Q4 2020 OraSure Technologies Inc Earnings Call
Ladies and gentlemen, please standby your conference call will begin momentarily once again, ladies and gentlemen, thank you for calling please remain on your line is your conference call will begin momentarily. Thank you for your patience.
[music].
Good afternoon, everyone and welcome to the over short technologies, 'twenty 'twenty fourth quarter and full year financial results conference call and simultaneous webcast as it from.
Today's conference is being recorded all lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there'll be a question and answer period.
If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.
If you'd like to withdraw your question press the pound key.
So a lot of timeframe 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 questioner can rejoin the queue for further questions I.
I would now like to turn the call over to Jean Bell, Vice President of corporate Communications for Orasure G.
Thank you operator with US today are Dr. Stephen Tang, President and Chief Executive Officer, and Mr. Roberto <unk>, Chief Financial Officer, Dr. Tang and Mr. Cooper will begin with the opening statements, which will be followed by the question and answer session.
I turn the call over the Doctor can you should know 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 and markets business plans.
The regulatory filings and approvals expectations and strategies actual results could be significantly different.
Actors that could affect results are discussed more fully in the companys SEC filings, including its registration statements. Its annual report on form 10-K for the year ended December 31, 2020, its quarterly reports on form 10-Q, and its other SEC filings.
Although forward looking statements help to provide complete information about future prospects listeners should 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 will turn the call.
Over to Dr. Stephen Tang.
Thank you gene and thank you everyone for joining us today I Hope you and your families are safe and well.
As you will hear today for sure continues to successfully navigate the COVID-19 pandemic.
Today, we reported record breaking of fourth quarter and double digit full year revenue growth.
Driven by our sales of our molecular sample collection kits for COVID-19 testing.
In addition, our base business was resilient.
With demonstrated strength in sales of our international HIV testing products, which also grew by double digits year over year and.
And strong genomics growth in key customers in our disease risk management and companion animal segments.
We expect our role in COVID-19 detection to only grow in importance as we've made substantial progress in our rapid antigen self test for COVID-19.
We have locked the proprietary assay chemistry, and completed development and completed clinical testing.
I'm delighted that we were able to accelerate the clinical trials for the prescription self test.
And now plan to submit for emergency use authorization or EUA for both the prescription self testing.
And a professional self testing by the end of the month.
We also remain on track to resubmit to separate E ways for a lot of base also of antibody test.
And look forward to bringing this pioneering product to market as soon as possible.
Revenue from our SAP collection kits for COVID-19, molecular testing continues to meaningfully contribute to our business with full year revenue from those kits totaling $50 million.
In the fourth quarter net revenues of $62.9 billion represent the highest quarterly revenue performance in <unk> history.
Driven by 'twenty, two and a half million in sales of our COVID-19, molecular sample collection kits in that quarter.
We expect the strong sustained performance to persist.
As testing remains a key strategy to combat the pandemic.
Here in the U S. The by the administration has called for more broad testing the turn the tide of the pandemic and propose is dedicating $50 billion in spending to testing.
December Rockefeller Foundation report calls for a 300 million tests per month.
And that's just the safely reopen America's public schools and keep them open.
Globally. This number will likely be much larger because vaccines will not be widely available and much of the world.
Multiple tests for multiple manufacturers will be required to meet the mass of global need.
The emergence of new more contagious variants of the Corona virus underscores the importance of testing as a means to detect infection, especially.
Especially as the rollout of vaccines and counters logistical hurdles.
Dr. Anthony South of you said that we will reach herd immunity when 70 to 85 per cent of the population is vaccinated.
Currently less than 10 per cent of the U S population is fully vaccinated.
Globally, the number is far less.
And as COVID-19 moves from the pandemic to an endemic disease. We believe people will still need to know their status and tests regularly.
Making testing and important part of overall disease management.
Also as the virus mutates surveillance or the genetic sequencing of samples for variant identification will become an increasingly important part of our global Coronavirus response plan.
We join our industry peers and public officials, who believe the testing will remain a key part of our return to normal life of unrestricted gathering and travel even with widespread vaccination.
Against that backdrop or short continues to advance its three distinct COVID-19 opportunities.
Sample collection from molecular testing and surveillance and easy to use rapid Amgen self testing in a lab based oral fluid antibody tests.
Each of which will help accelerate or insurance growth.
Our portfolio of COVID-19 tests and collection kits all feature convenient pain free self collection.
And can help improve access to testing alleviate the burden on the health care system, and minimize exposure risk and conserve personal protective equipment or PPE.
The momentum we've seen from our molecular COVID-19 sales significantly outweighs the challenges that the pandemic presents the other areas of our business, we expect that once commercialized our antigen and antibody tests will celebrate a record breaking growth.
Use of DNA genotype molecular sample collection kits continues to grow and back to work settings back to school programs laboratory testing and direct to consumer offerings.
We are encouraged by the high volume repeat orders from existing customers.
As well as demand from new customers the.
Our molecular collection kits are now included in eight EU ways granted by the U S food and drug administration to D&A of gene of tax customers.
We've also received our own F D. A E ways for the use of our omni gene oral and or collect RNA collection devices and COVID-19 testing.
Which allows for the unsupervised use of these devices at home or in health care settings, when used as part of the been approved or validated at home test kit.
In February State University of New York announced that their campuses of administered more than 1 billion COVID-19 tests since the start of the 'twenty 'twenty 2021 academic year.
These tests were developed by D E N a genotype customer quadrant biosciences and uses our or collect RNA collection device.
And clinical reference lab has announced that their C. R. L. Rapid response, COVID-19 saliva tests.
Which uses of the omni gene oral collection device is now available through Walgreens find care digital health platform.
Internationally, the omni channel oral is being utilized as the collection device by proteomics for the U K government's test to release per international travel COVID-19 testing program.
Which was announced in January.
In addition, both the omni gene oral and or collect RNA saliva collection devices receive interim authorization for use in COVID-19 testing from health Canada in January.
This enables diagnostic labs health authorities and COVID-19 test kit providers across Canada to offer of self collection, both at home and via health care professionals.
Authorizations could be transformative for public health efforts in Canada by adding important tools to increase access to testing.
Also of note.
From the gene oral was included in time magazine's Roundup of the best inventions of 2020.
Turning to our diagnostic tests for COVID-19, Orasure continued to make substantial progress on the development of our COVID-19 rapid antigen self test.
Subject to regulatory authorization, our rapid antigen self tests will detect COVID-19 infection using nasal samples self collected from the lower nostril.
As we've learned from our HIV tests.
Implicitly and ease of use are paramount when it comes to self tests.
Our COVID-19 rapid antigen tests requires no instrumentation batteries or smartphone.
Users would simply swap their nostrils swirled of swab and buffer solution.
And see the result.
As I noted earlier, we have finalized product development and completed the clinical studies necessary to submit both the professional version and the prescription self test version in Q1.
We are pleased that the clinical trial results validate our commitment to meeting the high standards, we have set for ourselves.
The self test market represents a significant opportunity for COVID-19 testing.
And as of Friday, only three self tests have been authorized by the FDA.
Subject to regulatory approvals, we intend to market the prescription self tests per used by individual consumers with the prescription at home or in any location by employers and universities on or off site, whereby physicians or public health authorities the remote testing.
And the professional tests per use it drive free sites physician offices public health testing sites and employer or University health centers.
In addition, we intend to continue our plans to pursue an over the counter claim with the additional clinical testing required.
We are also planning to launch our rapid antigen tests outside the U S. As we anticipate the COVID-19 diagnostic testing market will shift to international markets as U S vaccination of advances.
Moving onto our third COVID-19 opportunity or lab based oral fluid antibody Elisa test.
Antibody tests are becoming more important as vaccines rollout and the focus on herd immunity increases.
Our tests has the potential to be the first antibody tests authorized by the FDA that uses oral fluid samples.
This is an important distinction.
Oral fluid samples are easy for individuals to collect the.
Minimize health care professionals need for P. P E and reduce the exposure to the potentially infected patients as compared to blood draws.
<unk> test has been shown in a peer reviewed clinical study to increase the ability of antibody tests by 'twenty five full versus blood based testing.
In addition in the study the offshore oral fluids Sars Covid two antibody tests was shown to have a 90.9 positive per cent agreement and 100 per cent negative per cent agreement versus serology.
With this test individuals' would use a collection pad the self collect an oral fluid sample under the observation of the health care professional.
The sample would then be placed in the offshore oral antibody collection device buffer for storage and transport.
It will then later be dispense onto the offshore Elisa microplate for testing in the laboratory.
This lab based antibody tests can aid in identifying individuals with an adaptive immune response to Sars Covid two.
Indicating prior infection the.
Tests could also a health officials and community of surveillance efforts and zero prevalence studies.
At the request of the FDA, we plan to resubmit to separate E ways for the test.
One covering the oral fluid specimen collector and one for the microplate assay.
In addition, the FDA has requested additional analytical studies be conducted on sample collection and stability.
These studies are in process and we plan to file the E ways for this pioneering product as soon as the studies are completed.
Meanwhile, we continue continued the sell our antibody tests for research use only.
This has led the interest from several companies in labs that are conducting the zero prevalence studies.
In addition, our antibody test is being used in studies of looking at vaccine response.
We expect that the antibody testing will become more important as the vaccine rollout continues both the determined vaccine longevity and measure progress towards herd immunity.
I'd also like the touch on our ongoing manufacturing capacity expansion efforts, which continue on schedule for all of our COVID-19 activities.
In addition, we now plan to add capacity for an additional 15 million rapid antigen self test, bringing capacity to 120 million tests per year by the second quarter of 2022.
This additional capacity is intended to support sales outside the U S <unk>.
Included in these numbers are approximately $17 million of our existing tests for HIV HCV and Ebola.
Before I turn the call over to Roberto for a report on our fourth quarter and year end financials.
I'd like to note that we are encouraged by the Baidu administrations stated commitment to of scientific organized and centralized approach to COVID-19 testing in the U S.
We especially welcome the administration's focus on rapid test and the proposed 50 billion dollar of investment to increase the nation testing capacity.
This underscores the durability of our COVID-19 testing opportunities and aligns with our motivation to which the shirt insurer simple safe and rapid testing is widely available and with that I'll hand, it over the hill Roberto for report on our financials Roberto.
Thank you Steve.
Steve mentioned earlier, our fourth quarter net revenues increased 27% to $62 $9 million from the $49 $7 million reported in the fourth quarter of 2019, primarily as a result of strong sales of molecular sample collection kits for COVID-19 testing and increased international sales of the Companys HIV self test.
This was partially offset by lower sales across all of our other pump other product lines, primarily due to the impact of the COVID-19 pandemic as well as the shift in the ordering patterns of the large genomics customer.
Net product and services revenues were $60 $4 million of 28 per cent increase from the fourth quarter of 2019.
Total product and service revenues for the Companys molecular business unit were $43 million during the fourth quarter of 2020, an increase of 58% from the fourth quarter of 2019.
This increase included $22 $5 million and sales of oral fluid sample collection devices. The COVID-19, molecular testing, which was partially offset by a decrease in genomics and laboratory services sales.
International sales of the Companys or quick HIV tests increased 16% compared to the fourth quarter of 19th 2019, largely due to higher sales of our HIV self testing Africa.
Gross profit percentage was 61 per cent for the three months ended December 31, 2020, compared to 60 per cent in the same period of 2019 due to an improved product mix of higher gross profit percentage of product sales.
Net income for the fourth quarter of 2020 was $1 $9 million or <unk> <unk> per share on the fully diluted the diluted basis compared to net income of <unk>.
$2 4 million or four cents per share on the fully diluted basis for the fourth quarter of 2019.
Fourth quarter 2020 results included a benefit of $1 $5 million for the change from the estimated fair value of our acquisition related contingent consideration compared to a charge recorded in the in the fourth quarter of 2019 of $179000.
2020 results also reflect the additional product development cost incurred for our 2000 and of for our COVID-19 tests as well as increased foreign tax expense associated with improved results of our Canadian subsidiary.
Cash and investments totaled $257 $1 million at December 31, 2020.
As we disclosed in our press release, we expect revenues of $55 million to $60 million in the first quarter of 2021.
We are not providing full year guidance at this time, but we'll revisit that option as we get greater clarity on the regulatory status of our COVID-19, Inc.
The tests with that I'll turn the call back to Steve.
Thank you Roberto I would now like to provide some brief updates on our legacy businesses, which continued to show resiliency in the face of the challenges of the pandemic.
Access the HIV testing continues to be challenging in this pandemic and self testing as a convenient solution that enables social distancing. It helps minimize COVID-19 exposure.
This past quarter, we ensured continued access to rapid convenient HIV testing, both domestically and internationally.
HIV OTC and self test continued to show strength and offset the clients and professional testing due to the COVID-19 related clinic closures, which we're seeing across the U S Korea and the European Union.
We were encouraged by robust international HIV self test sales, which increased 16% over the same quarter in 2019 and for the full year.
In Q4 offshore sold over 4 million HIV self tests outside the U S as compared to 2.9 billion self test in the fourth quarter of 2019.
We expect this trend to continue.
Total diagnostic revenues were down 7% for the fourth quarter versus the fourth quarter of 2019 and down 8% for the full year period. However, it is important to note that the testing markets for HIV, HCV and risk assessment, which represents the vast majority of the diagnostic business unit.
It's been stated by various sources as being down by as much as 50%.
Comparatively orasure is the diagnostic business units showed strength a testament the orchards legacy of providing easy accurate answers to critical health questions.
On the molecular side outside of COVID-19, we have expanded the scope and application of our genomics collection products through new regulatory clearances.
The Org gene Dx saliva collection device was included as a component in the de Novo FDA authorization granted the helix for their whole exome sequencing platform.
This is the first exome sequencing based platform authorized by the FDA.
Forging Dx was also included as a component in the 510 day clearance helix receipt of quartz helix genetic health risk App tour of late onset Alzheimer's disease or.
For over the counter use the first test to be cleared on the helix laboratory platform.
As noted earlier, we saw growth with customers in disease risk management as saliva collection enabled ongoing genetic testing when blood collection became more difficult due to COVID-19 closures.
Additionally, the companion animals testing segments saw growth as pet adoptions rose double digits during the quarantine.
Our microbiome business held steady in Q4 with 3% growth over Q4 2019.
By strong repeat business from our customers.
And as I announced on the the third quarter call.
We continue to build our multi omics strategy with new product introductions, such as the met got an omni gene skin. The first combined products service offerings with diverse Jim.
Finally, before we move to Q&A I'd like to provide some summarizing thoughts.
Over the past year, we've seen further evidence of infectious disease testing and sample collection must meet customers wherever they are.
For sure of steadfastly focused on making COVID-19 detection simpler faster and smarter, putting the control of the hands of the individual.
The results of this past quarter to make it clear that orasure is well positioned to assist in the battle against COVID-19, and the best is yet to come.
Expected continued growth in COVID-19, molecular revenues ended 2021 the <unk>.
Planned introduction of our new rapid antigen and antibody tests and the ongoing expansion capacity to meet demand solidify our confidence that COVID-19 is a long term substantial and sustainable opportunity.
Meanwhile, we remain optimistic for the resilience and future the future of our legacy businesses as well as our journey towards multi omics.
Our strong balance sheet bolstered by COVID-19 revenues will afford us the opportunity to maximize the COVID-19 market opportunity fund, our legacy businesses and seek transformative and accretive business development opportunities we.
We are confident that we will emerge from the pandemic, a larger stronger and more innovative company able to effectively compete in key burgeoning markets in diagnostics and molecular solutions with that operator, I'll turn the call over for questions.
Ladies and gentlemen, if you have a question or comment at this time. Please press Star then one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue simply press the pound key.
Again, if you have a question or comment at this time. Please press Star then one on the telephone keypad.
Our first question or comment comes from the line of Vijay Kumar from Evercore ISI. Your line is open.
Hey, guys. Thanks for taking my question.
And Robert Congratulations on the on the progress you guys have made on the antigen testing.
You know I had a few questions.
I think the press release mentioned clinical studies are done could.
Could you, perhaps a comment on the performance of the test versus some of the other at home test, which are out there in the market and net.
In the past, Steve you mentioned that ease of use your cost as being one step. So now that we know what other tests are on the market could you perhaps comment on whether you're testing that will be the easiest one to use in the market.
Thank you Vijay we have made substantial progress of the clinical trials are complete and wait now we are just completing the submission to the F. D. A core of the EUA.
You're right I think the the simplicity of use of our device or an individual simply has to swap their nostril swirled in a vial and then see the results remains one of its the biggest advantages.
While we're not sharing specific performance data are we are very confident that we meet the requirements of the prescription self test templates and those are very specific procurements by the F. D. A.
So the use case for our product I think looks extremely promising.
Even in the face of other products that are on the market right now and as a reminder, there are still precious few tests self test that are on the market. There are only four of that had been so far you aid. So we are very encouraged by our prospects both in performance and the commercial prospects for <unk>.
The sales.
I guess on on not the point.
The steam Matt.
The manufacturing capacity was taken up the $120 million.
Think becton spoke of what perhaps pricing coming down in the market but.
The this seems to be different by a few days of expressing optimism.
How should we think about demand, but you have demand locked in for Rob I guess of $100 million engine tests.
And any comments on pricing.
Yeah. So we don't have demand locked in because we are able to market the product until we get the way, but we've had strong expressions of interest inbound from a number of different potential customers.
Along the way of lot of that as you can imagine P. J was awaiting clinical data, which we can now provide to them are under a non disclosure agreement so prospects.
Prospects look extremely extremely good.
The additional capacity, which we've announced which will bring us to a 120 million units by the second quarter of 2022.
Our four outside the U S and so I think our prospects outside the U S are strong as well.
As you know we have a legacy business.
In the.
The HIV self tests outside the U S, which grew by 16% last year for.
4 million units, we announced we sold in that from the fourth quarter last year and that's the real a springboard for us to address the needs of the low and middle income countries around the world.
We're also exploring.
The high income countries in the EU and elsewhere.
For market access from penetration for our products as well, but as you can imagine our first half is to submit the way in and obtain the UA from the F. D. A then we'll be looking at those clusters of opportunities as well, but suffice it to say we are confident in our prospects. That's why we've upped our capacity to address.
Address the the global needs as well as the domestic needs.
And just one last one from me.
Steven.
The increase it sounds like that the the step up in capacity manufacturing capacity. This is more driven by inbound.
Customer interest and I want to make sure I heard the right and then any comments on timing from Rob over the counter of test correct me, if I'm wrong, but none of these tests on the market have an OTC label.
Could you guys end up being the first with the known P. C label.
Well I think there is actually one with an O T C label, but it's not widely available because of manufacturing.
Capacity has not yet been built for it but.
So I won't speak for them, but that that does remain out there or plans for OTC are still are still bear a I think we want to see the performance of our.
The prescription self test product in the market place.
Of course, the biggest threshold for the OTC registration is asymptomatic patients and so we want to be careful of the design the studies in a way that.
Shows off the performance of the product. So we haven't announced anything in terms of timing per OTC, but it still is clearly in our plants.
Understood. Thanks, guys.
Youre welcome.
Our next question question. The comment comes from the line of Typhoon Peterson from Jpmorgan. Your line is open.
Casey on for Tycho.
Maybe can we just talk a little bit about the once you guidance.
Specifically what is what is baked in as far as Covid collection kit revenue in the <unk> Guide you guys mentioned.
There are some significant opportunities that you.
Received in <unk> as far as you as the concern so maybe just.
Can we expect another sequential step up there in <unk> and then maybe talk a little bit about the cadence that you're expecting.
For those revenues throughout the year.
Sure Casey Thanks for the questions Roberto here. So we haven't provided additional granularity on the guidance.
But I can give you the color that we do expect sequential growth in our COVID-19 molecular collection devices.
And we also expect to see the sort of normal historical seasonality in some business lines that have occurred in prior years.
We're not providing guidance beyond the first quarter in part because of the uncertainty of some of the regulatory status of of the products that we're applying for.
But the overall given the way we're expanding capacity both on the antigen antibody and collection devices sides are all on all of those sides. You can expect that we do expect to see a growth persisting.
Got it.
As far as what's needed for OTC submission.
What's left in terms of.
Clinical trial kind of data that you need for OTC and we heard from one of your competitors that finding positive samples to the run.
In OTC clinical trial has been a limiting factor as far as timing goes maybe talk about if you've been experiencing something similar or.
Can you maybe just talk a little bit about what you got whats left for OTC approval.
Yeah, So I can't obviously comment on on.
Someone else's E way, but.
Certainly as I mentioned before the.
Firemen from the OTC, you way or that you provide data for asymptomatic <unk> and so that is the key different difference between the prescription self tests in the OTC template.
So that requires some additional attention on our part for that submission AR, but we plan on the accounting for it but as I said before of our first job is to get the Rx self test through the EUA process and then go from there. So it is still in our plans, but we have an offer and anything beyond that.
Okay, and then maybe just one last one from me.
As far as the inbound interest that you commented on in the previous line of questions how.
Kind of goes from sort of large employer groups and schools versus customers that are would be more long term in their ordering patterns.
Is it your expectation that you'll be selling into these large employer groups and schools task.
Height of your scale up into 222.
Maybe just talk a little bit about yeah customers that you're talking to.
Yeah, certainly Casey so we're certainly the inbound interest has come from employers.
Education, both K through 12 and higher education.
And we expect the overall demand to be durable through 'twenty 'twenty two in the U S and then well beyond that outside the U S.
There are other buying groups that we're talking to as well congregate living facilities, including prisons in nursing homes that need to test routinely and quickly entertainment and travel.
Which will be needed to get people to to.
Essentially go wherever they want to go and travel wherever they want of travel. So I think many of these applications are going to be durable, particularly if you consider the fact that no.
No country is an island unto themselves are.
In order to get back to normal we're gonna have to.
Reestablish global travel and global trade and that's going to depend on further testing because of the vaccine rollout will not be even across the world.
Many countries won't receive the the vaccine for several years, particularly the lower Midland Gulf countries. So that's why we think of I'd say its.
It's a substantial sustainable opportunity for us for several years.
Okay, great. Thank you.
Okay. Thanks Casey.
Thank you.
Next question of comment comes from the line of Jacob Johnson from Stephens incorporated your line by line is open.
Hey, guys. This is mason on for Jacob just acute a few quick ones from me.
Any additional color you can provide on your FY 'twenty collection kit sales.
Maybe the split between the U S versus O U S and how do you expect that change to change your maybe shifting in the upcoming year.
Yeah.
Steve You want me to take that Yeah go ahead, we're in a place.
So maybe just to clarify do you mean, the collection kit sales specifically for COVID-19 or in general.
For COVID-19, sorry.
Okay.
Yeah. So the majority of those collection kit sales were for use in the U S with some smaller amount in Europe.
We do expect that.
As we're still capacity constrained with those products will be focusing on the U S. And then other higher income countries and then continue to roll those are the sales of those products out to lower medical middle income countries.
Later in the year and in the coming years.
Got it thanks for that and then.
Base business Wise could you just update us on the trends Youre seeing in some of your base business is non COVID-19 businesses are those recovering and any thoughts going into 2021.
Yeah, certainly so led by our international HIV franchise.
Which grew by 16% in the fourth quarter and 16% year over year that was largely unabated by the by the pandemic. So.
That's that's a extremely positive sign for us.
So that's the segment doesn't need to recover it simply needs to keep on growing the.
The other areas, which were affected by clinic closures kind of late in the U S. But the European Union places like South Korea, those are starting to recover.
We noted in our remarks that.
Even though our overall diagnostic revenue was down 7% in total for 2020.
The testing markets that we participate in that's HIV HCV and our risk assessment testing.
By some measures were down as much as 50 per cent for the entire year. So I think we showed strong resiliency through 2020 and were seeing signs of recovery already in the base businesses. So that's very positive and then on the molecular side clearly.
Clearly, we saw a little bit of growth in the microbiome side that was affected in.
In 2020 by closures of laboratories University laboratories.
And also on the commercial settings, that's looking like its starting to recover as well and disease risk management is starting to recover and we saw even companion animal sample collection growth because more people are adopting animals. So I.
I think we're saying different science for different reasons and I think we are optimistic that our recovery has already begun and that we are participating in it.
Great. Thanks, guys.
Youre welcome.
Thank you. Our next question the comment comes from the line of Patrick Donnelly from Citi. Your line is open.
Hey, thanks for taking the questions guys.
Maybe one for you just on the international opportunity for Covid clearly it sounds like you guys view that as quite sizable in a pretty nice tail on the backend as well can you just talk through I guess, the timeline to get to those market. How are you going to play it out again region by region.
It certainly sounds like U S is first but then beyond that I'm, just kind of wondering how long it'll take to get these products out there in the market on the on some of the different larger international opportunity.
Sure. Thanks.
Thanks for the question Patrick So I clearly, we understand the U S situation very well.
We're looking at markets and.
The higher income countries, including the European Union.
And the regulatory requirements specific there and what can be translated from our E rate filing.
For the prescription self test.
For the low and middle income countries I think we are as you're aware of part of a global consortium.
For the eradication of HIV and many of the same players and that will be the same players and.
The commissioning diagnostic testing.
For for COVID-19, it's the same fundamentals in low and middle income countries. There's a.
Very little infrastructure for testing that is you don't have large commercial laboratories like you do here in the U S and in Europe. So self testing is really ideal for that we.
Stand the cost structure, we understand the price points in those countries and so that's what gives us confidence that we'll be successful around.
Around the world not just in the U S.
Okay understood and then maybe just on the on the U S side with the EUA is certainly encouraging to hear the submission by the end of the month can you just talk about the path forward. You are you guys going to release the press release when you submit it and then obviously a little bit out of your hands, but anything you're hearing in terms of what the turnaround time could look like in terms of <unk>.
Frugal and actually being on the market.
Yes, certainly, yes, we do intend to issue a press release once we submit the EUA.
We project been projecting that in the first quarter of of this year.
As a as far as turnaround time.
That's out of our hands of course, but I think we're seeing turnaround times somewhere in the order of six to eight weeks from F. D. A.
For similarly, situated products so.
That's that's the only past history that doesn't guarantee what the.
The future looks like but for planning.
Purposes, that's the timeframe we're dealing with.
No. That's helpful. And then maybe last one I guess when you think out Youre, obviously seeing some free durability to the market you are talking about here. When you think about the different pieces of the market can you talk about OTC versus again, maybe some employers travel et cetera here in the U S versus international kind of how you're sizing them internally in terms of obviously.
Some of that capacity, where are you planning on that going.
Curious in terms of when you think about this market of year two years out clearly youre still believing it's real.
What pieces really make up the big piece of either.
Well the reason that we were we were keen on accelerating our clinical trials from the prescription self test is that that is a real sweet spot for us from the marketplace.
We we shared in our remarks that we that the market size for prescription self test is is in the order of about $16 billion per year.
So that gives us a lot of flexibility to address our employer.
Education needs.
Nursing homes prisons.
Travel and leisure there are there are some very durable opportunities there.
The obviously the OTC market as an area of the lot of people are interested in because that gives absolute power to the consumer to do testing that's going to be important as well, but I think that having physician.
The physicians prescribed the test is not a significant barrier for the markets that we want to penetrate and that's why we're so focused on the Rx self test area.
Alright, Thanks, Steve and look forward to keeping an eye on the progress.
Thank you.
Thanks, Patrick.
Thank you again, ladies and gentlemen, if you have a question or comment at this time. Please press Star then one on the telephone keypad. Our next question of comment comes from the line up.
Andrew Cooper from Raymond James Your line is open.
Hey, guys. Thanks for the question I guess I lost already been covered but maybe just take a step back and just think about the capacity expansion of the fact that at some point regardless of when we want to talk about it is.
At some point Covid testing will likely decline from some of the demand levels, we talk about today.
Yes.
Can you give us just some thoughts on the opportunity for more testing the AUM I think to some degree.
The FDA has had less of the cash out of the bag by allowing home testing at all four more infectious diseases, where they've been more cautious before so the.
He has an opportunity and something that given the capacity expansion here.
We're putting in place to be a nice out of nice way to absorb those extra manufacturing capabilities further down the road.
Yeah, you're absolutely right Andrew of that that the focus on self tests.
Is never has never been higher and of course or share has unique experience of Matt because when.
When we had our HIV in home test approved as an OTC test back in 2012, we were at that time, the only infectious disease self test.
On the market and until 2020, we were still the of Hawaii OTC infectious disease tests on the market. So yes.
Yes. The market is opened up we refer to that domain as effortless diagnostics.
So it's something that anybody can do with.
Very little skill or training, it's it's something that they can do of the privacy of their own home.
Anybody can be tested anywhere at any time so.
It is really uncoupling us two.
Find new opportunities for effortless, the effortless diagnostics in the marketplace one.
One of the nice things about our capacity expansion is that it's it's all of the same.
Basic products, whether it's our HIV HCV or Ebola product or are the new line of.
COVID-19 products.
These are all of the on the basic manufacturing platform for <unk> for all of those products together.
So that similarity of will help us with scale over time as we develop new products and so I think we are well positioned uniquely positioned to capitalize on other diagnostic opportunities going forward.
Okay, great and.
Maybe just one of them the antibody testing as well as to this hasn't been asked yet, but I think when you when you talked about the FDA initially wanting the UAE split and.
Some extra data there, we're getting near sort of the timeline, we had talked about so can you give us a little bit more specificity on where we are in that process and I know you said as expeditiously as possible, but that sort of what we need the fever or we can see an EUA for that product as well.
Yes, we haven't we haven't described the.
The the timeframe for that but it is as soon as possible and when we made the announcement that we had the.
Submit two separate EUA is back at the end of December.
We set a little bit about the types of tests that we needed to run most of those studies.
The studies are already done.
So that's moving right along.
And just as a refresher of the reason we had to do so it was.
There was no template for an oral fluid based antibody tests and so.
It's a required you know sort of the pioneers challenge for us.
For the F D a to describe.
The additional studies and the need to be done so that's going well.
Again, where we're looking to to get that for an EUA as soon as possible.
But we have not describe the timeframe beyond that.
Okay, Great and maybe just one last one.
We've seen one of your major genomics customers might be coming coming to the public market the stacks and ease of change anything in terms of the way you think about the relationship there or anything in terms of some of the contracting and how you assess the growth from that customer, especially given.
Some of the numbers that they put out there into the marketplace. At this point just any comment there after that that day.
Elements of the gate.
Well I think that that development sort of confirms that the focus of genomic testing on medical applications. What we call disease risk management is has a real sweet spot for them and for us.
They remain a very strong strategic customer to us we are under a long term supply agreement with them.
The fact that they are public now will give us better visibility on where they're headed both strategically and quarter by quarter performance and so we're very optimistic about that relationship and remains so.
Great I'll stop there I appreciate it.
Thanks, Andrew.
Thank you. Our next question the comment comes from the line of Frank <unk> from Lake Street Capital. Your line is open.
Hey, Thanks for taking my questions just two from me today.
Above gross margin as well.
Testing becomes a little bit larger portion of revenue in the back half of this year, assuming approvals how should we think about the gross margin profile of the aggregate company for 2021.
Thanks for the question Frank So as we've described in the past we expect that the gross margin percentage for each one of the three COVID-19 testing opportunities.
It's going to be higher than the average of the company or of the business unit from which the product is being sold so we would expect of that as those volumes increase.
With the EUA of additional products and with the continuing growth of our existing collection devices gross margin percentage should improve over the course of the year.
Perfect and then on the business development front, maybe give us a little update on your thought process here should we expect to potentially see something in the near to intermediate term or do you feel your plate is plentiful with the COVID-19 opportunities at the moment.
Yeah, we have a very robust.
Business development the acquisition pipeline Frank.
I think the inbound interest has never been higher.
We continue to evaluate that pipeline in terms of the right fit and the right potential.
So we have not and will not make predictions about when the acquisitions will will occur for a for a variety of reasons, but.
We have a lot of Optionality right now with the $257 million of cash on our balance sheet of no debt.
And looking for companies and technology and products.
The fit with our overall strategy, which of course of our multi omics strategy on the molecular side and effortless diagnostics on the diagnostics side. So.
It's a rich environment out there right now for targets. So as we've been saying for for a while we're intent on doing the right deal of the right time at the right valuation. So we'll continue to look at that pipeline and the.
Execute against it so we do have capacity to do so and we are actively in the market.
Great. Thanks for taking my questions.
Thanks Frank.
Thank you our next sort of a follow up from Mr. Vijay Kumar from Evercore ISI. Your line is open.
Okay.
Hey, guys I just shy of one quick follow up from me I know, we don't have the annual revenue guide.
But I guess, just given how antigen testing is ramping for some of your peers.
You know, even if I assume like a $10 ASB and you guys sell 50 million tests, that's half of the enough revenue. That's only about I think suites. At 400, you have of base business, that's north of $115 million and you have the collection kit.
And it's very hard for me to see how our revenues for fiscal 'twenty, one could be sub 700.
If you had any comments on not.
On.
How we should be thinking about fiscal 'twenty one.
If not a form of guidance, perhaps of some broad strokes.
Sure. Thanks for the question Vijay So the first I'd say that your arithmetic makes sense the.
The biggest variable for us is the F D, a and the timing or actuality of the EUA approval.
Which.
Presents a lot of variability either one of those dimensions parental of out of variability to total revenues. So that's the main driver of our not giving full year full year revenue guidance.
But.
As you say there could be a very big year for us if everything lines up correctly.
Understood. Thanks, guys.
Thanks, Vijay Thanks P J.
Thank you I'm showing no additional questions in the queue at this time I would like to turn the conference back over to Dr. <unk> for any closing remarks.
We want to thank everyone for participating in today's call and for your continued interest and we're sure have a good afternoon and evening and stay safe and be well. Thank you.
Ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may now disconnect everyone have a wonderful day.
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