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War Stories III: Vermillion -- Up 215,000% -- Plans Escape from Bankruptcy

This season's biotech conference circuit has been buzzing with war stories from companies that almost went belly-up only to bounce back with a vengeance, and one of the best comes from diagnostics maker Vermillion, which last week filed its plan to emerge from Chapter 11 bankruptcy.

As Matthew Herper at Forbes nicely summarizes, Vermillion (VRMLQ.PK) was delisted from Nasdaq last fall as the capital markets crashed and filed for Chapter 11 in March with less than $1 million left. According to Forbes:

The entire executive team resigned to save cash, continuing to work on a consulting basis. The board took payment in equity.
But on Sept. 11, the FDA approved Vermillion's OVA1 test, which uses a blood sample to measure the levels of proteins associated with ovarian cancer, predicting whether or not the cancer is malignant and providing insights into what type of surgery is appropriate.

Vermillion's stock is up 215,900 percent from its 52-week low of a penny, closing Monday at $21.60.

Last week, the company filed a plan of reorganization with the U.S. Bankruptcy Court, proposing to pay its debts in full and allow shareholders to retain their equity in the company. The plan has yet to be approved, and OVA1 has yet to launch, but Vermillion's prospects are a heck of a lot better now than they were six months ago, and some folks predict an acquisition by partner Quest (DGX) may be in the cards.

Survival Lesson: Do whatever it takes to get to that value-driving milestone.

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