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WHO Prequalification Expected to Boost International Sales of OraSure HIV Self-Test

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NEW YORK (360Dx) – Today's World Health Organization's prequalification of OraSure Technologies' HIV self-test could reinforce international demand that's already driving sales growth for the test, according to an investment analyst.    

"With prequalification in hand, we expect ordering for the HIV self-test to begin picking up from the many countries with whom OraSure has been in dialogue," Mark Massaro, an analyst at Canaccord Genuity investment bank, said in an interview.

He also wrote in a research note today that WHO prequalification "is expected to drive significant expansion of [OraSure's] HIV test for regulatory and funding reasons."

The United Nations and other procurement agencies leverage WHO prequalification to make purchasing decisions regarding diagnostics, medicines, and vaccines. Its objective is to ensure that diagnostic tests for high-burden diseases meet global standards of quality, safety, and efficacy.

Data supporting the prequalification for OraSure's HIV self-test demonstrated that it was 100 percent sensitive and greater than 99 percent specific when it was compared with the performance of a fourth-generation laboratory test, the firm said.

Its prequalification comes on the back of an agreement in June between OraSure and the Gates Foundation to make the HIV self-test available at a reduced price to developing countries in Africa and Asia. The countries include Malawi, Zambia, and Zimbabwe, where the company has been providing tests for the UNITAID and Population Services International Self-Testing in Africa, or STAR, project — an evaluation of HIV self-testing in Africa designed to give WHO guidance, support the establishment of appropriate policy, and encourage new manufacturers to enter the self-test market.

Massaro noted that in 2017, he expects 45 percent growth in OraSure's international HIV test revenues to $7.5 million; in 2018, he expects 39 percent growth to $10.5 million; and in 2019, he expects 20 percent to $12.6 million.

The WHO prequalification and Gates Foundation agreement comes amid a decline in Orasure's US-based HIV testing business as it faces competition from central laboratory viral load tests provided by firm's such as Roche and Hologic, Massaro said.

According to a Form 10K filed with the US Securities and Exchange commission, domestic sales of an OraSure HIV test for the clinic dropped 14 percent to $21.5 million in 2016 from almost $25 million in 2015. Even domestic sales of its over-the-counter HIV test are on the decline; revenue dropped by 10 percent to $6.3 million in 2016 from almost $7 million in 2015.

Massaro said he expects the company's US HIV test sales will continue to decline in 2017.

In the US, the number of people infected by HIV "is not rising dramatically like it did in the '80s, and OraSure, the market leader in HIV testing, has done a very good job," Massaro said.

"International HIV test demand is substantially higher than the test demand in the US," he said. This is partly because of investments in testing for people in poor countries that previously couldn't afford OraSure's test, and partly because of the increase in funding in the emerging world, he noted. 

According to its SEC document, OraSure's international sales in 2016 more than doubled to $5.3 million from $2.4 million in 2015.

The firm is finding opportunities for sales growth in low-resource economies and nations where prevalence rates are relatively high.

OraSure CFO Ron Spair said in an interview that he expects the company will sell more than 2 million HIV tests as part of the STAR developing-nations program over "a couple of years."

"It continues to be the goal of pretty much all of the testing programs out there worldwide to identify those individuals who are HIV-positive but unaware of their status, because they are spreading the infection among those who are not infected," Spair said.

"Diagnosing HIV quickly and accurately is critical to both improving treatment access and preventing new infections,” Emilio Emini, director of the HIV program at the Bill & Melinda Gates Foundation, said in a statement, adding that its initiative with OraSure "will allow for increased access to self-conducted HIV screening, resulting in a substantially improved ability to recognize and treat individuals living with HIV.”  

The OraSure HIV Self-Test, a version of which has been sold in the US since 2012 — when the firm become the first to receive US Food and Drug Administration premarket approval for such a test— is among the first infectious diseases tests to be sold over the counter in the US.

OraSure said that the HIV self-test is also based on a WHO-prequalified OraQuick Rapid HIV-1/2 Antibody Test in use by healthcare professionals worldwide.

Since the firm's HIV tests were first launched, healthcare professionals and individuals worldwide have used more than 40 million of them, the firm said.

The rapid, point-of-care self-test detects antibodies to HIV-1 and HIV-2 with an oral swab, and can provide results in as little as 20 minutes. Apart from its use for testing in homes, healthcare workers can also apply it at outreach testing settings and at community-based screening events.

Massaro said that among 50 countries that have expressed interest in adopting the test in Africa and Asia, OraSure had been in discussion with at least 12 with a view to deploying its HIV test when WHO prequalification came through.

"We think it's likely orders will begin to trickle in this month," he said.  

The Gates Foundation said it will provide funding of no more than $20 million over the four-year term of its deal with OraSure, and no more than $6 million each year. OraSure would receive payments that are tied to HIV test sales volume.  

OraSure has already sold 750,000 tests in the first phase of a program involving Population Services International and UNITAID. Most of the sales have been in Malawai. Zambia, and Zimbabwe.

The test may be available at an average price of $4 to $5, an important factor in its successful adoption, and phase two of its PSI STAR program may be worth between $6 million and $8 million to OraSure, Massaro said.

The pilot program was designed to provide an evaluation of the effectiveness of the OraSure self-test, Spair said.

Men around the world are especially hesitant to be seen on line at a clinic awaiting a test for their HIV status, he noted, and yet they are often responsible for transmitting the infection to their female partners who are generally far more willing to undergo testing.

"The program's results has motivated interest in self-testing being available to more countries in the developing world," he said, "and it provided the impetus to our discussions with the Gates Foundation, to find a way to make this available more broadly in the target countries."

Spair said that he expects to move into the next phase of the program during the second half of this year.

HIV testing is one of three pillars of growth for OraSure that also include its hepatitis C and molecular collections businesses.

In 2016, the firm's hepatitis C domestic sales were flat at $7.43 million compared with $7.5 million in 2015, but its international hepatitis C sales surged by 71 percent to $6.6 million in 2016 from $3.9 million in 2015.

According to the US Centers for Disease Control and Prevention, about 25 percent of those with HIV also have hepatitis C. And anywhere from 50 percent up to 90 percent of people with HIV who use injection drugs also have hepatitis C.

Massaro said that OraSure is "in active dialogue" with six to 12 countries, including "advanced discussions" with three about ordering its rapid hepatitis C test, and that it is "optimistic about its ability to renew an $18 million contract" with a foreign government, possibly Egypt, in Q4, that includes $16 million in hepatitis C test revenues and $2 million in HIV test revenues, bookable in incremental payments over time.

"OraSure management is feeling pretty good about the prospect of renewing that contract on the same terms in Q4 of this year," he said. 

In its molecular collections business, OraSure manufactures and sells kits that are used to collect, stabilize, transport, and store samples of genetic material for molecular testing in the consumer genetic, clinical genetic, academic research, pharmacogenomics, personalized medicine, microbiome, and animal genetics markets. The business, operated by OraSure's subsidiary, DNA Genotek, in Ottawa, Ontario, accounted for $32.2 million or 25 percent of the firm's consolidated net revenues in 2016. Massaro said that he expects 53 percent growth in 2017 to $49 million, and 31 percent growth in 2018 to $64.2 million.

Spair said that all three drivers of growth are equally important to the firm.