Q1 2020 Earnings Call
Ladies and gentlemen, just as the operator today's conference is scheduled to begin momentarily and so that time your lines will again be placed on music hold thank you for your patience.
[music].
Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines will again be placed on music hold thank you for your patience.
[music].
Good afternoon, everyone.
Good afternoon, everyone and welcome to the Orasure technologies Twentytwenty first quarter financial results conference call and simultaneous webcast.
As a reminder, today's conference is being recorded all lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer period, if he would like to ask the question. During this time simply Chris Star and the number one on your telephone keypad be would like to withdraw your question press the pound.
To allow time for as many questions as possible questioners are asked to limit themselves to only a single question with no more than one follow up question related to the same topic. Once the follow up is completed a question good rejoin the queue for further questions.
Orasure technologies issued a press release was approximately four PM eastern time today regarding its 2021st quarter financial results and certain other matters.
The press releases are available on our website at www Dot orchard dotcom or by calling six 108 to one 820.
If you go to our website. The press release can be found by opening the Investor Relations page clicking on the link for press releases.
With us today are Dr., Stephen King, President and Chief Executive Officer, and Mr. Burton Kuka, Chief Financial Officer, Dr. tagging Mr., Google will begin with opening statements, which will be followed with the question and answers success.
Before I turn the call over to Dr. Chang you should note that this call may contain certain forward looking statements, including statements with respect to revenues expenses profitability earnings or loss per share and other financial performance product development performance shipments in markets. This is planned regulatory filings and approval.
Expectations in strategy.
Actual results could be significantly different.
Factors that could affect results are described more fully in the Companys SBC filings, including its registration statement. Its annual report on form 10-K for the year ended December 31st 2019, its quarterly reports on form 10-Q, and other SEC filings.
Although forward looking statements helped provide complete information about future process.
Nursery keep in mind that forward looking statements are based solely on information available to management as of today.
The company undertakes no obligation to update any forward looking statements to reflect events or circumstances. After this call.
With that I would like to turn the call over to Dr. Stephen time.
Thank you Jane and good evening, everyone and welcome to our call.
Before we begin on behalf of all of us it or sure I would like to express our sincere gratitude the health care providers on the frontline fighting to cope with 19 pandemic, especially today, which is national nurses day.
I would also like to acknowledge all those workers were performing jobs, the keep our country and society functioning.
Your dedication bravery and important are vital to us.
Also must thanks all of our employees.
Outstanding efforts play an important role in helping people around the world.
Our employers are being put to the test every day and they are responding with tenacity and excellence.
I've never been prouder to lead our exceptional company.
For sure had to storied history of rising to the occasional of challenging health circumstances, having developed high quality diagnostic tests for HIV AIDS CB and a bullet.
As you can imagine you're doing everything we can to bring our expertise when infectious disease diagnostics and sample collection to the battle against Cobot 19.
On the testing fronts, we're developing a pan Sars Corona virus rapid antigen in home self test a uses oral fluid samples.
And analyze the based tests for the detect <unk>.
The anti Sars cope.
[noise] schurz to demonstrate the effectiveness of our sample collection technologies for cross device testing.
Later in the call I'll update you on our progress on these items.
Turning to the first quarter I'm pleased to report that Orasure is off to a good starts in 2020 with solid financial results.
A lot of buyers buyers pandemic is certainly affecting our business.
I'll discuss that in a minute.
Important to note that any negative impact from cobot 19 in Q1 was largely offset by additional product uptake in response to the pandemic.
As a result, the company's sales work in line with our own expectations for before the onset of the pandemic.
Because we're a company is considered into central business. We are permitted to continue operating in the various states in countries, where our employees are located.
A large number of our employees can fulfill their job functions remotely and are working from home in accordance with local stay at home requirements.
He group of employees, who must be onsite are primarily manufacturing warehouse laboratory in R&D personnel.
We have implemented enhance hygiene and social distancing protocols to ensure their safety.
Fortunately, we've had only one instance of Copel Viking infection reported amongst the more than 407.
The cobot 19 pandemic is having a mix impact on orasure.
We saw some downward pressure from Cowen 19 on revenues and our domestic professional HIV and HCV businesses.
And at our molecular sales to the academic market in Q1.
As HIV and HCV testing programs and molecular research programs have been delayed or terminated because a couple of 19.
In our services business revenue were also impacted as customers could not access samples housed in academic or medical facilities.
Okay. So altogether.
Remarks.
Okay and demonstrate the mix on works for <unk>.
[laughter] Brett.
[laughter] markets.
Exactly.
[laughter].
Consequently comedy said because of course.
[laughter].
Okay.
[laughter] medical.
So what existed for lunch versus five.
You see these [laughter].
Great that's of course.
No.
That's.
[laughter].
Chris.
[laughter] because they're just.
Okay.
We still supporting existing lots of questions.
Oh.
Customers blood collection due to difficulties what what.
I'm sure there.
Steve Thank you.
Ladies and gentlemen, we are experiencing technical difficulties. Please continue to publicize <unk>.
Ladies and gentlemen, we apologize for the inconvenience, where we presume the conversation.
And you may begin when you're ready Sir.
Thanks, everybody. This is Steve Tang I'll begin again.
Thank you Jane and good evening, everyone and welcome to our call.
Before we begin on behalf of all of us it or sure I would like to express our sincere gratitude to the health care providers on the frontline fighting the cobot 19 pandemic.
Especially on today wishes national nurses day.
We would like to acknowledge all those workers, who are performing jobs to keep our country and society functioning your dedication bravery and importance are vital to us.
I also must think all our employees your outstanding efforts, playing an important role helping people around the world.
Players are being put to the test every day and they are responding with tenacity and excellence.
I have never been prouder to lead our exceptional company.
Oh sure has a storied history of rising to the occasion of challenging health circumstances, having developed high quality diagnostic test for HIV HCV in a bolus.
As you can imagine we're doing everything we can to bring our expertise with infectious disease diagnostics and sample collection the battle against Cobot 19.
The testing front, we're developing a pan Sars carpet Corona virus rapid antigen in home self test.
That uses oral fluid samples and analyze a base tests for the detection of human anti Sars koby to antibodies and oral fluid specimens.
Our molecular solutions business unit is working with laboratories, and researchers to demonstrate the effectiveness or sample collection technologies for Kratos virus testing.
Later in the call I will update you are on progress in these areas.
Turning to the first quarter I'm pleased to report the orasure is off to a good start in 2020.
Solid financial results.
Club Iris pandemic, it's certainly in our business I'll discuss that in a minute <unk>.
It's important to note that any negative impact from Cook. It's been covered 19 in Q1 was largely offset additional product updates in response to the pandemic.
As a result, the company's sales were in line with our own expectations from before the onset of the pandemic.
You guys are companies considered an essential business. There are permitted to continue operating in the various states in countries. Our employees are located.
A large number of our employees can fulfill their job functions remotely and are working from home accordance with local stay at home requirements.
He group of employees, who must be onsite are primarily manufacturing or house laboratory research and development personnel.
You've implemented enhance hygiene and social distancing protocols to ensure their safety.
Fortunately, we have only one instance of Kofi 19 infection reported among them are more than 470 employees company wide.
And employee who is feel base has now recovered.
Before that we are very grateful.
Covered 19 pandemic as having mixed impact on orasure.
You saw some downward pressure from Kobin 19 on revenues in our domestic professional HIV and HCV businesses.
And in our molecular sales to the academic market in Q1, it's HIV and HCV testing programs and molecular research programs have been delayed or terminated because of koby 19.
And our services business revenue were also impacted as customers, who could not access samples house in academic or medical facilities were to be sent to our microbiomes surfaces lab for processing.
You see these trends continuing with a likely bigger impact on future quarters. However sales of our in home HIV test are rising as public health HIV testing programs in the U.S. increasingly using our over the counter product as they adjust sampling strategies in response to Koby 19.
We're also seeing increased sales or existing molecular saliva collection kits and all swabs some customers moved from blood to slip saliva collection due to difficulties collecting blood samples under current circumstances.
Suming were successful in our development and regulatory efforts, we anticipate that the new caught a virus testing products were working on and expanded use of some existing molecular collection products could make significant contributions later this year, especially as it needs for Cobi Kobin 19 testing increases.
Our manufacturing operations had been unaffected by the pandemic they have not had significant disruptions from our suppliers.
Importantly, we expect that to continue.
The respective logistics, we have seen additional challenges for international shipments, particularly by our Thailand contracts supplier largely due to a reduction in the availability of airfreight closing of customs offices in certain countries and transport congestion.
You have generally been able to work around these issues by using more sea freight.
Accordingly, our staffing costs are and will continue to be a bit higher for certain destinations.
We are considering several options to expand current capacity to make sufficient quantities to support the growing demand for existing products as well as demand for cobot 19 products in development.
We will share more information about these options once relevant and timely.
No.
Despite the many moving parts and uncertainties surrounding be impacted Kobin 19, We believe war shore is well positioned maintained its base business into play an important role in finding the pandemic.
Turning briefly to the highlights from Q1.
Net revenues of $31.6 million represent a 5% increase from the year ago period.
She this decrease despite the absence of our Cryosurgical product line, which we sold in 2019.
Excluding revenues from our Cryosurgical business, which we sold in August 2019 revenues from our news subsidiary Versajet, which we acquired in November 2019.
Revenues grew 8%.
International HIV sales increased a robust 74% for the first quarter compared to 2019, largely due to the strength of our HIV test self test.
Its performance continues a trend we saw throughout 2019, and we expect that to continue in future periods.
For molecular collection systems product service revenues for Q1 group, 25%.
Largely due to renew it make sales growth and a strong financial performance by our laboratory services business.
Our genomic business grew 14% in the first quarter compared to last year.
This was largely due to the shift from blood to sliwa testing by certain customers as I mentioned earlier.
We saw a 237% increase in laboratory service revenue for Q1, primarily due to the addition of diversification, which we acquired in late 2019.
Net loss from the first quarter was higher in the prior year as a result of greater cost of goods sold increased R&D spend.
<unk> charges, it and Costa so with our business development activity as we continue to prioritize the identification in pursuit of external acquisition opportunities.
Assistant it with our long term innovation growth strategy, all partially offset by higher foreign exchange gains.
Finally, our cash balances at the ended the quarter totaled $176 million.
This significant cash balance coupled with the absence of debt on our balance sheet will enable us to weather the type of uncertainties presented by cobot 19 pandemic, while pursuing our innovation growth strategy.
So we're pleased with the way 2020 has started look forward to delivering a successful rest of the year. Despite the challenges that may arise from coven 19.
And with that I'll now turn things over to Roberta for a financial review of the quarter.
I will then share some additional thoughts on our business and we'll take your questions rebuttal.
Thanks, Steve and good evening, everyone again.
First quarter net revenues increased 5% to $31.6 million from the $30.1 billion supported in the first quarter of 2019.
<unk> products and services revenues increased to $30.9 million growing 9% compared to the prior year period.
Notably the first quarter 2019 included Cryosurgical revenue of $2.6 million, which did not recur in 2020 since we sold this line of business August 2090.
Excluding these sales dollars Q1, 2019 revenues and the contribution to diversity in which we acquired in the fourth quarter of 29, King would result in an aggregate product and services revenue increased 13% in the first quarter 2020.
As Steve mentioned international HIV sales.
Oh increased 74% to $6.9 million from $4 million in the first quarter of 2019 due to higher sales of our HIV self testing to Africa.
Stick HIV sales decreased 2% to $4.2 million $4.3 million between 19 due to cope with 19 stay at home orders and the resulting deferral or shutdown public health testing activities.
This was offset by the launch of our in home HIV test into a new retail channel and the increased use of this odisi products in public health settings reaction to cope with 19.
Domestic HCV sales decreased 18% in the first quarter of 2000 $20 million to $1.5 million from $1.8 million in the prior year period also largely due to the station of testing programs as a result, cobot 19, as well as the redirection of funding away from each CB testing to cobot test.
International HCV tail sales in the first quarter 2020 decreased 25% to $1.1 million from $1.5 million in the same period of 2019, primarily due to lower sales into Asia.
Our total molecular revenues, including other revenues increased 16% $13.8 million in the first quarter compared to $11.9 million in 2019.
Royalty income declined 59% to $446000 in the first quarter of 20 $21.1 million in the same period of 2019.
This reflects continuing challenges faced in the consumer genomics ancestry market.
Genomics product revenues increased 14% to $9.1 million 2020, compared to $8.1 million 2019, due to organic growth of existing customers in a shift from blood to slide the collection by customers using both sample types due to the inability to collect blood samples as result of restrictions related to cope with thank you.
Microbiome product sales remained largely flat $1.6 million, both the first quarter 2020 and 29 Keith.
Lab service revenues generated by our subsidiaries core volume and diversity and increased 237% to $2.4 million in the first quarter of 2020 from $717000 in the same period of 2000 and keep largely due to the inclusion of revenues generated by generated by diverse Jim which was acquired in the fourth quarter of 29.
Gross profit percentage for the first quarter 2020 was 51% compared to 60% reported for the first quarter of 2019.
The decline is related to revenue mix higher in sales of lower gross profit percentage products and services, including the addition of microbiome services acquisitions in the absence of higher margin Cryosurgical product sales as well as increased international freight costs higher scrap unspoiled expense and a decline in other revenues, which contributed 100%.
Gross profit percentage.
Our operating expenses for the first quarter of 2020 were $24.2 million compared to $21.9 million in the comparable period to 29 keep.
The increase in operating expense in the first quarter 2020 was largely due to increasing staffing costs higher lamps applying consulting cost in support of bio informatics and new product initiatives increased legal fees and the inclusion of operating expenses incurred by diversity.
We reported a net loss of $7.3 million or 12 cents per share on a fully diluted basis first quarter of 2020 compared to a net loss of $3.3 million were five cents per share for the first quarter of 29 key.
Results in these periods included acquisition related charges of $1.1 million and $1.3 million respectively.
Results in Q1 2019 also included $597000 of transaction expenses.
These charges amounted to approximately two cents and three cents in the first quarters 2020, and 2019, respectively.
As Steve mentioned, we continue to meet team continued to maintain solid cash and liquidity position.
Our cash and investments balance at March 31st 2020 was $176.2 million compared to $189.8 billion at December 30, Onest 2019.
Cash generated by operating activities. During the three months ended March 30, Onest 2020 was $2.5 million compared to $528000 in the same period of 2019.
Hey, Steve will describe in a bit more detail shortly the coping 19 pandemic will likely not just exert downward pressure pressure on certain existing lines of business, but will also present new opportunities for both existing products and services and for development efforts, you're undertaking to address cobot 19 testing needs specifically.
Net effect with these future opportunities and challenges is difficult to predict reliably and for this reason we are withdrawing financial guidance for 2020.
However, I do want to reiterate that this is because of the difficult to protect predicts potential upside as well as downside presented by dependent.
With that I'll now turn the call back over to Steve for further business updates.
Thank you Roberto turning now to infectious disease.
Global HIV business continued to deliver strong performance with revenue increases.
Increasing 30.
4% in the first quarter compared to the first quarter 2019.
Major driver was a 74% increase in international HIV revenue.
We shipped 2 million HIV self test international markets Q1.
This business rose 98 per cent compared to the year ago quarter as established countries continue to scale of testing new countries began to come online.
With that percentage for the fourth quarter.
Coven 19 pandemic as having its greatest impact on our domestic HIV business and global HCV business.
During the first quarter, most domestic HIV testing programs, where either reduced or put on hold which lower demand for our professional products.
Because it started later in the quarter.
Q1 results were not significantly affected.
In contrast to national HIV testing remains strong we experienced early relatively minor issues, resulting from coven 19 related to shipping product overseas.
We were able to manage effectively.
At the covered 19 pandemic begins to subside by the middle of the year. We believe there is a good chance you'll have a little impact on our HIV self test sales in future periods.
However, we expect the downward revenue pressure from Cowen 19 to continue in the domestic HIV business.
How long this will last and the exact impact on revenues will depend on Ben the Cobot 19 pandemic is resolved.
To stay at home and social distancing restrictions are lifted.
Apart from covered 19, we remain optimistic about HIV self testing.
Appalachian services International as indicated it will extend the self test Africa or Star initiative, seven new countries, India, Indonesia Buganda.
Hi area, Tanzania, Cameroon in Mozambique.
Our phase three of that initiative.
Expect to receive orders under this phase to begin in the second quarter with shipments occurring in the third and fourth quarters.
Size of the program is expected to be similar to the 750000 test purchased under phase one.
I believe will phase three drive additional volume will also provide assistance for additional countries to start HIV self testing programs on a national scale.
Disregard the President's emergency plan for Asia relief, or PEPFAR, which is a U.S. governmental initiative to address the global HIV AIDS epidemic as communicated guidance.
It's funded countries to consider increasing HIV self testing during the coated 19 pandemic as a way of continuing testing, while maintaining social distancing.
The value of HIV self testing in the face of covered 19 is also being recognized.
Although sales for professional HIV tests are being negatively impacted many public health departments are increasing purchases of our FDA approved in home HIV test in order to enable their clients to continue HIV testing that happen without having to come to a clinic.
In fact, the centers for disease control and prevention, just last week should a letter to all their funded sites encouraging them to use in home self testing for HIV in order to continue testing, while complying with Cowen 19 safety restrictions since we have the only FDA approved in home.
Have you self test expect our revenues will be positively impacted.
No it will likely not fully offset the downward pressure on our professional HIV franchise.
Of course, the ultimate impact will depend on on when the cover 19 situation begins to mitigate.
Turning briefly to HCV.
Revenues from this part of our business declined in Q1 compare to the prior year.
Any testing programs in the U.S. have been put on hold as both money and personnel being shifted to covert related response activities.
Depending on when the Kobin 19 situation is resolved we would anticipate this business to eventually return to more normal levels of revenue.
Our international business was not material affected by Kobin 19 in Q1, although it declined due to lower sales in Asia.
As previously mentioned despite the challenges related to covert 19, we see a number of upside opportunities which could be substantial.
In April we announced a contract with the biomedical advanced research and development authority or BARDA.
Develop a pan saros Corrado virus rapid antigen in homes self test that uses oral fluid samples.
This funding will help pay the cost for development in receipt of an emergency use authorization.
From the FDIC.
Everything goes as planned we hope to have this test on the market early fall of two of 2020.
The value of an oral fluid anshan self test is that it will allow detection of current infections by individuals at home.
Using an oral fluid sample it is easier and less painful to collect and a nasal affair angio or an oropharyngeal sample.
We believe as BARDA has said publicly.
Test like this could be a game changer will reduce the pressure on overburden healthcare systems and it reference laboratories are protecting health care providers.
Millions of People's in their home identifying those are affected with coven 19, nice letting them will help safeguard our communities and restart our economy.
We're also developing an oral fluid micro flight test for Corona virus antibodies to be run on high volume laboratory equipment.
Samples would be self collected using our orasure oral specimen collection device.
Because place at this test will allow patients to more easily collectors sample at home mail it to a laboratory for testing.
Antibody test will be used to show past infection, helping to determine if people have acquired immunity to cover 19 and can safely returned to work and other normal activities.
Completion of this test and receipt of the way approval is targeted for early summer.
Finally, we are pursuing collaborations with multiple organizations, both domestic and international.
Some of these are intended to help fund an expansion of production capacity.
As we model various assumptions and demand scenarios to meet potential high demand for our products.
We are exploring third party collaborations for development and commercialization of crowd of Iops testing products different than the ones. We are currently developing internally.
I will provide appropriate updates on these collaborations as they develop.
Turning to the molecular solutions segment.
Revenues from our molecular business were up 25% compare to Q1 2019.
Our commercial genomics business delivered a strong performance.
Some organic growth and increased purchases from a number of customers.
Historically used a combination of saliva and blood collection, there now shifting to a greater realize some saliva given the difficulties obtaining blood samples in the cobot 19 environment.
We added 31, new commercial customers in Q1 and reported a 44% increase the number of customers that are using both our genomics microbiome products and in some cases services as well.
During Q1, we received a general use five 10-K clearance for our Oragene Dx family of products.
Yeah, and strengthens our regulatory and competitive position in the market and reduces the burden for test providers to adopt Oragene Dx as an approved collector for their molecular assays.
Despite the strong first quarter results as mentioned previously sales to our academic customers were negatively impacted by Coburn 19, as many of these customers delayed research activities not associated with coven 19 testing.
So affected sales of our genomics microbiology and urine collection kits for this market.
We remain confident to both our genomics business in the disease risk management Submarket in the microbiome market will return to double digit annual growth after the pandemic.
As with the infectious disease segments, we're now seeing a number of opportunities for increase business related to covert 19.
This could be significant.
And maybe more than offset any negative revenue impact in our molecular segment.
The current issues with sample collection and overall testing capacity medical community is seeking alternatives, the except as standard of collecting oropharyngeal and nasal affair angio samples for covered 19 testing.
Several publications have indicated that saliva.
In addition to being quicker and more comfortable to collect both patients and healthcare workers is technically superior sample type for the detection of cover 19.
Our product lines, specifically Oragene Dx.
Our collect arent day.
On the chain oral are well suited for this purpose.
Proprietary stabilization chemistries, our proven to be effective in stabilizing viral DNA anoro today.
Our Oragene Dx lighter products has been used by millions of customers in both home and professional settings.
The only device of this type granted five 10-K clearance.
It's safe nontoxic easy to use ticket and making it an ideal device for self collection of samples for cobot 19 testing either at home for under supervision the clinic.
Working with several laboratories in diagnostic companies to validate our sample collection products for use with covert 19 assays and feel confident that our devices will be compatible with at least some of the leading extraction techniques and testing platforms.
To date, we have engaged with over 150 customers from all over the world who share one common goal.
Broaden the scope of Coven 19 tests offered it provides easy to use collection solutions.
Just customer span all types of test providers, including manufactures of generic tests commercial labs and teaching hospitals.
Today, we ship Cobi vision, we shipped kits for coated validations to over 60 customers.
Now have 10 purchase orders of significance in house.
Expected to result in approximately $3.6 million in Q2 revenue with more expected shortly.
As we announced Monday, the first covered 19 related emergency use authorization or eway, incorporating one of our devices was issued last week by the FDA to bio sirna.
I'll see if.
As you weigh authorizes the use of our or collect.
Our M&A kit for the collection of interior it'll samples for testing with bias here in a cobot 19 assay.
Expect us to be the first of several airways incorporating our devices for covert 19 testing using either nasal or sliwa samples and professional and at home settings.
In addition to the data we're generating with our customers we have several ongoing studies.
Our own to confirm the safety and usability of our collection devices for Coven 19 testing.
These include studies to support at home sample collection.
Preliminary data is encouraging and we look forward to using the results from these studies to expand our regulatory clearances.
To meet the increased demand that we're seeing for our products, we have been increasing capacity at our multiple suppliers.
We expect to be able to leverage multiple shifts to help increase our product or production capabilities.
Finally in the last service area, we've seen a consistent demand for lab services from our existing commercial customers with dedicated microbiome projects.
However, we anticipate a short term weakening in the overall microbiomes services market as major pharmaceutical companies refocused efforts due to cover 19.
As I noted previously there've been some delays in the academic market due to cover 19 restrictions because a limited access to microbiomes samples.
They're continuing to integrate our microbiome laboratory businesses.
Hey, core biome service operation will relocate to a new state of the art 17000 square foot facility in Saint Paul Minnesota.
This facility has been designed to absorb the integration of both the legacy core bio and diverse Chen laboratory operations as well as part of our bio informatics and software teams.
Lab is expected to be 100% operational for our core by on customers are amazing.
Maybe 18th.
Relocation of the diversity in laboratory operations will began in mid day with a target day for completion near the end of the third quarter 2020.
Along with physical integration will be consolidating the branding for Microbiomes service organizations under the diversity and name.
Fair in the final stretches for this rebranding work and within the next few weeks all Microbiomes services will be operating under the diversity name with a new logo.
Final topic I want to cover is the recent organizational changes we have now we have announced.
Tony is as <unk>, who is the business unit leader in charge of our infectious disease business unit will be retiring this summer.
Tony has been with the cut with a company for almost 10 years and has made significant contributions, including the global commercialization of our rapid H CB tests and the substantial growth in our HIV franchise.
His dedication and steady leadership will certainly be missed and wish wish him well in his retirement.
Tony successor will be Lisa Neibauer will be joining orasure after serving for the past eight years with Becton Dickinson, most recently as vice President and general manager of Bds medication delivery solutions business.
He has extensive general management sales and marketing responsibility, but that BD and at other large companies and has exactly the skills we needed for this role.
I'm confident she will be a strong leader for this important segment of our business.
We've also recently announced several board changes Dr. David shocking.
Was formally secretary of the U.S. Department of Veterans Affairs joined the Board last month and is now serving on the audit Committee and nominating and corporate governance Committee.
David has a long history, a long history and distinguished career in the medical public health and public health fields and has served at the highest level within our federal government.
His track record of strong executive leadership will enable him to be a significant contributor to the board.
We also now the upcoming departure of two board members.
Dr. Rhonda surgeon, who joined the board in 2018 currently serves as chair of the audit Committee in a member of the nominating and corporate governance Committee will be leaving the board prior to our annual meeting so that she can develop more time to our duties as chief financial officer of Aleksey on Pharmaceuticals <unk>.
In addition, Chuck Patrick who has been with the boards for almost 14 years serves as a member of the audit Committee I remember the nominating and corporate governance Committee will be retiring to the board effective may 16th.
But the rather and Chuck had been strong contributors to the board and their advice and counsel will you missed mission wish them both much success in their final and they're in their future endeavors.
In closing 2020 is off to a good start with a solid Q1 performance in spite of the pandemic.
Our HIV self testing business. It is expected to continue to grow strongly we are proud to leverage our expertise to help fight.
Overnight team.
We believe the opportunities for a new rapid oral fluid in home krona buyers antigen test and a laboratory based oral fluid antibody test along with the expanded use of our molecular sliwa collection products are promising and could generate revenues well in excess of any revenue loss as a result.
The coven 19 pandemic.
Despite the on certain current environment, our future is bright.
You know strong financially we have the technical and management capabilities on board to enable us to successfully capture the opportunities before us.
The same time, we continue to execute against our innovation growth strategy.
The continuing evaluation in pursuit of external acquisitions look forward to reporting back any significant new developments as they become available and with that we'll now take your questions. Operator. Please proceed.
At this time I would like to inform everyone. If you'd like to ask a question. Please press star in the number one on your telephone keypad.
Your first question comes in the line of Jacob.
Johnson with Stephens.
Hey, Thanks for taking the question.
First question on the rapid parents.
I think there's just broadly around until the question is no other questions about sensitivity that's it.
This is <unk> that's in the market can you just give us any kind of color.
Insight into the sensitivity.
Specificity, you're looking to exceed with this rapid that there would be adequate like that.
Yes. Thanks, Thanks for the question Jacobs, So we have a long history of having sensitivity and specificity.
Across our product portfolio in the high Ninetys, so above 95% for both.
Specificity and sensitivity.
We have not locked in a design yet so I can't share with you yet what.
Our current specifications are they can tell you that for that are if boa.
Yeah rapid antigen test a we had a.
Causative correlation of 97.1% and a negative correlation of 100% or use of that product it with oral cadaver fluids in the U.S.
Got it said to tell there Steve I guess the follow up here.
On the advertising I think you refer to it ended at home.
Yes that could be like the multiple use opportunity, it's something that could be used.
In the manufacturing facility to ensure that that employees.
I don't have killed it I'm just kind of what's the opportunity in terms of volume.
Oh, we think the opportunity it is very large <unk> the reason that we're targeting.
In home self test for FDA clearance purposes is to make it is widely available as possible.
Absolutely right it could be a equally purchased not just by individuals but by anybody that needs to ensure the safety of let's say their workforce or a school.
Large gatherings of people public health and so.
Buying segments or it can be can be viewed as extremely large if you consider that.
Likely that employers will need to test folks for.
Whether they're in infectious are not before returning to work certainly schools will want to know that as well and any large gathering sporting events and the like.
Well well have to test as well so that's why we've.
Looked for the broadest application possible, which would be clearance for a self test.
Got it thanks for taking the questions.
<unk>.
Your next question comes from the line of Andrew Cooper with Raymond James.
Hey, guys. Thanks for the questions I guess.
First one I know, it's very early for this but when we think about you know the some of these test that you're working on you have a sense for relative to I guess the pricing relative to you know a home cast obviously, bringing a little bit different value proposition than what most of the other folks are are out there talking about developing on the market. How do you how do you.
You think about that relative to what you're hearing me a table from a pricing perspective, and then I have a follow up after that.
Yeah. Thanks, Andrew.
We.
We have probably.
A unique set of experiences in pricing because.
We're one of the few companies. It if they are the only one that has both professional and over the counter products sold in the U.S. as well as a product design for global public health. So we have not yet.
[noise] pricing for.
Particular segments of the market or match it with volume and that's something we'll we'll consider as we get closer the product launch, but I think our experience with HIV across the world in the U.S. and and abroad will be very instructive.
Okay. That's helpful. And then I guess secondly, when we think about manufacturing capacity, obviously, it's easy to get really carried away.
Where demand could go but.
Can you give us just maybe a reminder, kind of where you are on on or capacity and how you think about potentially.
Ramping that should.
Should there be demand a win win cash launch.
Sure I share that in the first quarter of 2020, we shipped 2 million HIV self test.
And that in the fourth quarter 2019.
We share that we shipped 2.9 million HIV self test. So you can tell but if you do the math there that we are in the range just on the HIV self test of tens of millions of test per year.
Depending on on the estimates that you're looking at for the amount of a widespread testing that need be done to get back to normal.
That number is significantly higher than tens of millions.
Some by some reports that's somewhere between three and 30 million tests per day and so that's why we're looking at scale of possibilities in and massive scale up possibilities.
For that antigen test today and by the way the same goes for our molecular sample collection kits, which could be at high demand also as an alternative to.
The nasal ferenci or when they were a fair atrial swaps that are currently use so we.
We are looking at.
Capacity increases across the corporation.
In some cases massive increases in capacity.
Okay. That's helpful. I will allow me to their appreciate it.
Thank you Andrew.
Your next question comes from the line of David Westenberg with Guggenheim Securities.
Hey, guys on thanks for taking my question. So I excuse my ignorance on in sub Saharan Africa, but <unk> what are your state like on the ground there in terms of coded and potential socially distancing nine years I'm just trying to think about maybe the next six months a year what it could look like.
On the ground for self testing I mean or.
Yes, Hi, David. So are you are you asking about HIV self testing no I have a nice I'm actually asking about cobot, what the what the likes what the public policy it looks like there.
<unk> into <unk> 99, I'm guessing, there's going be country differences, but is there a general way that that koby 19 is being treated in sub Saharan African countries, particularly ones, where you where you have a higher penetration of your HIV tests I'm, just trying to think about what what.
End of measures that would be in place that might stall a HIV testing.
I see so [noise].
First of all I think we share that certainly in the first quarter.
We are sales of HIV self test is Africa, and the rest of the World was it was as expected and that that led to a 74% increased year over year for the first quarter.
We expect that to continue provided that shipping is it isn't an issue and so far that seems to be seems to be working out.
And your monthly fee in HIV and cobot is rather interesting. So first of all it were ever as a reminder, Africa as in the southern Hemisphere. So they are now just entering the winter months and so the traditional flu and cold season is just upon them right now and that's of course, where we started with covenants.
And northern hemisphere around the winter months, so were watch that kept that situation very carefully.
Also important to remember is that immuno compromised patients are the most susceptible to covert 19, and the most susceptible to morbidity from cobot 19. So it's absolutely imperative, we continue HIV testing and.
Africa as Cobot 19 begins to enter the seasonal cycle there.
We also believe that ultimately the sales channels that we have developed for HIV self test in sub Saharan Africa and elsewhere that is primarily selling.
II ministries of health and individual countries will be the same for selling coping 19 self test or should we get approved and launched a in the in the fall and winter. So.
I think it a ultimately ends up being a tailwind for us overall for both the HIV and the cobot potential coated business.
Got it. Thank you very much and so when we think of Orasure. We think this is a a you know you change in the infectious disease business do you think of it is a in HCV HIV kind of business and then you have these infectious diseases that come along the way likeable NZ Guy in now Cozadd now.
You've developed the speech casts fairly.
On track these new task you know thinking about this in in like a three to five year timeframe. I mean, do you see or sure as a little bit more of a on a white menu infectious disease company I'm, just I'm kind of picking up on the key learnings that you're getting from from this cobot testing.
He in how you might apply this to maybe future activities in R&D Ah. Thank you and that's all I have.
Thanks, David I think we we view ourselves as quick learners and so I think having served the needs of the HIV pandemic globally.
The a bullet pandemic, which thankfully was mainly isolated to certain parts of the world. It didn't spread the way. They cover 19 is spread today has been instructive and obviously, we're learning a lot about serving the needs of Cowen 19, today and hopefully as a global society will be.
He better prepared God forbid and the next pandemic. So I think the wait wait a view US is a learning organization that is focused on.
Meeting unmet needs for global public health and the reason I think we've been able to respond so quickly for coven 19 everywhere from separate collection to development of this antigen test and development of this antibody test is that these are skills and capabilities. We've developed over time not just technically.
But in terms of scale up.
For sales and marketing and channel development to get product to customer effectively. So I think we've just been fortunate to be extremely well position based on other all those experiences and I think the that's we look ahead, a they'll be I think more opportunities to serve a global public health and the needs of public health and other area.
As in a in the <unk> in the U.S. in particular.
I'm going to go ahead and route again say another public health crisis right.
Well, we are what you are 100% [laughter], but but were there if needed certainly.
Thank you that's all I got.
Thanks, David.
Thanks, David.
Your next question comes from the line Brendan.
Jeffrey.
Hey, Thanks, good afternoon.
Murder Stephen just.
Outlook I understand there's some parts of the business that you may be negatively impacted but should we think about the headwinds from Tobey 19, actually outweighed the potential tailwinds or is it actually Uh huh.
The rapidly in Twoq.
I think that way as we shared and our message today brand and I think that we see a lot.
There.
Oh into this are more more apparent than the headwinds, but I don't think you can count the headwinds and that's why we're so explicitly areas, where we saw them in terms of you know HCV testing in the U.S. in terms of serving the academic market for molecular but.
You know I think of that we're seeing a book of business that's related to cope and growing.
Every week of this crisis and so while we are far have withdrawn guidance for the full year.
You see we're very optimistic about our overall prospects.
And the on them like yogurt business.
Is there any benefit in the first quarter from order timing that my Didnt favorable and then secondly, it's 3.6 million revenue you will do booking in the second quarter from labs using the also collection to study Cobot 19 is that just based on orders that you've received to date or could that number actually be much higher as the.
Quarter things yeah.
Yeah, So I don't.
For buying remember <unk> that most people were in stay at home or social discussing towards the middle end of March which would put it towards the end of quarter. So I don't think there was much that that was footwear.
In the first quarter, and then related to the 3.6 million second quarter covered related Sep collection. That's that's a current number that's out of projection for the full quarter. That's what we have.
Currently in play isn't what we know today, but as I said.
Situation is changing daily weekly.
And its triggered by things like the virus or not.
You a announcement earlier this week and I think we're expecting to see someone else, but it's like that coming up in the coming weeks.
Hi, good thank you.
Thanks, Brian.
That brings to an into Q any session of today's call I will now turn the call over to Dr. Chang for closing remarks.
Thank you everyone for participating on today's call and for your continued interest in orasure.
I have a good afternoon and evening and please stay safe and be well.
This concludes today's conference you may now disconnect.
<unk>.
[music].