UNITED STATES
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): June 10, 2014
OraSure Technologies, Inc.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-16537 | 36-4370966 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| 220 East First Street Bethlehem, Pennsylvania |
18015-1360 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: 610-882-1820
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 – Entry Into a Material Definitive Agreement.
On June 10, 2014, OraSure Technologies, Inc. (“OraSure”) entered into a Master Program Services and Co-Promotion Agreement (the “Agreement”) with AbbVie Bahamas Ltd., a wholly-owned subsidiary of AbbVie, Inc. (“AbbVie”). A copy of a press release announcing the Agreement is attached as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.
Under the Agreement, OraSure and AbbVie will co-promote the OraQuick® rapid HCV test in the United States. OraSure has granted to AbbVie the exclusive right to promote, with OraSure, the OraQuick® HCV test in certain markets, and OraSure will provide certain additional services as set forth in the Agreement. OraSure will retain responsibility for manufacturing and selling the test into all markets.
In exchange for the exclusive rights granted to AbbVie under the Agreement, OraSure will receive up to $75.0 million in exclusivity payments during the term of the Agreement, which extends through December 31, 2019. In addition, upon achievement of certain performance-based milestones, OraSure will be eligible to receive additional payments ranging from $3.5 million to $55.5 million annually during the life of the Agreement. The Agreement contains additional terms and conditions, including indemnification provisions, typical of agreements of this type. The Agreement may be terminated by either party due to material breach by, or insolvency of, the other party, as well as by either party for convenience on or after December 31, 2016 or, in certain circumstances by AbbVie, after a change of control of OraSure. The foregoing is only a summary of certain of the terms of the Agreement and is qualified by reference to the entire Agreement.
Item 7.01 – Regulation FD Disclosure.
On June 11, 2014, the Company held a webcast conference call with analysts and investors, during which Douglas A. Michels, the Company’s President and Chief Executive Officer, and Ronald H. Spair, the Company’s Chief Financial Officer and Chief Operating Officer, discussed the recently announced Agreement with AbbVie. A copy of the prepared remarks of Messrs. Michels and Spair is attached as Exhibit 99.2 to this Form 8-K and is incorporated herein by reference.
The information in this Item and attached Exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall such information and Exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such a filing. The fact that the information and Exhibit are being furnished should not be deemed an admission as to the materiality of any information contained therein. The Company undertakes no duty or obligation to publicly update or revise the information contained in this Current Report or attached Exhibit.
Item 9.01 – Financial Statements and Exhibits.
| (d) | Exhibits |
| Exhibit |
Description | |
| 99.1 | Press Release, dated June 11, 2014, announcing that OraSure has entered into a Master Program Services and Co-Promotion Agreement with AbbVie. | |
| 99.2 | Prepared Remarks of Douglas A. Michels and Ronald H. Spair for OraSure Technologies, Inc. AbbVie Agreement Analyst/Investor Conference Call Held June 11, 2014. | |
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: June 11, 2014 | By: | /s/ Jack E. Jerrett | ||||
| Jack E. Jerrett | ||||||
| Senior Vice President, General Counsel and Secretary | ||||||
Index to Exhibits
| Exhibit |
Description | |
| 99.1 | Press Release, dated June 11, 2014, announcing that OraSure has entered into a Master Program Services and Co-Promotion Agreement with AbbVie. | |
| 99.2 | Prepared Remarks of Douglas A. Michels and Ronald H. Spair for OraSure Technologies, Inc. AbbVie Agreement Analyst/Investor Conference Call Held June 11, 2014. | |
Exhibit 99.1
| Company Contact: | Media Contact: | |
| Ronald H. Spair | Jennifer Moritz | |
| Chief Financial Officer | Zer0 to 5ive for OraSure Technologies | |
| 610-882-1820 | 917-748-4006 | |
| Investorinfo@orasure.com | jmoritz@0to5.com | |
| www.orasure.com |
ORASURE TECHNOLOGIES ANNOUNCES NEW CO-PROMOTION AGREEMENT FOR ORAQUICK® HCV RAPID ANTIBODY TEST
- Investor Conference Call Scheduled Today for 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) -
BETHLEHEM, Pa. – June 11, 2014 – OraSure Technologies (NASDAQ: OSUR), a market leader in point of care diagnostics, announced today that it has entered into a Master Program Services and Co-Promotion Agreement with AbbVie under which AbbVie and OraSure will co-promote the Company’s OraQuick® HCV Rapid Test in the United States. The product will be used to test individuals at-risk for hepatitis C (HCV). OraSure will be responsible for manufacturing and selling the product directly into all markets.
Under the agreement, OraSure has granted exclusive promotion rights to AbbVie for the OraQuick® HCV test in certain markets and will provide certain additional services in support of HCV testing. In exchange for the exclusive rights granted to AbbVie, OraSure will receive up to $75 million in exclusivity payments over the term of the agreement, which runs through December 31, 2019. In addition, upon achievement of certain performance-based milestones, OraSure will be eligible to receive additional payments annually over the life of the agreement. Further information regarding the agreement will be available in the Company’s 8-K Report filed later today with the SEC.
According to the Centers for Disease Control and Prevention (CDC), HCV is the most common chronic blood-borne infection in the United States, with approximately 5 million people infected. It is estimated that one in 30 Baby Boomers (adults born between 1945 and 1965) have chronic hepatitis C and up to 75% of the people infected with HCV are unaware of their infection. The CDC, the U.S. Preventative Services Task Force (USPSTF), and the American Association for the Study of Liver Diseases (AASLD) have all issued guidance that recommends HCV testing for at-risk individuals including all Baby Boomers.
“We believe it is critical that at-risk individuals be tested for hepatitis C to prevent serious consequences from untreated infection,” said Douglas A. Michels, President and Chief Executive Officer of OraSure Technologies. “This new collaboration allows us to educate healthcare professionals and the patients they treat about hepatitis C and provide them with a very important rapid diagnostic tool.”
The OraQuick® HCV test is the first and only FDA-approved and CLIA-waived point of care test for detection of HCV infection in at-risk individuals. The simple platform enables healthcare providers to deliver a diagnosis based on lab-accurate test results in 20 minutes, using fingerstick or venipuncture blood.
Updated Financial Guidance
As a result of the new co-promotion agreement announced today, the Company has updated its financial guidance to reflect the initial impact of this arrangement and is now projecting consolidated net revenues ranging from $26.0 to $26.5 million and a consolidated net loss of approximately $0.08 to $0.09 per share for the second quarter of 2014.
Conference Call
The Company will host a conference call and audio webcast to discuss the co-promotion agreement today beginning at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time). On the call will be Douglas A. Michels, President and Chief Executive Officer, and Ronald H. Spair, Chief Financial Officer and Chief Operating Officer. The call will include prepared remarks by management and a question and answer session.
In order to listen to the conference call, please either dial 844-831-3030 (Domestic) or 315-625-6887 (International) and reference Conference ID #59796252 or go to OraSure Technologies’ web site, www.orasure.com, and click on the Investor Relations page. Please click on the webcast link and follow the prompts for registration and access 10 minutes prior to the call. A replay of the call will be archived on OraSure Technologies’ web site shortly after the call has ended and will be available for seven days. A replay of the call can also be accessed until June 18, 2014, by dialing 855-859-2056 (Domestic) or 404-537-3406 (International) and entering the Conference ID #59796252.
About OraSure Technologies
OraSure Technologies is a leader in the development, manufacture and distribution of point of care diagnostic and collection devices and other technologies designed to detect or diagnose critical medical conditions. Its innovative products include rapid tests for the detection of antibodies to HIV and HCV at the point of care and testing solutions tests for detecting various drugs of abuse. The Company sells the OraQuick® In-Home HIV Test, the first and only rapid HIV test approved by the U.S. Food and Drug Administration for sale to the consumer over-the-counter market in the U.S. In addition, the Company is a leading provider of oral fluid sample collection, stabilization and preparation products for molecular diagnostic applications. OraSure’s portfolio of products is sold globally to various clinical laboratories, hospitals, clinics, community-based organizations and other public health organizations, research and academic institutions, distributors, government agencies, physicians’ offices, and commercial and industrial entities. The Company’s products enable healthcare providers to deliver critical information to patients, empowering them to make decisions to improve and protect their health.
For more information on OraSure Technologies, please visit www.orasure.com.
OraSure Technologies Forward-Looking Statement
This press release contains certain forward-looking statements, including with respect to expected revenues and product usage. Forward-looking statements are not guarantees of future
performance or results. Known and unknown factors that could cause actual performance or results to be materially different from those expressed or implied in these statements include, but are not limited to: ability to market and sell products, whether through our internal, direct sales force or third parties; ability to manufacture products in accordance with applicable specifications, performance standards and quality requirements; ability to obtain, and timing and cost of obtaining, necessary regulatory approvals for new products or new indications or applications for existing products; ability to comply with applicable regulatory requirements; ability to effectively resolve warning letters, audit observations and other findings or comments from the FDA or other regulators; changes in relationships, including disputes or disagreements, with strategic partners or other parties and reliance on strategic partners for the performance of critical activities under collaborative arrangements; failure of distributors or other customers to meet purchase forecasts, historic purchase levels or minimum purchase requirements for the Company’s products; impact of replacing distributors; inventory levels at distributors and other customers; ability of DNA Genotek to achieve its financial and strategic objectives and continue to increase its revenues; ability to identify, complete, integrate and realize the full benefits of future acquisitions; impact of competitors, competing products and technology changes; impact of negative economic conditions, high unemployment and poor credit conditions; reduction or deferral of public funding available to customers; competition from new or better technology or lower cost products; ability to develop, commercialize and market new products; market acceptance of oral fluid testing or other products; changes in market acceptance of products based on product performance or other factors; ability to fund research and development and other products and operations; ability to obtain and maintain new or existing product distribution channels; reliance on sole supply sources for critical products and components; availability of related products produced by third parties or products required for use of the Company’s products; history of losses and ability to achieve sustained profitability; ability to utilize net operating loss carry forwards or other deferred tax assets; volatility of the Company’s stock price; uncertainty relating to patent protection and potential patent infringement claims; uncertainty and costs of litigation relating to patents and other intellectual property; availability of licenses to patents or other technology; ability to enter into international manufacturing agreements; obstacles to international marketing and manufacturing of products; ability to sell products internationally, including the impact of changes in international funding sources and testing algorithms; adverse movements in foreign currency exchange rates; loss or impairment of sources of capital; ability to retain qualified personnel; exposure to product liability and other types of litigation; changes in international, federal or state laws and regulations; customer consolidations and inventory practices; 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 are discussed more fully in the Company’s Securities and Exchange Commission filings, including its registration statements, Annual Report on Form 10-K for the year ended December 31, 2013, Quarterly Reports on Form 10-Q, and other filings with the SEC. Although forward-looking statements help to provide 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.
###
Exhibit 99.2
OraSure Technologies, Inc.
AbbVie Agreement
Analyst/Investor Conference Call – 8:30 a.m. EST
June 11, 2014
Prepared Remarks of Douglas A. Michels and Ronald H. Spair
Please see “Important Information” at the conclusion of the following prepared remarks.
Introduction – Doug Michels
Thanks Rena. Good morning everyone and welcome to our call.
* * * *
I am extremely pleased to share with you that our Company has entered into a Master Program Services and Co-Promotion Agreement with AbbVie under which AbbVie and OraSure will co-promote our Company’s OraQuick® HCV Rapid Test in the United States.
The agreement is among the most significant in our Company’s history. First and foremost, it will enable us to broadly provide healthcare professionals and the patients they serve with a critically important rapid diagnostic test. Second, we believe this opportunity will be transformative for OraSure and will drive significant growth in our HCV testing business.
There has never been a more critical time to know your HCV status. As we have previously discussed on earnings calls, there are many positive trends occurring with respect to HCV testing and treatment, not the least of which is the development of new and more effective drug therapies.
Under the new agreement, we have granted exclusive rights to AbbVie to promote with us, the use of our OraQuick® HCV Rapid Test in certain markets and we will provide certain services in support of HCV testing. In exchange for those rights, OraSure will receive up to $75 million in exclusivity payments over the term of the agreement which runs through December 31, 2019. In addition, upon achievement of certain performance-based milestones, the Company will be eligible to receive additional payments ranging from $3.5 million to $55.5 million per year over the life of agreement.
Hepatitis C is the most common chronic blood-borne infection in the United States and the Centers for Disease Control and Prevention estimates that one in 30 baby boomers – adults born between 1945 and 1965 – have a chronic infection. Perhaps most alarming is that up to 75% of people infected with HCV are unaware of their infection which is why the CDC, the U.S. Preventative Services Task Forces and the American Association for the Study of Liver Diseases have all issued guidance that recommends HCV testing for at-risk individuals including all baby boomers.
It is critical that at-risk individuals be tested for hepatitis C to prevent potentially serious consequences from undiagnosed and untreated infection. Hepatitis C is the leading cause of liver cancer and liver transplants. Our OraQuick® Rapid HCV Test, the only FDA approved and CLIA-waived point of care test, enables healthcare providers to deliver a diagnosis based on lab-accurate test results in just 20 minutes, using a fingerstick or venipuncture blood sample.
With that, let me turn the call over to Ron who can share some financial highlights associated with the agreement.
Agreement Financial Highlights – Ron Spair
Thanks Doug, and good morning everyone.
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As Doug referenced, in exchange for providing exclusive co-promotion rights to AbbVie for the OraQuick® HCV test in certain markets, OraSure will receive up to $75 million in exclusivity payments over the term of the agreement which runs through December 31, 2019. We plan on recognizing the exclusivity payments ratably on a monthly basis over the life of the agreement.
In addition, upon achievement of certain performance-based milestones, the Company will be eligible to receive additional payments ranging from $3.5 million to $55.5 million annually over the life of agreement. It is important to note that the first potential recognition of milestone revenues would occur during 2015 under this component of the agreement. We expect the success we have under this component of our relationship with AbbVie to ramp over time.
The agreement also contains termination, indemnification and other provisions typical for agreements of this type. Additional information about the agreement can be found in our 8-K report, which was filed shortly after the start of this call.
As we look out over the balance of the year, in addition to recognizing incremental revenues, we will be investing in various promotional programs that we will pursue with AbbVie. These programs will require bringing on additional personnel to staff new initiatives and incurring programmatic expenses. We will be disclosing more details of the specific programs as they are launched over the next several months.
Consequently, we are revising our guidance for the second quarter to include the anticipated new revenues and expenses from the AbbVie collaboration. We now are projecting consolidated net revenues of between $26.0 million and $26.5 million and a consolidated net loss in the range of $0.08 to $0.09 per share for the second quarter.
- 3 -
As we take a somewhat longer view of the business, this exciting opportunity with AbbVie, along with the changes that we have announced with our HIV-OTC program and the expected termination of certain patent royalties on sales of our professional and OTC HIV products beginning in early 2015, are expected to drive the Company to full-year profitability in 2015.
And, with that, I will now turn the call back over to Doug.
Conclusion – Doug Michels
Thanks Ron.
This is truly a significant milestone for our Company and a major step in achieving our vision for this amazing product.
I would like to thank all the people at AbbVie and OraSure who worked so hard to make this agreement a reality. It is a great achievement for each of our respective companies. More importantly, we now have the opportunity to make a significant impact on those patients at risk for HCV, especially those who are unaware they are infected and face potentially serious health consequences from going undiagnosed and/or untreated.
And with that, I will now open the floor to your questions. Operator please proceed.
[Q&A session]
Final Conclusion – Doug Michels
Thank you for participating on today’s call and for your continued interest in OraSure.
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Important Information
This document contains certain forward-looking statements, including with respect to expected revenues and earnings/loss per share. Forward-looking statements are not guarantees of future performance or results. Known and unknown factors that could cause actual performance or results to be materially different from those expressed or implied in these statements include, but are not limited to: ability to market and sell products, whether through our internal, direct sales force or third parties; ability to manufacture products in accordance with applicable specifications, performance standards and quality requirements; ability to obtain, and timing and cost of obtaining, necessary regulatory approvals for new products or new indications or applications for existing products; ability to comply with applicable regulatory requirements; ability to effectively resolve warning letters, audit observations and other findings or comments from the FDA or other regulators; changes in relationships, including disputes or disagreements, with strategic partners or other parties and reliance on strategic partners for the performance of critical activities under collaborative arrangements; failure of distributors or other customers to meet purchase forecasts, historic purchase levels or minimum purchase requirements for the Company’s products; impact of replacing distributors; inventory levels at distributors and other customers; ability of DNA Genotek to achieve its financial and strategic objectives and continue to increase its revenues; ability to identify, complete, integrate and realize the full benefits of future acquisitions; impact of competitors, competing products and technology changes; impact of negative economic conditions, high unemployment and poor credit conditions; reduction or deferral of public funding available to customers; competition from new or better technology or lower cost products; ability to develop, commercialize and market new products; market acceptance of oral fluid testing or other products; changes in market acceptance of products
- 5 -
based on product performance or other factors; ability to fund research and development and other products and operations; ability to obtain and maintain new or existing product distribution channels; reliance on sole supply sources for critical products and components; availability of related products produced by third parties or products required for use of the Company’s products; history of losses and ability to achieve sustained profitability; ability to utilize net operating loss carry forwards or other deferred tax assets; volatility of the Company’s stock price; uncertainty relating to patent protection and potential patent infringement claims; uncertainty and costs of litigation relating to patents and other intellectual property; availability of licenses to patents or other technology; ability to enter into international manufacturing agreements; obstacles to international marketing and manufacturing of products; ability to sell products internationally, including the impact of changes in international funding sources and testing algorithms; adverse movements in foreign currency exchange rates; loss or impairment of sources of capital; ability to retain qualified personnel; exposure to product liability and other types of litigation; changes in international, federal or state laws and regulations; customer consolidations and inventory practices; 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 are discussed more fully in the Company’s Securities and Exchange Commission filings, including its registration statements, Annual Report on Form 10-K for the year ended December 31, 2013, Quarterly Reports on Form 10-Q, and other filings with the SEC. Although forward-looking statements help to provide 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.
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