you could provide any color as to what type of volume inflection that you think you might be able to obtain in OVA1? And maybe related to that, to what extent do you think the new informatics report might have some type of factor in potentially increasing the trajectory of growth this year?

So Mark, I will answer that in two ways. Number one is, where we have payer coverage and I'll give you two examples, Michigan as well as Maryland. In Michigan, we've seen 32% growth year-over-year, and in Maryland 51% growth. So the recipe is payer coverage now that we’re in guidelines we’ve checked that box. Number two, we have a large degree of covered lives. So in Michigan we have 8 out of 10 lives and Maryland it’s 7 out of 10. So where we’ve a large percentage of covered lives the ability to grow basically multiplies. So now that we have TRICARE, so in those areas of the country where TRICARE is most predominant, we do think the TRICARE will make a significant impact. So that’s question number one. Question number two on informatics. We were very pleased with the Goff study. Getting to a 100% sensitivity and a 100% negative predictive value for a blood test is very unusual. And so what our goal is now is putting this Symptom Index, which is three questions into practice, making it easy for the provider to coordinate with the patients, as well as it allows us to stay connected to the patients. So I do believe the informatic report is not just going to be one-dimensional, it's really going to be an interactive product that we will be able to work with providers as well as patients.

Okay, great. And the -- certainly the TRICARE update was certainly a positive one. So as we think about your comments about increasing the sales force, can -- would it be reasonable for us to think that the new reps might be heading into the South region where those new payers are or can you provide a little more color as far as maybe how many reps you’re adding and where are they going?

So we are adding two representatives and in well vetted areas where we're seeing growth opportunity. And as you can imagine those reps will be added where there is significant metro population. So that's where we’re adding them is where we have payer coverage and large metro population.

Okay. That’s helpful. Can you provide a little more color as far as -- you talked about complementing your reps with strategic laboratories. We'd love to hear the status of maybe how many labs you might be working with now? It sounds like you’re in conversations with other labs as well. Can you just refresh us on the overall commercial strategy, how your direct reps can be working together with labs?

Sure. Let me step back, so when you look at the large laboratories, the ones you say there's the top four, which is LabCorp, Quest, Bioreference and Sonic. Those laboratories when you look at just their core diagnostics business not including let’s just say LabCorp's CRO business, 50% of their revenue is women's health based and these women specifically those that have a pelvic mass are really a quandary for these physicians. So there's several strategic partners that are interested in our technology. We're looking to complement our sales force in regions where we either don't have sales coverage, but there is a large metro base or where we have significant payer contracts, because again we want to make sure we are managing the value of our technology, that's where we’re complementing. So we've partnerships that are in process right now and we have partnerships that are actually to become to start.

Okay, great. The other one would be on ASPiRA IVD. I know last quarter you announced a global companion diagnostics deal. You characterized the deal as significant. Can you just speak to -- any update there as to how that might be progressing? I know there maybe some lumpiness and maybe some milestones and things running at the pace of the pharma partner. Can you speak to how you’re thinking about that business the rest of this year and maybe speak to any type of funnel?

Sure. So as you know this is a brainy business and we really consider as a significant milestone. This is our first enrolling trial and in fact we are the only laboratory, we mentioned this on the last earnings call, we are the only laboratory in the Americas. So North America and South America and actually we might be picking up another area of the world. So this is a significant trial. It's a two-year trial. The issue is the enrollment ramp or traction, which we don't have control over. But this is something that once you really, I call it put that tent pole in in your first enrolling trial, you come on the radar screen with the other pharma companies. And being a device company, being the company that is very -- has FDA cleared products as well as the CLIA laboratory, people are looking at us as number one as we’re solely dedicated in IVD, which a lot of time IVD trials are handed by normal production laboratories. So we are solely dedicated and our quality is second to none. So I do think this is an opportunity for us to really set the stage for IVD. But we want to be cognizant that we don't have control over the enrollment process. So -- but certainly it's a milestone for us by far. And the fact that there is only four labs that were selected in the world and we are representing as I said the Americas right now, and maybe one other part of the world.

Okay, great. Then I think you used about $2.6 million of cash in the quarter. I think you’re targeting below $2 million a quarter. Are there some low hanging fruit, I mean, I think you’re already operating pretty lean, in my opinion. But are there areas where you can strip out another 600,000 or 700,000 a quarter? And if so, where are they?

Sure, Mark. You know in the prepared remarks the $2.6 million that we burned had some significant one-time payment of expenses incurred in 2016 and even previous to that. So we can get to $2 million without really stripping out anything else. We're on a consistent run rate, and of course we intend to grow revenue quarter-over-quarter as well, a combination of those two factors.

Perfect. And if I can, one more, any update on progress with the -- with commercial payers, certainly you’ve had some success with some of the regional guys. Can you just speak to where you might be with some of the larger commercial [indiscernible]?

So we’re in active dialogue -- we’ve submitted, we are waiting. So there's no -- I must say that now with guidelines and with our latest publications we're as strong as we’ve ever been. And so we’re in a wait mode right now, but we anticipate hearing some news shortly.

Very good. Thanks very much.

Thank you.

And next we will hear from [indiscernible] with LifeSci Capital.

Hello. Hi, there. Hi, Valarie. Thank you for taking my question. So just in regard to updates with regard to the National Medical Society, which in the guidance and the -- so which of these guidance is -- do you think is most important based on the one that you mentioned, or the guideline, sorry, which do you think is most important?

[Indiscernible] thank you.

I will answer that question. This is Dr. Francis. So our customer base is the general OB/GYN and the ACOG Practice Bulletin number 174, which is the management of adnexal masses is really the most important for the general OB/GYN. It outline how you work up a patient with a suspected adnexal mass all the way from family history to the diagnostic test that you can choose from. So it was -- that update was seven years in the making and that really is the one that we used to educate our main customer base. That is the one that is going to give us the most traction on the ground and the field.

Okay. Thank you.

[Operator Instructions] And we will move on to a question from George Kosturko, Private Investor.

Hi, guys. Can you hear me?

Yes, we can. Good morning, George.

Hi, good morning. Thank you for taking my questions. Just a couple of questions. I think, Dr. Francis, you mentioned about the economic advantage paper was submitted last quarter.

Yes.

Is that -- do you mean Q1 calendar or because this is Q1 earnings, it were submitted in Q4?

No. It was submitted in Q1 quarter of this year.

Okay. Okay. Do you have an expectation to when that will surface or not?

We are hopeful that that will surface shortly. There's always with publications give-and-take between reviewers and the authors and that process is actively ongoing right now.

Okay. Thank you. That sounds very interesting, very exciting frankly. How you guys think about international. For example, in the U.K., on a per capita basis, ovarian cancer has a higher instance than [indiscernible] in U.S., in domestic, right. It's like three for one. There are three more cases at America that for everyone in the U.K., but the population in the U.S is five times as much as the U.K. So, on a per capita, there is a higher instance, right? So, according to my research there are about [technical difficulty] report in 2014. [Technical difficulty] U.K., how do you guys think about coverage for that? Meaning if [technical difficulty] coverage for tests or 1,000, how do you guys [technical difficulty]?

So George there is a couple of updates on the U.K in a sense that U.K not only is there a larger prevalence per in terms of the female population, but it also has one of the highest mortality rates of any developed country worldwide. So we are -- the U.K is definitely high on our priority list. There is active dialogue, should I say, with partners in the U.K., as well as researchers. So I can't go into much more details on that, but I will tell you that it is one of our most significant ex-U.S locations where we would like to deploy our technology.

And would you expect that the developments that you talk too this year or next quarter or you’re not sure, just …?

I think that there should be something coming up this year. I can't say this next quarter, but I think this year there should be some further progress with U.K. As you know, any National Health System are going to take a long time. So …

Yes. That’s for sure.

… we [indiscernible] and -- but there is some continued progress.

Yes, yes. And for example that peer review around economic advantages will be super helpful there as well, I’d imagine. Okay. Just a couple more questions. I did hear some great questions by the first caller about the national payer and we hope to hear -- I did hear that correctly, that you hope to hear soon, is that -- did I hear that correctly, Valarie?

Yes, yes. We had several irons in the fire not just with one national payer, but as you can imagine we are now with guidelines in our publication and are continued to build our publications. We believe we’re as strong as we ever where …

Absolutely.

… in terms of these discussions.

Okay. And my final question, I mean, with the SI Index and having a 100% efficacy which is really quite incredible and with ACOG guide -- national guidelines as of November. Are you now -- are you guys now modeling the number of tests on an annualized run rate? I mean, for me I will find it appealing if we were annualizing to 60,000 or 100,000 tests per year, right. So my -- 25,000 tests per quarter will be wonderful. Are you guys modeling that out and do you think that’s going to happen in two years time or 15 months? How do you think about the number of tests as a real significant milestone to make this a very cash returning and saving hopefully millions of lives?

So I think there is a couple of things. I think that we are consciously investing in the business in the right areas to make sure that we, number one, have the strong foundational publications, number one. Number two that we can stand up to these payers when they push back on us with data. And then number three is we want to put this in a nice neat box, so that the regional partners can deploy. So we're is that build phase and transition phase. Where do I see? Do I see there is a huge need from a regional partner perspective? Yes, there is a lot of interest out there. But we want to make sure that we've ticked and tied our publications, our value and that we have this in a nice box so that it's ready to deploy. So I do think there's a huge opportunity. When you look at the market itself there are a million women with some form of pelvic mass conditions and we know that there is 2 million CL-125s in the U.S., which the majority are off-label. So we do believe there is a substantial opportunity for our technology beyond our current indication.

Okay, superb. Thank you for taking my questions.

Our pleasure, George.

And that does conclude our question-and-answer session. I would now like to turn the call back over to Ms. Palmieri. Please proceed.

To conclude, we’ve a steadfast execution plan to change the course of pelvic mass patient management in the U.S and worldwide. We've completed two of the three major strategy phases, our rebuild phase and transformation phase. We are focusing on our growth phase which include sales and payer adoption, while diversifying our revenue channels with international and ASPiRA IVD. In parallel, we have laid the foundation for our one-of-a-kind pelvic mass repository, which is intended to be the core of our big data engine in pelvic mass portfolio. You’ve already seen some of the fruits of this with our risk of malignancy report with ultrasound and we will soon be incorporating Symptom Index as well. As we build upon our database, we plan to build upon our existing platform to not only change the way ovarian cancer is managed, but also push early detection upstream and build the proprietary portfolio to manage pelvic mass conditions which impact one out of every five women in the U.S. Our end goal is to serve a global market with strong proprietary science coupled with a platform which will drive profitability and overall shareholder value. Thank you for joining us today, and thank you for your interest in Vermillion. We look forward to seeing you at the upcoming Medical Meetings and Investor Conferences.

Thank you. That does conclude today's call. We do thank you all for your participation. You may now disconnect.