SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 24, 2001
ORASURE TECHNOLOGIES, INC.
----------------------------
(Exact name of issuer as specified in charter)
DELAWARE 1-10492 36-4370966
(State or Other (Commission (I.R.S. Employer
Jurisdiction file Identification
of Incorporation or number) Number)
Organization)
150 Webster Street
Bethlehem, Pennsylvania 18015
(Address of principal executive offices)
(610) 882-1820
(Registrant's telephone number, including area code)
Item 5 - Other Events.
OraSure Technologies, Inc. (the "Company") issued a press release on October 24,
2001, announcing financial results for the third quarter of 2001 and certain
other matters, including financial performance guidance for the fourth quarter
of 2001 and total year 2002. A copy of the press release is attached to this
Report as Exhibit 99 and is incorporated herein by reference.
The Company is also filing an updated set of "Frequently Asked Questions" and
the answers to these questions. The Frequently Asked Questions reflect
information that experience has demonstrated to be often asked by analysts and
investors.
OraSure Technologies, Inc.
Frequently Asked Questions
See "Important Information Regarding the Answers to Frequently Asked Questions"
below (Revised through October 31, 2001)
What is OraSure Technologies, Inc. and how long has it been in business?
OraSure Technologies, Inc. resulted from the September 29, 2000, merger between
Epitope, Inc. (Nasdaq NM: EPTO) and STC Technologies, Inc., a closely held
private company. Our combined Company leverages expertise in oral fluid testing
for infectious disease and drugs of abuse in order to extend the reach of oral
fluid testing to the benefit of millions of people. Epitope was incorporated in
1981 and STC Technologies was founded under the name of SolarCare, Inc. in 1987.
Neither of these companies continues to exist as a separate corporate entity.
What are OraSure Technologies' main products?
OraSure Technologies' four platform technologies -- OraQuick(R), OraSure(R),
UPT(TM) and UPlink(TM)-- provide the foundation for our growing line of
products.
What is Up-Converting Phosphor Technology (UPT(TM))?
UPT(TM) is a proprietary label technology that can be applied to the detection
of minute quantities of various substances such as antibodies, antigens,
proteins, and DNA. UPT(TM) utilizes phosphorescent particles that up-convert
infrared energy to visible light. When used in conjunction with antibodies or
DNA probes, UPT(TM) particles produce virtually no background interference,
which dramatically increases the sensitivity of any test system. In addition to
elimination of interference, these particles are stable in a variety of
biological specimens, allow simultaneous detection of multiple biological
markers, and permit miniaturization of the test platform.
2
What is UPT(TM) expected to do for the Company?
UPT(TM) is a major new label technology, improving sensitivity by up to three
orders of magnitude over existing label technologies. It has a broad array of
potential applications, including:
o Human clinical diagnosis for infectious disease, cancer, drugs of abuse,
allergies, therapeutic drug monitoring, thyroid and cardiac conditions.
o Biological warfare testing.
o Biological diagnostic systems for food and environmental testing.
o Genomics and pharmacogenomics.
o Veterinary testing.
o Surgical imaging.
What are OraSure Technologies' primary markets?
OraSure Technologies' primary markets today include insurance risk assessment
testing, public health infectious disease testing, and correctional health and
workplace drug testing. There are an estimated 34 million HIV-infected people in
the world, making it a significant public health issue - both domestically and
internationally. Approximately 40 million tests for drugs of abuse are performed
annually in the United States. OraSure Technologies currently sells oral fluid
diagnostic products to more than 170 life insurance companies in the U.S.
market.
Do OraSure Technologies' products have FDA clearance/approval?
OraSure Technologies' OraSure(R) HIV-1 Oral Specimen Collection Device is the
only FDA-approved oral fluid sample collection device available for use in
testing for antibodies to the HIV-1 virus. The OraSure(R) HIV-1 Western Blot is
an FDA-approved confirmatory test for use with an OraSure(R) HIV-1 oral fluid
sample. Also, Intercept(R), Q.E.D. (R), Histofreezer(R), and selected
MICRO-PLATE and AUTO-LYTE(R) assays have FDA clearance.
For what products is the Company seeking FDA clearance/approval?
OraSure Technologies commenced U.S. clinical trials in August 2000 for
OraQuick(R) HIV and an application for pre-market approval was submitted to the
FDA in the second quarter of 2001 for whole blood, plasma and serum
applications. The Company responded to the FDA's first round of questions on the
application and the FDA's review is proceeding as expected. The Company expects
to submit for FDA approval of oral fluid applications during the first quarter
of 2002. Also, the UPlink(TM) rapid detection system, including six drugs of
abuse assays, was submitted to the FDA for 510(k) clearance in the second
quarter of 2001. Because this is the first reader-based oral fluid point-of-care
testing system submitted to the FDA and due to UPlink's(TM) broad clinical
utility, the FDA has requested approximately 60 additional test samples for each
of the six drug assays. As a result, the Company is expecting clearance of all
drugs of abuse assays by the first quarter of 2002. FDA submission of an
OraSure(R) device-based hepatitis test is expected in the first quarter of 2002.
3
Who are OraSure Technologies' customers?
OraSure Technologies' develops, manufactures and markets medical devices and
diagnostic products for use by insurance companies, public health agencies,
clinical laboratories, physicians' offices, and workplace sites. OraSure
Technologies is the leading supplier of oral fluid collection devices and
related assays to the life insurance industry and public health markets for the
detection of antibodies to HIV and other conditions. In addition, OraSure
Technologies supplies oral fluid testing solutions for drugs of abuse testing
and is developing new oral fluid tests for Hepatitis C and syphilis. OraSure
Technologies intends to leverage its UPT(TM) platform into development and
licensing opportunities in a variety of markets, such as testing for chemical
and biological warfare agents, food testing, environmental testing, and
genomics.
Where are OraSure Technologies' products currently distributed?
OraSure Technologies generally has worldwide coverage for its products
Who are OraSure Technologies' principal partners?
OraSure Technologies' FDA-approved OraSure(R) HIV-1 Western Blot kit is marketed
and distributed under an exclusive arrangement with Organon Teknika Corporation.
In May 1999, OraSure Technologies contracted with LabOne, Inc. to market and
provide oral fluid analysis for the Intercept(R) Drugs of Abuse product line in
North America for workplace drug testing. LabOne also provides laboratory
services for some of OraSure Technologies' public health clients.
In March 2000, OraSure Technologies signed a research and development agreement
with Drager, a European manufacturer and supplier of medical products for the
purpose of developing the UPlink(TM) system for rapid detection of drugs of
abuse in oral fluid. Drager will distribute the product worldwide for roadside
drug testing and in select criminal justice applications.
In September 2000, OraSure Technologies signed a research and development
agreement with Meridian Bioscience (formerly Meridian Diagnostics). Meridian and
OraSure Technologies will work together to develop, manufacture and sell a broad
range of point-of-care tests for the rapid detection of parasites,
gastrointestinal, and upper respiratory diseases using the UPlink(TM) system.
Meridian will distribute the products worldwide.
4
What are OraSure Technologies' priorities for 2002?
o FDA pre-market approval of OraQuick(R)HIV for whole blood, serum, plasma
and oral fluid applications.
o FDA 510(k) clearance of the UPlink(TM) drugs of abuse rapid detection
system by the end of first quarter 2002.
o International market launch of UPlink(TM) drugs of abuse and infectious
disease testing systems by the Company's partners, Drager and Meridian
Biosciences, during the first half of 2002.
o Complete development and licensing arrangements for new
UPT(TM)applications.
o Launch OraQuick(R)HIV in the United States and increase penetration in
international markets.
o Expand Intercept(R) penetration in the criminal justice, drug
rehabilitation, and workplace testing markets.
o Achieve a revenue increase of 30% or more and strong earnings growth
during 2002.
How do I get more information?
You can reach OraSure Technologies' Investor Relations team via email at
investorinfo@orasure.com or by calling Shannon Morin at 610-882-1820.
5
Important Information Regarding the Answers to Frequently Asked Questions
The foregoing "Frequently Asked Questions" contain certain "forward-looking
statements," within the meaning of the Federal securities laws. These include
statements about expected revenues, earnings, future product performance or
development, expected regulatory filings and approvals, and views of future
industry or market conditions. Forward-looking statements are not guarantees of
future performance or results. Known and unknown factors could cause actual
performance or results to be materially different from those expressed or
implied in these statements. Some of these factors are: ability to market
products; impact of competitors, competing products and technology changes;
ability to develop, commercialize and market new products; market acceptance of
oral fluid testing products and up-converting phosphor technology products;
ability to fund research and development and other projects and operations;
ability to obtain and timing of obtaining necessary regulatory approvals;
ability to develop product distribution channels; uncertainty relating to patent
protection and potential patent infringement claims; ability to enter into
international manufacturing agreements; obstacles to international marketing and
manufacturing of products; ability to sell products internationally; loss or
impairment of sources of capital; exposure to product liability and other types
of litigation; changes in international, federal or state laws and regulations;
changes in relationships with strategic partners and reliance on strategic
partners for the performance of critical activities under collaborative
arrangements; changes in accounting practices or interpretation of accounting
requirements; equipment failures and ability to obtain needed raw materials and
components; the impact of terrorist attacks and civil unrest; and general
political, business and economic conditions. These and other factors that could
cause the forward-looking statements to be materially different are described in
greater detail in the Company's filings with the Securities and Exchange
Commission, including its most recent Annual Report on Form 10-K and Quarterly
Report on Form 10-Q. Although forward-looking statements help to provide
complete information about future prospects, they may not be reliable.
The forward-looking statements contained in the answers to the "Frequently Asked
Questions" may become outdated over time. The Company does not assume any
responsibility for updating any forward-looking statements. From time-to-time,
statements made by the Company may modify or replace prior statements found in
the "Frequently Asked Questions" or other releases and investors should refer to
the most recently dated material available. Presenting information in the
"Frequently Asked Questions" or updating this information from time to time
should not be deemed an acknowledgement that such information is material or
otherwise required to be disclosed.
6
Item 7. - Financial Statements and Exhibits
(c) Exhibits.
Exhibits are listed on the attached exhibit index following the signature page
of this report.
7
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
ORASURE TECHNOLOGIES, INC.
Date: October 31, 2001 By: /s/Jack E. Jerrett
--------------------------------
Jack E. Jerrett
Vice President, General Counsel
and Secretary
8
EXHIBIT INDEX
Exhibit
-------
99 Press release issued October 24, 2001 by OraSure Technologies, Inc.
announcing third-quarter 2001 financial results and certain other
matters.
9
Exhibit 99
[GRAPHIC OMITTED][GRAPHIC OMITTED]
Company Contact:
Rich Hooper
Chief Financial Officer
610-882-1820, ext. 3042
Investorinfo@orasure.com
www.orasure.com
OraSure Technologies Reports PROFIT ON RECORD revenues
Bethlehem, PA - (October 24, 2001) - OraSure Technologies, Inc. (Nasdaq
NM:OSUR), the market leader for oral fluid diagnostics, today announced record
third quarter revenues of $8.6 million, a 19 percent increase over the $7.2
million reported in the same period a year ago. The net profit for the quarter
was $16,000, an improvement of $7.9 million over the third quarter of 2000,
which included a one-time charge of $5.9 million for merger-related expenses.
Excluding revenue from the prior period for the discontinued Serum Western Blot
product, total revenue would have increased by 27 percent in the third quarter.
Cash flow from operations, as measured by EBITDA (earnings before interest
expense, taxes, depreciation and amortization), was $620,000 for the quarter.
This was the Company's second consecutive quarter of positive cash flow.
For the first nine months of 2001, revenues were also a record of $24.5 million,
17 percent above the comparable period in 2000. The net loss for the nine-month
period was $1.4 million, an improvement of $7.7 million over the first nine
months of 2000, which included a one-time charge of $5.9 million for
merger-related expenses. Excluding revenue from the prior period for the
discontinued Serum Western Blot product, total revenue would have increased by
24 percent in the first nine months.
Robert D. Thompson, Chief Executive Officer of OraSure Technologies, Inc.,
stated, "We are very pleased with the strong revenue growth and achieving
profitability. Our Intercept(R) and OraQuick(R) products have driven our growth
this year. Intercept(R) is showing strong momentum, as oral fluid drug testing
gains marketplace acceptance, in both the occupational health and correctional
health settings. This momentum will be aided by the recent inclusion of oral
fluid drug testing in the new draft federal drug program guidelines for all
uses, including pre-employment, random, and post-accident testing. We shipped
our first OraQuick(R) order to the Centers for Disease Control and Prevention
(CDC) for use in more than fifteen African countries participating in the LIFE
Initiative. Additionally, OraQuick(R) was selected for use in the CDC's MIRIAD
Project, a program focused on reducing mother-to-child transmission of HIV in
the United States." The Company showed significant improvement in its cost
structure during the third quarter. Gross margins improved to 67% from 57% in
the comparable quarter of 2000. Operating expenses totaled approximately $5.7
million for the quarter, a decline of $700,000 from the total of $6.4 million
recorded in the comparable quarter of 2000, reflecting synergies from the
merger.
The Company announced today it has received FDA feedback on its OraQuick(R)
submission filed in late June. The FDA responded to the OraQuick(R) submission
in a very timely manner with its first round of questions on the data submitted.
The Company promptly answered those questions, and the FDA's review is
progressing as anticipated.
The FDA also responded to the Company's UPlink(TM) submission, which was filed
in late June. Because this is the first reader-based oral fluid point-of-care
testing system submitted to the FDA, and due to UPlink's(TM) very broad clinical
utility, the FDA has requested approximately sixty additional trial samples for
each of the six drug assays. Consequently, the Company is now expecting full
clearance of all of the drugs of abuse assays in the first quarter of 2002.
However, the Company expects revenue in the fourth quarter of 2001 and first
quarter of 2002 from initial UPlink(TM) reader shipments to development
partners.
"Despite our impressive revenue gains, we are disappointed with the unforeseen
delays of OraQuick(R) orders from our African distributor, which were the result
of government purchase process delays in Africa," said Mr. Thompson. "We expect
to work through these delays and continue to develop these opportunities in the
future," he added.
In light of these developments, the Company's new revenue projection for the
fourth quarter of 2001 is set in excess of $10 million, more than 28 percent
higher than revenues in the fourth quarter of 2000. The Company also expects to
report a net profit in the fourth quarter. Excluding revenues from the
discontinued Serum Western Blot product line, projected fourth quarter 2001
revenues would represent growth of more than 35 percent over 2000.
For 2002, the Company expects revenue growth of at least 30 percent over 2001,
and continued strong growth in earnings. Mr. Thompson continued, "We are
positioning the Company to achieve even higher growth. The key milestones
include FDA approval of both the OraQuick(R) HIV and UPlink(TM) Drugs of Abuse
products in the United States, the recruiting of new marketing partners for
UPlink(TM), Intercept(R), and OraQuick(R), and the execution of additional joint
development agreements to pursue new markets with our platform technologies."
Internet Audio Broadcast
OraSure Technologies will host a conference call with analysts to discuss these
results beginning at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) today. In
order to listen to the conference call, please go to OraSure Technologies' web
site, www.orasure.com, at least ten minutes prior to the start of the call to
register, download and install any necessary audio software. In addition, a
replay will be archived on OraSure Technologies' web site shortly after the call
has ended and will be available for 30 days. A replay of the call can also be
accessed until October 29, 2001, by dialing (888) 203-1112 (Domestic) or (719)
457-0820 (International) and entering the access code 683274.
Important Information
This press release contains certain forward-looking statements, including with
respect to revenues, earnings, and product development, performance, regulatory
approvals, shipments and markets. Actual results could be significantly
different. Factors that could affect results include ability to market products;
impact of competitors, competing products and technology changes; ability to
develop, commercialize and market new products; market acceptance of oral fluid
testing products and up-converting phosphor technology products; ability to fund
research and development and other projects and operations; ability to obtain
and timing of obtaining necessary regulatory approvals; ability to develop
product distribution channels; uncertainty relating to patent protection and
potential patent infringement claims; ability to enter into international
manufacturing agreements; obstacles to international marketing and manufacturing
of products; ability to sell products internationally; loss or impairment of
sources of capital; exposure to product liability and other types of litigation;
changes in international, federal or state laws and regulations; changes in
relationships with strategic partners and reliance on strategic partners for the
performance of critical activities under collaborative arrangements; changes in
accounting practices or interpretation of accounting requirements; equipment
failures and ability to obtain needed raw materials and components; and general
business and economic conditions. These and other factors are discussed more
fully in the Securities and Exchange Commission filings of OraSure Technologies,
including its Annual Report on Form 10-K for the year ended December 31, 2000.
Although forward-looking statements help to provide complete information about
future prospects, readers should keep in mind that forward-looking statements
may not be reliable. The forward-looking statements are made as of the date of
this press release and OraSure Technologies undertakes no duty to update these
statements.
Condensed Financial Data
------------------------
(In thousands, Except Per-Share Data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------- -------------
2001 2000 2001 2000
---- ---- ---- ----
Results of Operations
Revenues $ 8,599 $ 7,222 $ 24,510 $21,002
Cost of goods sold 2,873 3,097 8,580 8,211
----- ----- ------ ------
Gross margin 5,726 4,125 15,930 12,791
Operating expenses 5,737 6,418 17,332 17,128
Merger related costs - 5,920 - 5,920
Manufacturing restructuring - - 450 -
costs ----- ----- ------ ------
Operating Income (loss) (11) (8,213) (1,852) (10,257)
Other income (expense), net 27 289 427 1,162
----- ----- ------ -------
Net income (loss)
16 (7,924) (1,425) (9,095)
===== ===== ====== =======
Earnings (loss) per common share:
Basic $ 0.00 $ (0.22) $(0.04) $ (0.26)
===== ===== ====== =======
Diluted $ 0.00 $ (0.22) $(0.04) $ (0.26)
===== ===== ====== =======
Average shares of common
stock
outstanding:
Basic 37,057 35,370 36,741 34,546
====== ====== ====== =======
Diluted 39,009 35,370 36,741 34,546
====== ====== ====== =======
Product Revenue Summary
Three Months Ended September 30, Percentage of
Dollars Total Revenues
% --------------
2001 2000 Change 2001 2000
---- ---- ---- ----
Product Revenues
Oral specimen collection devices $3,139 2,856 10% 36% 40%
OraQuick(R) 415 - N/A 5% 0%
Histofreezer(R)cryosurgical systems 1,954 1,737 12% 23% 24%
Immunoassay tests 2,027 1,445 40% 23% 20%
Western Blot HIV confirmatory tests 143 538 (73)% 2% 7%
Other product revenues 559 291 92% 7% 4%
------ ----- ----- -----
8,237 6,867 20% 96% 95%
License and product
development 362 355 2% 4% 5%
------ ----- ----- -----
Total revenues $8,599 $7,222 19% 100% 100%
====== ====== ===== =====
Nine Months Ended September 30,
Percentage of
Dollars Total Revenues
% --------------
2001 2000 Change 2001 2000
---- ---- ---- ----
Product Revenues
Oral specimen collection devices $9,855 $8,271 19% 40% 39%
OraQuick(R) 655 - N/A 3% 0%
Histofreezer(R)cryosurgical systems 4,733 4,681 1% 19% 22%
Immunoassay tests 5,835 4,959 18% 24% 24%
Western Blot HIV confirmatory tests 471 1,424 (67)% 2% 7%
Other product revenues 1,658 1,062 56% 7% 5%
------ ----- ----- -----
23,207 20,397 14% 95% 97%
License and product development 1,303 605 115% 5% 3%
------ ----- ----- -----
Total revenues $ 24,510 $21,002 17% 100% 100%
====== ====== ===== =====
About OraSure Technologies
OraSure Technologies, Inc. is the market leader for oral fluid diagnostics. The
Company develops, manufactures and markets medical devices and diagnostic
products for use by insurance companies, public health agencies, clinical
laboratories, physicians' offices and workplace sites. For more information on
the Company, please visit www.orasure.com.