Vermillion CEO accused of deceiving shareholders

Actively concealed extremely high (over 80%) Medicare denial rate for OVA1

Dear Fellow Shareholders, I am writing to inform you of some shocking and very disturbing information I have learned regarding the wilful failure of Vermillion Inc. (Nasdaq: VRML) CEO to disclose to its investors material information regarding Medicare reimbursement denials of OVA1 test and related issues. Specifically, in the Vermillion earning releases and the earnings calls in 2011, the company has reported the number of tests performed by Quest Diagnostics Inc. (NYSE: DGX) to its investors. However, I have learned from persons with knowledge that these figures and descriptions are highly misleading with regard to the revenue that Vermillion can ever hope to realize from its OVA1 sales for 2011. Specifically, Gail Page, the CEO of the company (Page), and other members of the Board of Directors (Board) colluded to conceal material information from us. Indeed, Page and the Board were aware no later than December 2010 that Medicare had been denying over 80% of OVA1 claims (in comparison I understand the average denial rate for by Medicare on general claims is only 6%). This left the company with absolutely no practical recourse, and I presently believe that the thousands of denied claims will never likely be paid by anyone. This denial rate continued through 2011. It is outrageous that this information has never been disclosed to the shareholders. Page and the Board knew or should have known that Medicare is their single largest payer, responsible for reimbursement as to approximately 50% of all OVA1 sales. Therefore, simple math dictates that around 40% of total reported OVA1 sales will never get any reimbursement, with the result being that Vermillion management has purported to disclose sales that will never be reimbursed. To the contrary, despite having been aware of this extremely high denial rate, Vermillion management has continued to report the number of performed tests as though Medicare will reimburse them, creating expectations for 2011 that are not couched in reality. Even more troubling is that I have learned that Page was encouraged to disclose this information to shareholders, and she simply refused, apparently preferring to leave her shareholders in the dark regarding this inconvenient truth. Perhaps Pages reluctance to disclose this fact was motivated by her desire to raise more cash. In February of 2011, Vermillion proceeded with a secondary offering, selling shares for $21.8 million to investors who had no idea that claims on OVA1 tests performed by Quest Diagnostics were being denied and/or grossly reduced. While the company was bleeding cash and badly needed the influx of new capital, such demands cannot excuse Pages silence --- she owed us more candor. In light of the above, which I learned after relatively perfunctory research, one begins to wonder what else we do not know. As a concerned shareholder since 2010, I have decided to take various actions in order to preserve the remaining assets of the company: Expect to engage the law firm Novak Druce + Quigg regarding the issues presented above and expect them to investigate all of the matters raised and to determine appropriate legal action

I am in the process of requesting that the Board undertake the following actions: o Immediately remove Page as CEO and board member of Vermillion o Establish an independent and unbiased audit committee (not to include any current Board member) to launch a thorough investigation into Vermillion's disclosure practices and generate a report releasing all material information that heretofore has been concealed o As a result of the investigation, have any board member with knowledge of concealed information removed. Initiate discussion with shareholders for replacements

The company has no future with people who lost their credibility, damaged shareholder value and were involved in such duplicitous activities. Once we have an honest and capable board in place, we can finally start to unlock shareholder value. Stay tuned.

December 15, 2011

George Bessenyei Tel: +1-561-444-8180 Email: gb@oba.co.uk

Disclaimer: Long Vermillion (VRML) since 2010