OraSure Technologies(OSUR) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net product and service revenues for Q2 2020 decreased by 24% compared to Q2 2019, primarily due to lower sales in genomics products and domestic HIV, HCV, and microbiome products impacted by COVID-19 [28][32] - Total product and service revenues for the DNA Genotek business unit were $18.1 million in Q2 2020, representing a 4% increase from Q2 2019 [30] - COVID-19 related revenues from molecular collection products reached $8.5 million in Q2 2020, contributing to expectations of higher total revenues in 2020 compared to 2019 [24][34] Business Line Data and Key Metrics Changes - International sales of OraQuick HIV products decreased by 28% compared to Q2 2019, attributed to shipment delays, although the underlying business showed strong year-to-date growth [29] - Laboratory service revenue increased to $2.2 million in Q2 2020 from $1.2 million in Q2 2019, driven by the performance of laboratory services subsidiaries [31] - The company expects non-COVID-19 revenues in infectious disease and molecular collections to decline in 2020, but COVID-19 product sales are anticipated to offset this decline [32][34] Market Data and Key Metrics Changes - The company is positioned to meet the global testing needs created by the COVID-19 pandemic, with existing distribution channels across public health, laboratories, and direct-to-consumer markets [8][12] - The demand for saliva collection devices is increasing as in-clinic blood collection remains challenging due to COVID-19 [47] - The company is exploring partnerships to expand its capacity to meet anticipated demands across all areas [41] Company Strategy and Development Direction - The company is focusing on expanding its COVID-19 testing capabilities, including antigen and antibody tests, to capture significant revenue opportunities [5][6] - Investments are being made to increase manufacturing capacity for COVID-19 related products, with expectations to ramp up production significantly in the coming quarters [36][39] - The acquisition of UrSure, Inc. supports the strategy of expanding the core offerings to include additional diagnostic products, particularly in the HIV space [45] Management's Comments on Operating Environment and Future Outlook - Management believes the second half of 2020 will show strong revenue growth, driven by COVID-19 related products and a recovery in non-COVID-19 business lines [6][34] - The company is optimistic about the long-term need for expanded testing options, even with the potential availability of vaccines [14][21] - Management highlighted the importance of rapid testing solutions for schools and workplaces as part of the strategy to support safe reopening [75] Other Important Information - The company ended Q2 2020 with $265.8 million in cash and no debt, positioning itself well for future growth [41] - The company is currently in clinical trials for its antigen test, with a target launch in Q4 2020 [59][60] - The company is also developing an ELISA test for COVID-19 antibodies, with plans to file for EUA in Q4 2020 [21] Q&A Session Summary Question: Can you elaborate on the switch to nostril collection for the antigen test? - The decision was based on scientific findings indicating that nasal swabs provide higher accuracy and viral load compared to oral fluid tests [58] Question: What are the expected milestones for the antigen test before the Q4 launch? - The next internal milestone is a prototype block, with the expectation of submitting for EUA in Q4 [59] Question: What end markets are being targeted for the antigen test? - The company is in discussions with large employers, schools, and government agencies for potential contracts [61][63] Question: Did the company recognize any revenues from CRL in Q2? - Specific customer contributions to revenue are not disclosed, but there is optimism for the second half of the year [70] Question: How does the recent FDA guidance impact the rapid test? - The company does not foresee any surprises in the FDA guidelines and believes it aligns with their product strategy [71] Question: What is the expected revenue visibility for the third quarter? - The company expects revenues to be substantially greater than the $8.5 million achieved in Q2, but specific numbers are not provided due to unpredictability [76]