A Medical Device Daily
Vermillion (Fremont, California) reported that it has reduced its workforce and filed a voluntary petition for reorganization relief under Chapter 11 of the U.S. Bankruptcy Code in Wilmington, Delaware. The company said it plans to continue operating without interruption as it focuses on obtaining regulatory clearance for its ovarian tumor triage test (OVA1).
The company said that once it receives FDA clearance for the test, it will seek to move forward, including the pursuit of a partner to bring the OVA1 test to market.
In conjunction with the filing, Vermillion said it is seeking authority from the bankruptcy court enabling it to continue operating its business in ordinary fashion. It said it make workforce cuts to address its financial condition and deteriorating liquidity position.
Directors Kenneth Conway, Rajen Dalal, James Rathmann and John Young resigned from the board, effective immediately, and Gail Page has been elected as the executive chair of the board. The company said it will save costs by operating the board with the reduced number of directors.
The board now consists of Page, John Hamilton and James Burns, all having indicated their intention to continue their role as directors for the time being, Vermillion noted.
Also to save costs, the company late last week asked several of its executive officers to resign; these include Page, president/CEO, Qun Zhou, interim CFO, and Simon Shorter, VP of corporate development. The sole reason for these resignations was to conserve company resources and was not the result of any disagreement with the company on any matter relating to the company's operations, policies or practices or in any way for cause, Vermillion said.
The resigning personnel will continue to act as company consultants and accrue severance and other rights as a result of the termination to the extent of available funds in the bankruptcy reorganization, Vermillion said.
Vermillion has multiple ovarian cancer diagnostic tests in development. The most advanced of its programs is the OVA1 test, designed to use a panel of biomarkers to help identify women with a higher likelihood of malignancy so they can be referred to a gynecologic oncologist for their initial surgery. Vermillion filed a 510(k) application with the FDA for the test last June.
In other restructuring activity: Opnext (Fremont, California) reported plans to reduce its cost structure and operating expenses, including a roughly 10% reduction in its global workforce. Opnext said it also plans a 10% reduction in executive salaries and director cash compensation; a 5% reduction in salaries for other employees; elimination of cash bonuses for FY09 and salary increases in the current fiscal year; and suspension of matching contributions to its 401(k) plan.
By year-end, these actions and R&D and SG&A synergies and expense reductions are expected to provide annual savings of about $25 million, Opnext said, and that these actions will be implemented in the current quarter. The compensation-related reductions are temporary and will be re-evaluated during the second half of the current fiscal year, it said.